Document of The World Bank · Document of The World Bank ... ICR Date: 12/28/2011 ICR Type: Core ICR Lending Instrument: DPL Borrower: ... Value Baseline study on

Document of

The World Bank

Report No: ICR1947

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(Credit No.s 4426-GH & 4627-GH & 4746-GH)

ON

CREDITS

IN THE AMOUNT OF SDR 25.9 MILLION

(US$ 40 MILLION EQUIVALENT)

TO

THE REPUBLIC OF GHANA

FOR

NATURAL RESOURCES AND ENVIRONMENTAL GOVERNANCE FIRST, SECOND AND

THIRD DEVELOPMENT POLICY OPERATIONS

December 28, 2011

Environmental and Natural Resources

Sustainable Development Department

Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 28, 2011)

Currency Unit = Ghana Cedis (GHS)

1.00GHS = US$0.60

US$ 1.00 = GHS 1.65

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AFD Agence Française de Développement

ASM Artisanal & Small-scale Mining

CAS Country Assistance Strategy

CBO Community Based Organization

CEA Country Environmental Analysis

CEPS Customs, Excise & Preventive Service

CHRAJ Commission on Human Rights and Administrative Justice

CIDA Canadian International Development Agency

CSO Civil Society Organization

CRM Community Resource Management

CSIF Country Strategic Investment Framework (for sustainable land management)

DA District Assembly

DFID Department for International Development of the United Kingdom

DPO Development Policy Operation

DP Development Partner

DSA Debt Sustainability Analysis

EA Environmental Assessment

EC European Community

EGPRC Economic Governance and Poverty Reduction Credit

EIA Environmental Impact Assessment

EITI Extractive Industries Transparency Initiative

EKN Embassy of the Kingdom of the Netherlands (Ghana)

ENRAC Environment and Natural Resources Advisory Committee

EPA Environmental Protection Agency

EU European Union

FC Forestry Commission

FLEGT Forest Law Enforcement, Governance & Trade

GoG Government of Ghana

GEF Global Environment Facility

GDP Gross Domestic Product

GESS Ghana Environment Sector Study

GNPC Ghana National Petroleum Corporation

GEITI Ghana Extractive Industries Transparency Initiative

IBRD International Bank for Reconstruction and Development

ICR Implementation Completion Report

IDA International Development Association

IMF International Monetary Fund

IMP Information Management System

IMS Information Management System

ISR Implementation Status and Results Report

IRS Internal Revenue Service

IMAT Independent Monitoring & Advisory Team

MEST Ministry of Environment, Science & Technology

M&E Monitoring & Evaluation

MC Minerals Commission

MDBS Multi-Donor Budget Support

MDAs Ministries, Departments & Agencies

MEST Ministry of Environment Science & Technology

MLFM Ministry of Lands, Forests & Mines (former)

MLGRD Ministry of Local Government & Rural Development

MLGRDE Ministry of Local Government & Rural Development Environment (former)

MLNR Ministry of Lands & Natural Resources

MoFEP Ministry of Finance & Economic Planning

MoV Means of Verification (of achievement of PAF targets & triggers)

MTEF Medium-Term Economic Framework (GoG budget planning tool)

MTR Mid-Term Review

MSSP Mining Sector Support Program

NCOM National Coalition on Mining

NDPC National Development Planning Commission

NGO Non-Governmental Organization

NRE Natural Resources & Environment

NREG Natural Resources & Environmental Governance

NRMP Natural Resources Management Project

OASL Office of the Administrator of Stool Lands

PAD Project Appraisal Document

PAF Performance Assessment Framework

PAMAB Protected Area Management Advisory Board

PDO Program Development Objective

PES Payment for Environmental Services

PFM Public Financial Management

PHRD Policy & Human Resources Development (Japanese Trust Fund)

PRSC Poverty Reduction Support Credit (World Bank DPL in support of national

development strategy; latterly renamed „EGPRC‟ in Ghana)

PSIA Poverty & Social Impact Assessment

REDD Reduced Emissions from Deforestation & Degradation

SBS Sector Budget Support

SDAP Sustainable Development Action Plan

SEA Strategic Environmental Assessment

SLM Sustainable Land Management

SMART Specific, Measurable, Attainable, Relevant & Time-bound (indicators)

SSM Small Scale Mining/Miners

SRMC Savannah Resource Management Center

TA Technical Assistance

TCC Technical Coordination Committee

TIDD Timber Industry Development Division (of Forestry Commission)

ToR Terms of Reference

WD Wildlife Department

UNFCC United Nations Framework Convention on Climate Change

VAT Value Added Tax

VLTP Validation of Legal Timber Programme

VPA Voluntary Partnership Agreement (Forestry)

Vice President: Obiageli K. Ezekwesili

Country Director: Sergiy V. Kulyk (Acting)

Sector Manager: Idah Pswarayi-Riddihough

Project Team Leader: John W. Fraser Stewart

ICR Team Leader: Stephen Ling

THE REPUBLIC OF GHANA

Natural Resources and Environmental Governance First, Second and Third

Development Policy Operations

CONTENTS

Data Sheet

A. Basic Information

B. Key Dates

C. Ratings Summary

D. Sector and Theme Codes

E. Bank Staff

F. Results Framework Analysis

G. Ratings of Project Performance in ISRs

H. Restructuring

1. Program Context, Development Objectives and Design: ................................................................... 1

2. Key Factors Affecting Implementation and Outcomes ....................................................................... 6

3. Assessment of Outcomes ................................................................................................................... 18

4. Assessment of Risk to Development Outcome ................................................................................. 24

5. Assessment of Bank and Borrower Performance .............................................................................. 24

6. Lessons Learned ................................................................................................................................ 27

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ................................... 29

Annex 1. Bank Lending and Implementation Support/Supervision Processes ...................................... 30 Annex 2. Stakeholder Workshop Report and Results ............................................................................ 32 Annex 3. Summary of Borrower‟s Comments on Draft ICR ................................................................ 34

Annex 4. Comments of Cofinanciers and Other Partners/Stakeholders ................................................ 36 Annex 5. List of Key Supporting Documents ........................................................................................ 37 Annex 6. Full text of PDO indicators and triggers. ............................................................................... 39 Annex 7. NREG Program Matrices ....................................................................................................... 42 Annex 8. DPO1 Program Matrix targets for 2007 & 2008 that were not carried through (as opposed to

re-worked) into the revised DPO2/3 Program Matrix .............................................................................. 52

Annex 9. Participation and Demand For Good Governance mechanisms in the NRE sectors ............. 55

Annex 10. Six main risks identified at the appraisal of DPO-1 ............................................................... 56 Annex 11. Key findings of the NREG Mid-Term Review (August 2010) on sector management systems

................................................................................................................................................................... 57 Annex 12. MAP ....................................................................................................................................... 58

i

A. Basic Information

Country: Ghana Program Name: Natural Resources and Environmental

Governance (NREG) Program

Program ID: DPO-1: P102971

DPO-2: P113172

DPO-3: P118188

L/C/TF Number(s): DPO-1: IDA-4460

DPO-2: IDA-4470

DPO-3: IDA-47460

ICR Date: 12/28/2011 ICR Type: Core ICR

Lending Instrument: DPL Borrower: Government of Ghana

Original Total Commitment:

DPO-1: XDR 12.5 M

DPO-2: XDR 6.8 M

DPO-3: XDR 6.6 M

Disbursed Amount:

DPO-1: XDR 12.5 M

DPO-2: XDR 6.8 M

DPO-3: XDR 6.6 M

Implementing Agencies: Ministry of Finance & Economic Planning

Cofinanciers and Other External Partners: Embassy of the Kingdom of the Netherlands (EKN),

European Union (EU), Department for International Development (DFID, UK), Agence Française de

Développement (AFD)

B. Key Dates (all fields are entered by the system)

First Natural Resources and Environmental Governance Development Policy Operation – P102971

Process Date Process Original Date Revised/Actual

Date(s)

Concept Review: 09/13/2007 Effectiveness: 08/05/2008 08/05/2008

Appraisal: 02/19/2008 Restructuring(s): N/A

Approval: 06/03/2008 Mid-term Review: N/A1 N/A

Closing: 06/30/2009 06/30/2009

Second Natural Resources and Environmental Governance Development Policy Operation –

P113172


Date(s)



Approval: 06/30/2009 Mid-term Review: N/A N/A

Closing: 06/30/2010 06/30/2010

Third Natural Resources and Environmental Governance Development Policy Operation – P118188


Date(s)

1 The Bank did not conduct Mid-Term Reviews for each operation. A Mid-Term Review exercise for the whole NREG

Program was conducted under the leadership of EKN and GoG early in FY11, and is discussed below.

ii



Approval: 06/03/2010 Mid-term Review: N/A N/A

Closing: 06/30/2011 06/30/2011

C. Ratings Summary

C.1 Performance Rating by ICR Outcome: Moderately satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately unsatisfactory

Borrower Performance: Moderately satisfactory

C.2 Detailed ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately

unsatisfactory

Government: NA

Quality of

Supervision:

Moderately

unsatisfactory

Implementation

Agency/Agencies:

NA

Overall Bank

Performance:

Moderately

unsatisfactory

Overall Borrower

Performance:

Moderately

satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments (if any) Rating

Potential Prob. Program at any time (Yes/No): No Quality at Entry (QEA): None

Problem Program at any time(Yes/No): No Quality of Supervision (QSA): None

DO rating before Closing/Inactive status: Satisfactory

D. Sector and Theme Codes

First Natural Resources and Environmental Governance Development Policy Operation – P102971

Original Actual

Sector Code (as % of total Bank financing)

Forestry 29

General Energy Sector 14

General Transportation Sector 14

Mining and other extractive 29

Other Social Services 14

Theme Code (as % of total Bank financing)

Environmental policies and institutions 67

Other environment and natural resources management 33

iii

Second Natural Resources and Environmental Governance Development Policy Operation –

P113172

Original Actual


Forestry 33

General agriculture, fishing and forestry sector 17


Other Industry 17


Biodiversity 18

Climate change 18


Other rural development 10

Rural policies and institutions 18

Third Natural Resources and Environmental Governance Development Policy Operation –

P118188

Original Actual


Forestry 40


Oil and gas 20


Biodiversity 18


Lead administrations and management 10

Rural policies and institutions 18

E. Bank Staff

Positions At ICR At Approval

Vice President: Obiageli K. Ezekwesili Obiageli K. Ezekwesili

Country Director: Sergiy V. Kulyk (Acting) Ishac Diwan

Sector Manager: Idah Pswarayi-Riddihough Marjorie-Anne Bromhead

TTL: John W. Fraser Stewart Jean-Christophe Carret

ICR Team Leader: Stephen Ling

ICR Primary Author: Sylke von Thadden / Stephen Ling

iv

F. Results Framework Analysis

Program Development Objective:

The objectives of the three operations in this DPO series were to: (a) ensure predictable and

sustainable financing for the forest and wildlife sectors and effective forest law enforcement; (b)

improve mining sector revenue collection, management, and transparency; (c) address social issues

in forest and mining communities; and (d) mainstream environment into economic growth through

Strategic Environmental Assessment (SEA), Environmental Impact Assessment (EIA), and

development of a climate change strategy.

Revised Program Development Objective:

No substantive changes (see section 1.3).

The PDO indicators below are taken from 3-year outcomes identified under the 1st operation

(DPO-1), and substantially revised as the Key Outcome Indicators during the preparation of DPO-

2. However, the outcome indicators were not given appropriate attention during the remainder of

the DPO series and therefore do not fully reflect the agreed triggers. Section 2.1 presents the PDO

indicators alongside the triggers for a clearer understanding of the disconnect between the two and

the achievements in focal areas of the Program.

(a) PDO Indicator(s)

Baseline Value

(from approval

documents)

Original Target

Values

(from approval

documents)

Formally Revised

Target Values

Actual Values

Achieved

at Completion or

Target Years

PDO Indicator 1: Strengthen institutions and governance [in forestry sector]

Value

(quantitative or

qualitative)

Baseline study on

percentage of legal

timber in the

domestic market

completed in

September 2009.

Reduced level of

illegality by X%

100% timber

exports verified

legal

(a) 10% increase in

legal wood supply to

domestic markets;

(b) first Forest Law

Enforcement

Governance and

Trade (FLEGT)

license issued.

(a) Baseline share

of domestic timber

market from legal

sources (sawmills

and bush mills)

estimated at 16%.

(b) First license

awaiting

completion of

tracking system

pilot –expected

shortly.

Date achieved

Comments

(incl. %

achievement)

Partially achieved. Draft policies for increasing legal domestic supply require further

development. Baseline estimated through market surveys, but not yet repeated. Strong

implementation of FLEGT systems, but 1st license delayed by pilot stage.

PDO Indicator 2: Sustainably finance and promote investment in forestry sector

Value

(quantitative or

Qualitative)

Baseline revenue

study in June 2009 Budget allocation

FC: 95%

Approved district

(a) Timber Revenues

increased by 15%;

(b) plantation forest

area increased by

(a) Revenues

increased by 30%

between 2006 and

v

budgets released:

80%

Revenues

collection rate:

80%

15%, through

increased private

investment.

2008, but then

declined by almost

50% to 2009.

(b) Plantation forest

area increased by

19% from 2007 to

2009, with private

investment

contributing a third

of the total.

Date achieved

Comments

(incl. %

achievement)

Partially achieved. Revenue collection performance increased, but overall revenue has

fallen recently due to shortage of commercial timber. Plantation expansion exceeded

target, but mostly through government action.

PDO Indicator 3: Reduce social conflict issues in mining communities and improve support to small scale

miners (SSM)

Value

(quantitative or

Qualitative)

No tool or tracking

of perception of

social conflicts in

mining communities

2 cooperatives in

existence (2006

baseline)

Reduced social

conflicts and other

negative impacts as a

result of

consultations among

government, mining

communities/civil

society, and mining

companies including

implementation of

guideline

(a) design of a survey

tool and carrying out

of at least one

survey,

(b) SSM established

through three co-

operatives in mining

areas with improved

performance

(a) Tool developed

and piloted in three

areas as part of

baseline study.

(b) SSM

cooperatives have

not yet been

established as

survey processes to

identify suitable

areas have taken

longer than

anticipated.

Date achieved

Comments

(incl. %

achievement)

Mostly achieved. 3a fully achieved. Over 60 candidate SSM sites. Survey activities have

been conducted at 7, but 2 of the first sites explored proved unsuitable and no site has

yet been formally designated or formal cooperatives established.

PDO Indicator 4: Improve mining sector revenue collection, management, and transparency

Value

(quantitative or

Qualitative)

Zero mine fiscal

models in use (2006

baseline)

No mining macro-

model

Data on local mining

incomes, royalties,

and local revenues

and their distribution

not published

No tracking of

perception of use of

local mineral

revenues

Increased mining

revenues to

government

(a) fiscal model

applied to three

mines;

(b) up to date data on

mining incomes,

royalties and local

revenues published at

district level;

(c) survey tool to

track perception of

use of mining

revenues at local

level designed, and

one survey

undertaken.

(a) Application of

fiscal models

completed. Macro

model created.

(b) Sub-national

transfers have been

included in

Extractive Industry

Transparency

Initiative (EITI)

reports.

(c) Social specialist

hired, but tool not

developed by close

of DPO-3.

Date achieved

Comments Mostly achieved. 4a & 4b were achieved, although traditional authorities are blocking

vi

(incl. %

achievement)

publication of details of royalty payments they receive. Revenue perception survey tool

was not a PAF target, and has not been prioritized.

PDO Indicator 5: Promote investment in climate change adaptation and mitigation

Value

(quantitative or

Qualitative)

No investments for

adaptation to climate

change in the 2008

budget

Climate change

adaptation and

mitigation measures

are adopted by all

relevant Ministries,

Departments and

Agencies (MDAs) at

different levels and

the National

Development and

Planning

Commission

(NDPC).

preparation of one

long-term investment

plan

Investment plan

was not prepared by

the end of DPO3,

due to the decision

to drop preparation

of a national

adaptation strategy

in favor of a

comprehensive

National Climate

Change

Framework.

Date achieved

Comments

(incl. %

achievement)

Partially achieved. A general National Climate Change Framework has been

developed, and investment planning is underway in specific sectors, but a

comprehensive investment plan had not yet been formulated.

PDO Indicator 6: Strengthen national environmental impact assessment system

Value

(quantitative or

Qualitative)

Strategic

Environmental

Assessment in need

of update vis-a vis

legislation and

development of

sector guidelines

needed

30% of EIA

applications

processed within the

prescribed time

frame and with the

requested

consultation and

disclosure

procedures

Enhanced EIA

service delivery,

including application

of 8 sectoral

guidelines and

enhanced

consultation and

disclosure

procedures, Polluter

Pays Principle

implemented

(a) updated

legislative instrument

on Strategic

Environmental

Assessment (SEA),

sector guidelines for

oil, mining, forestry,

energy, transport

sectors for

environmental

assessment;

(b) 60% of EIA

applications


prescribed time

frame.

(a) Preparation of a

law on SEA has

begun. Sectoral

EIA guidelines

have been

produced.

Environmental

guidelines for the

oil sector have been

issued.

(b) Performance

target met in

assessed sectors.

Date achieved

Comments

(incl. %

achievement)

Mostly achieved. Sector guidelines prepared and SEA institutionalized, although SEA

law is still being drafted. 6b was achieved based on an assessment of the last year of the

NREG Program using the new on-line EIA processing system.

(b) Intermediate Outcome Indicator(s)

Intermediate Outcome Indicators were not identified in the program documents.

G. Ratings of Program Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements

(US$mil.)

vii

1 - P102971 05/27/2009 Satisfactory Satisfactory 19.75

2 - P113172 11/11/2009 Satisfactory Satisfactory 10.77

3 - P118188

H. Restructuring

N/A.

1

1. Program Context, Development Objectives and Design:

1.1.Context at Appraisal

Macro-economic Context

1. The first development policy operation (DPO-1) was prepared in the context of a strong

macroeconomic performance with GDP growth at 6.3 percent in 2007, down slightly from 6.4 percent in

2006. Performance was driven by several sectors (mining, finance and insurance and real estate,

construction and in services), which greatly outweighed the output declines in other sectors (such as

manufacturing, electricity and water production). Stimulus was also provided by fiscal policy, with

government services rising by 6 percent, and yielding an additional 1 percent of real GDP growth.

2. Additionally, export revenues increased due to a continuous rise in prices for cocoa and gold by 60 and

125 percent respectively over the previous seven years. However, despite a good performance of the export

sector as well as positive net capital inflows, the surge in imports (attributed in particular to a 17 percent

increase in oil and non-oil imports) led to a weakening in the country‟s external position. The current

account deficit widened to 12 percent of GDP (including official transfers) in 2007, from 10 percent in

2006.

3. Since the second half of 2006, government expenditures have risen faster than revenue collections,

leading the overall fiscal deficit to reach 7.5 percent of GDP in 2006. The main driver of growth in

government spending has been the public sector wage bill and energy sector subsidies. Nevertheless,

government spending maintained its pro-poor orientation in 2007 at 9.4 percent, though slightly lower than

in 2006 (10.5 percent) but up from 8.5 percent in 2005.

4. Fiscal and balance of payments factors have influenced the interest and exchange rates. Between

September 2007 and mid March 2008, the exchange rate (Cedis to the US$) declined by 5.2 percent (against

an already declining US Dollar), prompting the Bank of Ghana to increase its prime rate twice over the

same period to 14.2 percent by mid March 2008. Meanwhile, the consumer price index rose from 10.9

percent in 2006 to 12.7 percent by end of 2007, driven by external supply-side shocks (e.g. higher crude oil

prices, higher imported food prices) and internal pressures (e.g. higher food prices following the drought

and flood in northern Ghana and adjustments in utility tariffs).

5. At the start of implementation of the DPO series, the Ghanaian economy continued its strong GDP

growth performance (7.3 percent in 2008), driven by a surge in export revenues and sustained public and

private domestic demand for goods and services. Estimates for 2009 and 2010 suggested a significant

slowing of GDP growth (down to an average of 4 percent), due to the global slowdown and decelerated

domestic demand, and through the combined impact of fiscal stabilization, tighter credit conditions, and

lower remittances and foreign direct investment. Continued fiscal expansion in 2008, combined with

exogenous shocks led to a fiscal deficit of 15.5 percent. In response, the Government adopted a multi-year

fiscal stabilization plan, supported by the IMF, with complementary support is provided by the Bank‟s

Economic Governance and Poverty Reduction Credit (EGPRC). Government has faced some fiscal and

balance of payments challenges during the course of the NREG Program, especially with the advent of the

crisis, but has responded through sound planning in coordination with key development partners.

Sector background

6. Ghana‟s growth has historically been fueled by natural resources. At preparation, the forestry, wildlife

and mining sectors accounted for 15 percent of Ghana‟s GDP, 25 percent of Government revenues, 60

2

percent of foreign exchange, and significant employment. Over 70 percent of the population was dependent

on natural resources for their basic food, water, and energy requirements. However, absence of effective

regulatory institutions, lack of effective inter-sectoral collaboration among the natural resources sectors and

weak mechanisms for citizen participation led to institutional inefficiencies and put both sustainability and

long-term economic growth at risk. Ghana‟s resources were being depleted at an alarming rate: (i) 50

percent of the original forest has been converted to agriculture, while timber and non-timber forest products,

and biodiversity were in serious decline; (ii) mining and forestry revenues were suspected not to be well

captured; and declining environmental quality has affected the quality of life and productivity of Ghana‟s

population, notably through air pollution and inadequate clean water supply and sanitation. According to

the findings of the Country Environmental Analysis (CEA)2, the high rate of natural resource degradation

represented an annual cost of about 10 percent of GDP, representing almost half of Ghana‟s US$ 1.5 billion

annual Official Development Assistance.3

7. In this context, the Government of Ghana (GoG) decided to launch a five-year Natural Resources and

Environmental Governance (NREG) 2008-2012 program to address governance issues related to the mining

and forestry sector and to improve environmental management with the overall objective of ensuring

economic growth, poverty alleviation, increasing revenues and improving environmental protection.

Rationale for Bank assistance & contribution to higher level objectives

8. The Bank‟s involvement in NREG built upon on support already provided for natural resources

management and the environment over the previous decade, centered around the Natural Resources

Management Project (NRMP) and two related GEF grants – the High Forest Biodiversity Conservation

Project and the Northern Savanna Biodiversity Conservation Project. NRMP was envisaged as a 10-year, 3-

phase APL, but was discontinued after the initial 2-year phase because the structure of the project was

considered to be too complex, and policy and governance gaps limited the effectiveness of project

investments4. A renewed policy dialogue, anchored in a series of analytical studies shared among key

development partners, was considered necessary to identify and lay the groundwork to overcome the

systemic weaknesses (see summary of background analysis in section 2.2). Involvement of the Bank was

seen as critical in order to convene support of the other DPs, not only through its financial contribution, but

also due to the Bank‟s experience in policy lending for the natural resources and environment (NRE),

including DPOs in Cameroon and Gabon, as well as a multi-sector NRE DPOs in Brazil, Colombia,

Mexico, and Peru.

9. The program was consistent with Government‟s national priorities as described in the 2006-2009 2nd

Growth and Poverty Reduction Strategy (GPRS II), and was intended to complement the EGPRC DPO

series, allowing greater focus on natural resource and environmental policy issues. The GPRS II laid the

foundation for the NREG program with the Government‟s commitment to reducing environmental

degradation and identified priorities for environmental management through an SEA for each of the GPRS

II key pillars (private sector competitiveness, human resource development, and good governance and civil

2 World Bank, AFD, EKN & DFID (2007)

3 Out of the total US$730 million costs of lost productivity due to damage to five classes of natural assets (agriculture

land, forest and savanna woodlands, coastal fisheries and wetlands, wildlife, and Lake Volta) and of damages to

human health (incurred from urban air pollution, indoor air pollution and inadequate potable water supply, sanitation

and hygiene), the two highest costs are from timber depletion (US$270 million) and inadequate potable water supply,

sanitation and hygiene (US$180 million). 4 NRMP ICR (2003): “There were several serious flaws in project design, however that were largely responsible for

the problems encountered during Project implementation. . . Project design failed to identify as a risk, that it would be

very difficult to complete the myriad of policy reforms in a complex sector such as Forestry in 2 years. Thus, the

project was overly ambitious given the number of activities in each sub-component, the number of co-financiers and

the weak human capacity”

3

responsibility). NREG was also aligned with the 2008-2011 CAS which has a substantial section on

sustainable management of natural resources as well as a number of specific priorities aligned with the

NREG Program, including: (a) transparent fiscal and revenue frameworks in natural resources management;

(b) the analysis and governance of extractive industries through a value chain approach; (c) engagement and

dialogue with civil society organizations and local communities; (d) increased coordination between natural

resource/environment ministries and agencies; (e) increased attention to climate change mitigation and

adaptation; and (f) sound environmental management of the oil and gas sectors.

1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved)

10. The objectives of the three operations in the DPO series were to: (a) ensure predictable and sustainable

financing for the forest and wildlife sectors and effective forest law enforcement; (b) improve mining sector

revenue collection, management, and transparency; (c) address social issues in forest and mining

communities; and (d) mainstream environment into economic growth through Strategic Environmental

Assessment (SEA), Environmental Impact Assessment (EIA), and development of a climate change

strategy.

11. The PDO indicators are based on the six key outcome indicators identified in the DPO-2 & -3 program

documents, which are linked to the PDO (see annex 6). They are drawn from the 16 3-year (2008-2010)

expected outcomes in the revised NREG Performance Assessment Framework (PAF). The DPO-1 program

document did not identify key outcome indicators, but did identify 3-year outcomes for the 8 (of an original

24) program / policy objectives corresponding to the DPO triggers. The outcome indicators and baselines in

the DPO-1 document were generally qualitative, and substantially revised during the preparation of DPO-2.

1.3. Revised PDO (as approved by original approving authority) and Key Indicators, and

reasons/justification

12. The same statement of objectives was included in all three program documents, although it was first

explicitly labeled as the Program Development Objective and linked to a set of Key Outcome Indicators in

the DPO-2 program document.

1.4 Original Policy Areas Supported by the Program (as approved):

13. The NREG DPOs supported reforms in three natural resource sectors – forestry and wildlife,

mining, and environmental protection – under the institutional mandate of three semi-autonomous

agencies, the Forestry Commission (FC), the Minerals Commission (MC), and the Environmental

Protection Agency (EPA), respectively. The selection of policy areas was based on the findings of a number

of analytical studies carried out prior to the NREG preparation5 as well as policy interventions and reforms

implemented by the Government under the GPRS I.

14. The forestry and wildlife sector was identified as an important pillar of economic growth. The formal

sector employed about 120,000 Ghanaians, and is dominated by sawmills that focus on international

markets. Processed wood products accounted for only 11 percent of exports, and Government did not

capture high levels of timber values. The residual forest rent not collected by government was estimated to

be typically US$10 to US$45 million per year. Of the total industry turnover of US$500 million in 2004,

GoG captured only US$22 million. The potential of the timber industry had not been realized as market

practices were inefficient in their utilization of wood extracted, employed outdated technology and

considerably exceeded the annual allowable cut required to sustain the productive base of the industry.

5 See section 2.2 for further details.

4

Domestic demand for timber was estimated to be roughly equal to that of the export market yet there was

insufficient supply from legal sources to meet this demand. The illegal chainsaw industry provided US$ 1.3

million in income for an estimated 50,000 people in 2003, yet was un-regulated, unsustainably managed,

and wasteful due to processing of logs by chainsaw as opposed to sawmills.

15. Data across 46 forest reserves, comparing inventories in the 1950‟s, 1970‟s and 1990s showed that

forest stocks were being degraded, with a loss of 0.13m2/ha/yr in average basal area of stems. Degradation

of forest reserves accelerated dramatically in the last decade from over-logging, encroachment, illegal

logging, and bushfires. Off-reserve, losses arose from the combined expansion of farming (especially

cocoa) and demand for timber for domestic (informal) markets. The CEA estimated that timber depletion

results in an annual cost of about 3.5 percent of Ghana‟s GDP. A key challenge for the FC was insufficient

budget that hindered performance of its management, regulatory and enforcement mandates. Furthermore,

opportunities existed for attracting investment in ecotourism and plantation development, and for the

promotion of value-added processing, but had not received sufficient attention.

16. In order to ensure good governance in the forestry sector, the Government prioritized its actions under

four strategic policy areas: (i) strengthening institutional capacity of the sector to ensure effective policy

implementation and law enforcement and securing predictable and sustainable financing of the forestry

sector, (ii) promoting collaborative resource management, promoting forest and wildlife investments, (iii)

increasing supply of legal timber on the domestic market and (iv) securing the natural ecosystem and

strengthening monitoring and evaluation and information communication technology.

17. At preparation, revenues from Ghana‟s mining sector represented about 5 percent of GDP and 12

percent of Government‟s revenues and the mining industry accounted for 37 percent of Ghana‟s total

exports. Ghana has one of the worlds‟ largest gold ore reserves, ranking around tenth worldwide in gold

production and second in Africa. Ghana is also a significant producer of manganese ore, and diamonds.

Metal prices have risen greatly in recent years, and gold prices more than doubled. Nonetheless, with the

use of older calculation procedures along a sliding scale and lack of capacity for collection, it was widely

suspected that GoG was not benefitting from mining revenues as fully as it should have been, given the

increase in resource prices. Ghana‟s EITI (Extractive Industries Transparency Initiative) reports also

illustrated inadequate scrutiny of mining sector revenues, estimating that this could cost Ghana a significant

amount in terms of foregone revenue.

18. At the time of the program, seven large and one medium-scale gold mining company formally

employed about 15,000 people, with an additional 5,000 working on other minerals. A further 500,000

people are estimated to work in artisanal and small-scale mining (ASM), although the actual figure is not

reliably known. Mining in Ghana has been characterized by divergent interests, cultures and institutions,

lack of clarity over legal compensation and the distribution of benefits, conflict and a lack of trust between

communities, industry and Government, as well as tensions between local communities and migrants. With

increasing gold price and government strategy to attract more foreign investment, disputes have been on the

rise. Moreover, large-scale mining operations often cause involuntary resettlement, resulting in loss of land,

livelihoods and resources for local communities. Another area of concern has been the environmental

damage resulting from mining activities, especially unregulated ASM. Conscious of these challenges, GoG

and its development partners (DPs) identified establishment of a modern policy and regulatory framework,

the improvement of mining sector revenue collection, management, and transparency and the tackling of

social issues in mining communities as critical areas for reform under NREG.

19. With respect to environmental protection, health costs related to water supply, sanitation and indoor

air pollution were identified as one of the key sources of the high cost of environmental degradation in

Ghana. EIA systems are relatively well-established in Ghana, and the country has been a regional pioneer in

the application of Strategic Environmental Assessment (SEA). However, several challenges remained for

5

effective regulatory mechanisms, especially enforcement of compliance. There was a need to improve

coverage and effectiveness of the current EIA systems, including decentralizing the EIA review process to

avoid bottlenecks in Accra, and developing sectoral guidelines. Ghana also needed to consolidate its

leadership in SEA through mainstreaming application to sectoral policies and district plans. Monitoring and

enforcement of the recommendations of various environmental assessment tools has also been weak partly

due to resource constraints for the EPA. To enhance environmental governance, there was also a need to

establish mechanism and a platform for more comprehensive dialogue and partnership between government

agencies and sector stakeholders. In the context of an assessment of Ghana‟s vulnerability to the impacts of

climate change under the Initial National Communication to the UNFCCC, there was also increasing

appreciation of the potential vulnerability of Ghana‟s coastal zone, agriculture (including fisheries, cocoa,

cereals, and root crops production), and water resource sectors, as well as human health, poverty, and

women‟s livelihoods, to climate change and variability.

20. To improve the effectiveness of environmental management, NREG identified as key areas of reform:

(i) carrying out SEAs to inform decision-making and mainstream environment in sector planning; (ii)

improving cross-sectoral environmental management, including development and implementation of an

inter-sectoral climate change strategy; (iii) strengthening of the EIA process and compliance

bydecentralizing environment management, reinforcing monitoring and effective dissemination; and (iv)

regularizing funding for EPA and ensuring better civil society participation.

21. Two other natural resource sectors were considered for inclusion in NREG, but not carried

forward as core pillars of the program. Discussions were held with the Fisheries Department, but given

its institutional home within the Ministry of Food and Agriculture, it was considered more appropriate to

support fisheries policy reform through the Bank‟s Agricultural Development DPO series. Anticipation of

rapid development of the oil and gas sector in Ghana was growing at around the time that the NREG

Program was being developed, and consideration was given to how this sector might be supported in

parallel to mining and forestry. NREG partners were concerned, however, that the expected rapid growth

of the oil and gas sector might overwhelm the already broad NREG agenda, and, therefore, it was decided

not to address it directly under the present program.

1.5 Revised Policy Areas (if applicable):

22. No changes were made to the general policy areas during the course of the three DPOs, although

the Performance Assessment Framework (PAF) was streamlined during the preparation of DPO-2 with a reduction in the policy objectives (from 24 to 16) and targets (from more than 60 to around 40),

together with considerable efforts to tighten the indicators to make them more precise and measurable.

Support for sustainable management of the oil sector through a SEA was also included. In the context of

the third DPO, the prior action on submission of a climate change adaptation strategy to cabinet was

dropped as it was superseded by the Government‟s new policy to develop a comprehensive (i.e. adaptation

and mitigation) National Climate Change Framework. In general terms, however, attention to climate

change issues has intensified during and with support of NREG, through publication of the Economics of

Adaptation to Climate Change, and emergence of new opportunities for forest carbon financing.

1.6 Other significant changes:

23. Changes since preparation of DPO-1:

IDA financing. During the identification and preparation of the NREG program the indicative IDA

allocation for the Bank‟s support to the program, rose from US$3 million for the first year, to

US$10 million, and eventually to US$20 million, when the potential for inclusion of considerable

activities in the oil and gas sector appeared high. Following resistance from other development

6

partners (DPs) to inclusion of major oil and gas activities, however, it was decided that the IDA

allocation for the subsequent two years would remain at $10m per year. Despite these amounts

being discussed and agreed with the Ministry of Finance & Economic Planning (MoFEP), it created

an impression amongst the NREG ministries, departments and agencies (MDAs) that funding had

been reduced relative to expectations. Whilst this was unlikely to have had much material effect on

the implementation of the NREG program, given that absorption by the three core agencies has

lagged behind the available funding, the perceived cut did create some tension, adding to existing

sensitivities in the forestry sector over the Bank‟s earlier decision to discontinue support to NRMP.

Institutional setting. When NREG was first under preparation, EPA was under the Ministry of

Local Government, Rural Development and Environment (MLGRDE). Prior to Appraisal of DPO-

1, however, it became effectively independent, although formally still under the oversight of the

Ministry of Local Government and Rural Development. Then in 2009, it was included within the

reformed Ministry of Environment Science and Technology (MEST). As a result, the routing of

funds to the EPA for NREG activities has changed a number of times, as has the autonomy with

which it could act. This has at times led to some delays in the transfer of funds to the EPA as well

as in the implementation of its activities.

Change of government. National elections were held in autumn 2008, shortly after DPO-1 became

effective, and a new government was installed in early 2009. As with the institutional changes

above, this did not lead to any appreciable change in the policy content of the program, but it did

delay certain activities, particularly policy dialogue and coordination with senior levels of

government.

2. Key Factors Affecting Implementation and Outcomes

2.1 Program Performance:

24. The Performance Assessment Framework (PAF) for the NREG Program details annual targets

grouped under policy objectives. Six triggers were drawn from the targets for each operation6. Outcome

indicators were also specified for each policy objective at 5 years (end of the GoG NREG Program) and,

during development of DPO-2, also at 3 years (end of the Bank‟s DPO series). Annex 7 summarizes the

PAF for the 3 years of the Bank DPO series, based on the streamlined version created for DPO-2, but

including relevant parts of the DPO-1 matrix.

25. All triggers for all three DPOs were met, with the exception of the dropped DPO-3 trigger on

submission of a climate change adaptation strategy which was waived (see section 1.5 above).

However, there is a performance gap between the achievement of the triggers and achievement

against the PDO indicators, largely due to a disconnect between the triggers (which received

particular attention during the Program) and the PDO indicators (which did not). The PDO indicators

were not referenced in the legal documents, and after their initial formulation were not given much

emphasis, nor were they revised during preparation of DPO-3, despite changes to related PAF targets. The

following tables summarize achievements within each sector in relation to both the triggers and

corresponding PDO indicators, to give a clearer picture of achievement within the focal areas of the

Program than is evident from review of the PDO indicators alone. The disconnect with the triggers is

evident in the occurrence of PDO indicator targets which:

6 Annex 6 lists all the triggers according to the exact language in the legal agreements. Triggers were used as a basis

for World Bank approval of each operation. Other DPs disbursed against a more holistic assessment of progress

against PAF targets.

7

are not directly related to any PAF targets – e.g. survey to track perception of use of mining

revenues at local levels, and updated legislative instrument on SEA.

are directly related to PAF targets, but not to the triggers – e.g. increase in the legal wood supply to

domestic markets, increase in plantation forest area, and establishment of SSM cooperatives.

were not updated after DPO-2, and are therefore out of sync with revised DPO-3 action targets,

e.g.:

- increase in legal timber supply, although the end-of-DPO-3 target was only for a baseline to be

evaluated.

- FLEGT license to be issued, although the DPO-3 target was only for completion of the wood

tracking pilot.

- design and implementation of a conflict tracking tool, although the DPO-3 target was only to

initiate development of an annual tracking mechanism.

- establishment of 3 SSM cooperatives, although the DPO-3 target was only to conduct

exploration in new areas after the initial areas identified appeared unsuitable.

- long-term climate investment plan, although the DPO-3 target was only for a consolidated

National Framework for Climate Change, which did not include the identification of specific

investments.

Forestry: Key Outcome

Indicator

Triggers Outcome indicator targets7

DPO-1 (2008) DPO-2 (2009) DPO-3 (2010)

Strengthen

institutions and

governance

Define elements

of VPA

[Achieved]

VPA signed

[Achieved]

Pilot wood

tracking

commenced

with at least 3

companies

[Achieved]

(a) 10% increase in legal wood supply to

domestic markets;

(b) first FLEGT license issued.

[Partially achieved]

Implementation of FLEGT systems in the formal forestry sector has progressed well through a

consultative process. The Voluntary Partnership Agreement (VPA) was signed with the EU,

outlining the safeguards that Ghana would follow to retain access to EU timber markets, a tracking

system to verify the legality of timber has been piloted with 4 companies, and a Timber Verification

Department established in FC to issue FLEGT licenses. Implementation of the tracking system has

been complex and slower than anticipated, and therefore issuance of the first license is somewhat

delayed. In the meantime, faced with a largely uncontrolled informal industry, the stocks of quality

timber available for the formal, export sector appear to be rapidly dwindling.

Ghanaian sawmills are required to provide 20% of output to the domestic market. In reality the

figure is probably closer to around 5%, as domestic buyers are unwilling to pay export prices. A

proposal to increase domestic supply by allowing chainsaw operators to retrieve stumps and residues

from licensed timber coupes is delayed by questions over legal rights. Other proposals, to (i) better

enforce the requirement on sawmills to supply the domestic market or (ii) regularize informal

chainsaw operators more generally, have yet to be developed into detailed policies.

Sustainably

finance and

promote

investment in

forestry sector

Financial

Framework

submitted to

cabinet

[Achieved]

Implement

approved

Financial

Framework

[Achieved]

Procedures to

improve

transparency of

forestry revenue

disbursement

[Achieved]

(a) Timber Revenues increased by 15%;

(b) plantation forest area increased by

15%, through increased private investment.


Under the Financial Framework, measures were implemented to improve the collection rates of

stumpage fees and debts, and revenue collection performance has risen to 95%. A number of

legislative options for increasing revenues were proposed by FC, but have met with obstacles:

Park visitor fees have been revised upwards, but this is a very small component of overall forest

7 Details of assessment of achievement of PDO indicators are in Section F above.

8

revenues.

Timber export levy was decreased from 3% to 1.5% following complaints by the timber

companies that this is no longer ear-marked for re-investment in the industry.

Conversion of timber concessions to Timber Utilization Contracts is subject to legal review.

Linking stumpage fees to exchange rates is under consideration, but resisted by the industry.

Proposals to establish a payment for environmental services (PES) system to fund forest areas are

at an exploratory stage.

Timber revenues did initially increase, but then declined in 2009 and 2010. Changes are likely due

mainly to cutting cycles and the general decline in the availability of valuable timber – the available

data do not reveal the impact of improved collection performance.

On revenue transparency, district revenues have been published, although dissemination at the local

level remains rudimentary. Ghana plans to make forestry EITI-compliant, and combining with

mining and oil sectors offers potentials for strengthening dissemination of sub-national revenue that

Ghana is attempting to pioneer through its EITI program.

NREG targets on the signing of leases and benefit-sharing agreements contributed to expansion of

plantations beyond the 15% target, but FC struggled to attract as much private sector investment as

desired, and most of the increase was through direct government action.

Mining: Key Outcome

Indicator

Triggers

Outcome indicator targets DPO-1 (2008) DPO-2 (2009) DPO-3 (2010)

Reduce social

conflict issues

in mining

communities

and improve

support to

small scale

miners (SSM)

Proposal on

social

responsibility

guidelines

[Achieved]

Consultations

on social

responsibility

guidelines

[Achieved]

Social

responsibility

guidelines

issued

[Achieved]

(a) design of a conflict survey tool and

carrying out of at least one survey,

(b) SSM established through three co-

operatives in mining areas with improved

performance

[Mostly achieved]

Social responsibility guidelines (non-binding) for mining companies in mining communities have

been developed. These consist of principles and a set of operating guidelines designed to serve

companies, regulators, communities and civil society as benchmarks for development and

implementation of social responsibility activities. These have been assessed to be of high quality and

focus on corporate governance and ethics, human rights, employment and labor standards, health

and safety, environmental stewardship, supply-chain stewardship, community development,

stakeholder engagement, and compliance and reporting. M&E systems will need to be strengthened

going forward to assess the implementation and impact of the guidelines and other conflict-

mitigating measures. A conflict monitoring instrument has been developed, and used for a baseline

study, but needs to be developed into a regular conflict monitoring process, however.

Over 60 candidate SSM sites have been identified, and survey activities conducted at 7 of them, with

a further 8 planned for 2012. However, the process has taken longer than anticipated as two of the

first sites proved unsuitable (gold deposits too deep), and no site has yet been formally designated.

In the meantime, the MC have carried out capacity-building and monitoring activities with small-

scale miners, but formal cooperatives have yet to be established.

Improve

mining sector

revenue

collection,

management,

and

transparency

Draft mining

policy and

regulations

[Achieved]

Revenue Task

Force, action

plan, and fiscal

model piloted

[Achieved]

Pilot audit of

one mine and

fiscal model

applied to three

mines

[Achieved]

(a) fiscal model applied to three mines;

(b) up to date data on mining incomes,

royalties and local revenues and their

distribution published at the district level;

(c) at least one survey to track perception

of use of mining revenues at district and

municipal level.

[Mostly achieved]

The development of the Mining Policy has helped re-orient the minerals sector towards improving

durable economic outcomes for Ghana (including revenue generation, diversification, generating

employment, support industries and infrastructure) with due regard to social and environmental

issues.

The Multi-Agency Minerals Revenue Task Force is considered to have worked effectively. The

9

macroeconomic models, financial models and audits used by the Task Force (i) demonstrated that

the fiscal regime in Ghana was internationally competitive, rather than excessively favorable to

investors as had been suggested; and (ii) revealed some specific gaps in revenue collection and led

to government proposals for a streamlined and more progressive regime. A flat 5% royalty has

replaced the former sliding rate based on mine profits, for easier administration. Other proposals for

the 2012 would increase income and windfall taxes, and significantly increase revenues.

District transfers and revenue use guidelines have been published, but local dissemination is weak.

Environmental protection: Key Outcome

Indicator

Triggers

Outcome indicator targets DPO-1 (2008) DPO-2 (2009) DPO-3 (2010)

Promote

investment in

climate change

adaptation and

mitigation

-

Draft National

Climate Change

Adaptation

Strategy

[Achieved]

Adaptation

Strategy

submitted to

Cabinet

[Dropped]

Preparation of long-term investment plan


The Adaptation Strategy developed in 2008-09 reviews areas of climate vulnerability in Ghana and

identifies priority adaptation programs. This was subsequently complemented by work on the social

dimensions and Economics of Adaptation to Climate Change in Ghana, which particularly

highlighted the vulnerabilities and costs in the agricultural sector and for the rural poor. Submission

of the Adaptation Strategy to cabinet was dropped in favor of development of a comprehensive

National Climate Change Framework, combining the work on adaptation needs with the draft

NAMAs. An overview document entitled Ghana Goes for Green Growth was prepared. It remains

to be converted into a coherent program including identification of specific investments, but efforts

are ongoing, and climate planning and action is relatively advanced within key sectors – forestry,

agriculture, coastal management, health, transport and energy. EPA is trying to mainstream climate

change in national planning through NDPC (alongside new SEA requirements).

Strengthen

national

environmental

impact

assessment

system

Energy and

transport SEAs

[Achieved]

Appraisal of

EIA service

delivery

processes and

sectoral

guidelines

[Achieved]

Tourism SEA

and review of

national SEA

experience

[Achieved]

Environmental

management

guidelines and

draft SEA for

oil sector

[Achieved]

(a) updated legislative instrument on

Strategic Environmental Assessment;

(b) 60% of EIA applications processed

within the prescribed time frame.

[Mostly achieved]

Under the NREG program, a number of additional sector SEAs have been conducted, and Ghana‟s

national experience in promoting the use of SEAs reviewed. Ghana‟s SEA model emphasizes use of

simple (i.e. largely no-quantitative) tools through participatory processes for engagement around

environmental issues, building understanding and capacity. A weakness is that SEAs have typically

been applied ex-post, and their policy impact has therefore been limited. Following the review, EPA

and NDPC have worked to introduce the use of basic SEA tools into routine local government

planning. New legislation to mandate the use of SEA in targeted planning processes is at an early

stage of development. The draft SEA of the oil sector reviewed environmental assets and the legal

framework, established 3 development scenarios, and identified accident prevention and response as

a key priority. The SEA process will be completed with support of the Oil and Gas TA project, and a

team including GNPC, NDPC and EPA has been established to lead this process.

EPA has established an on-line EIA system that has improved performance and monitoring.

26. Performance against the wider range of annual PAF targets (beyond the World Bank

disbursement triggers) has been considerable, given the large number of actions involved. Around half

have been fully achieved and most of the rest were partially achieved (see table below). As reported in the

DPO-2 Program Document, the results of the 2009 PAF assessment were markedly better, but the

10

Independent Advisory and Monitoring Team‟s (IMAT) assessment8 for the same year pointed out a number

of weaknesses and deviations from the original means of verification (MoVs)9, suggesting that the later

joint assessment benefited from more flexibility in the interpretation of MoVs as well as the additional time

to complete delivery. Implementation against NREG work plans prepared by the MDAs also encountered

delays, partly due to delays in the transfer of funds10

, but mainly to limits on absorptive capacity imposed

by staffing constraints and procurement processes. Budget performance of NREG MDAs has been steadily

improving during the course of the program, but up to September 2010, MoFEP had only transferred a total

amount of GhC 68.7 million, out of an available GhC 97 million11

. These constraints on implementation

suggest that expectations on completion of all annual PAF targets to schedule were overly ambitious.

Year

Achievement of PAF targets

Source Fully

achieved

Partially

achieved

Not

achieved

Unclear /

no longer

valid12

2008 36 14 2 19 MTR interpretation of descriptive statements in DPO-2 PD

2009

28 5 2 Ratings stated in DPO-3 document

4 12 4 1 ICR interpretation of descriptive statements in IMAT report

(NB: Forestry not included)

2010 21 14 5 Ratings stated in DPs‟ letter (dated 27 June 2010)

summarizing Joint Assessment of 2010 PAF

2.2 Major Factors Affecting Implementation:

Government's commitment

27. Ownership of the NREG Program and associated matrix by the three natural resource agencies,

and engagement by Ministry of Finance & Economic Planning (MoFEP) have been strong, and is

cited as a step-change from the earlier experience in the NRM sectors under a traditional project

modality. MDAs uniformly feel empowered by and enthusiastic about the NREG process than previous

investment projects (see annex 3). The Technical Coordination Committee (TCC), led by MoFEP and

including representatives from participating MDAs and the National Development Planning Commission

(NDPC), has generally provided an effective platform for inter-agency dialogue and coordination, including

annual performance reviews and updates to the PAF. Leadership by MoFEP has been key13

, and the recent

appointment of a Natural Resources Director (a former Technical Director for forestry in the Ministry of

Land & Natural Resources) is evidence of the strong engagement by the Ministry.

8 For mining and environment only; forestry was not included due to an road accident that befell the IMAT‟s forestry

specialist. 9 E.g. the establishment of an inter-ministerial environment and natural resources forum was supposed to be evidenced

by the minutes of the first meeting, but a draft TOR for establishment of the Environment and Natural Resources

Advisory Committee (ENRAC) was instead provided as ENRAC didn‟t meet until later 2010. 10

E.g. out of the GhC 8.4 million transferred to the EPA by Feb 2010, the agency received the bulk (60 percent) only

within preceding three months. (IMAT 2010) 11

Ecorys (2010) NREG-PFM support mission Ghana, September 2010 12

I.e. the description of the achievement against the target was unclear, or the target had been dropped by the time of

the assessment. 13

“Coordination by MoFEP [through the TCC] has been very successful in bringing together the sector ministries and

agencies in a constructive manner, leading to efficiency gains within the sector through cross-agency learning.” (MTR,

2010)

11

28. Nevertheless, the Program would have benefited from supplementary capacity to meet

coordination, M&E and reporting requirements, and from more engagement from senior decision-

makers around contentious issues, such as revisions to the forestry fiscal regime. NREG coordinators

in all the key MDAs, including the MoFEP NREG Program Coordinator14

, have numerous other duties,

which significantly constrained program management capacity (for e.g., close oversight of PHRD and other

consultancies, development of sector strategies, monitoring and reporting). Engagement by senior policy-

makers also lagged behind engagement at the technical level, in part due to disruptions from the change of

government during the first year of the Program and the protracted institutional transition of the EPA to the

newly re-formed Ministry of Environment, Science & Technology (MEST). The Policy Committee

envisaged in the original NREG design was replaced by an Environment and Natural Resources Advisory

Council (ENRAC) with a long-term mandate, but it was not convened until late 2010, with the first

substantive meeting on policy issues occurring in February 2011. Select members of parliament have

attended some NREG meetings, but more could have been done to educate legislators on the Program and

issues.

Stakeholder involvement

29. NREG involved strong commitment to stakeholder inclusion, notably through the organization of

annual Sector Summits, but the approach to civil society inclusion could be further elaborated and

institutionalized. Many government activities related to civil society engagement and transparency have

been implemented, including a pioneering EITI program, a public environmental rating and disclosure

process, and consultation platforms at national and local level (see annex 9 for more details), but the overall

approach could have been more systematic. Although the span of activities has been wider, much of the

discussion on civil society within NREG has focused on how to coordinate input from civil society

organizations (CSOs) to workshops and dialogue. A comprehensive strategy would have given more

recognition to other aspects, such as community co-management, adoption of transparency standards,

participatory monitoring, etc. Engagement could also be strengthened at the local level. For instance, data

on district-level revenues from mining and forestry have been published but effective dissemination to

impacted communities is limited, and District and Regional Forest Forums need more support. Civil society

is increasingly vibrant and recognized as a potentially important development resource in Ghana, but

attitudes within Government still vary between individuals and agencies who appreciate the value-added of

civil society engagement15

, and others which view it primarily as an issue of compliance with minimum

consultation requirements.

30. Direct support to CSOs on environment and natural resource issues was successfully piloted. In

addition to government activities, the Embassy of the Kingdom of the Netherlands (EKN) established direct

capacity-building support to CSOs, including parallel civil society reviews of the NREG Program, through

the Kasa (“speak out” in Twi) mechanism16

. The multi-donor civil society facility originally envisaged in

the DPO-1 Program Document did not materialize, but Kasa commenced in the 2nd

year of NREG and was

assessed to have „done remarkably well for a pilot with effectively 18 months of implementation‟, although

with some more attention needed to strategic direction and gender focus17

. It promoted increased civil

society engagement in NRE issues, including through establishment of CSO platforms and working

14

Notably, he is also head of the EITI Secretariat. 15

E.g., the EPA perceives the strength of its mandate to be linked to its ability to mobilize public understanding and

concern around environmental issues, and is therefore enthusiastic on civil society engagement. 16

Kasa‟s activities focused on (i) supporting capacity enhancement activities of civil society groups, (ii) providing

grants to civil society, research and media organizations to conduct advocacy, (iii) facilitating platforms for

information sharing with Government and DPs and (iv) documenting lessons learned to inform a longer-term civil

society advocacy mechanism for equitable natural resource and environmental governance in Ghana. 17

Nordic Consulting Group (2011) Final evaluation of Kasa.

12

relationships with the media. CARE and DANIDA have stepped in to continue support to Kasa beyond the

initial pilot phase, but due to a change in EKN funding priorities, longer term support remains in doubt.

31. Many Ghanaian NGOs have a healthy skepticism towards government. Building the robust

relationships and understanding that will facilitate constructive dialogue is a gradual process. Overall,

NREG has seen markedly increased dialogue between government NRM agencies and civil society, but not

all CSOs are familiar with NREG, still fewer have been actively involved in government-led meetings, and

trust remains weak in some quarters. Consultations have led to increased expectations and to some

frustrations from CSOs that their feedback was not subsequently incorporated into policy18

. According to

the World Bank Civil Society Monitoring program that reviewed NREG in 201019

, CSOs suggested a

number of platforms for further engagement with civil society, including Publish What You Pay, a CSOs-

led transparency and accountability network, the new Ghana Oil Platform bringing together CSOs to

interface with government on petroleum matters, and the National Coalition on Mining (NCOM). NREG

has also illuminated complexities of engaging with traditional authorities. They are important stakeholders

and community representatives in their own right, and are routinely included in consultation structures, but

they have also resisted attempts to increase transparency of the use of natural resource revenues that flow to

them. The MTR also pointed out that structured involvement of the private sector in policy discussions has

been limited.

Soundness of the background analysis

32. NREG design was founded on a considerable analytical base, which identified areas of concern,

but left room for more precise policy analysis as part of the program. In particular, the Country

Environmental Analysis (CEA; World Bank, DFID, RNE, AFD 2007) evaluated the economic costs of

environmental degradation in Ghana, building on the Ghana Natural Resources Management and Growth

Sustainability Economic and Sector Work (World Bank, DFID, 2006), and the Ghana Environment Sector

Study (GESS, EKN 2006), which reviewed institutional capacity for environmental management20

. The

CEA identified environmental governance as key for sustainable management of the country‟s natural

resources and this became a catalyst for the creation of the NREG budget support program. It also laid out a

broad agenda of reform, that was highly influential in the development of the PAF, e.g. making

recommendations to review fiscal regimes in forestry and mining, pay more attention to local consultation

and social safeguards in forestry and mining, introduce more transparency and competition in bidding for

timber concessions, introduce legal timber verification systems, encourage private sector involvement in

forest plantation, promote CSR by mining companies, establish programs for management of ASM, and

increase capacity for environmental management within the mining sector.

33. During NREG preparation, institutional and contextual analyses were undertaken through a

recipient-executed PHRD grant, including a Stakeholder and Risk Analysis, a Public Revenue Analysis, a

review of budget, expenditure & financial management in the NRE sectors, and a study of options to

empower civil society. The PHRD studies were useful, but could have gone into more depth and detail.

Delivery was delayed, with the result that outputs were not timely for program preparation and over 40

percent of the funds21

were returned, as the grant had to be closed once NREG became Effective.

18

Partly this is a result of naivety amongst young CSOs, who sometimes assume that having a voice should

automatically equate to policy influence, rather than appreciating that their influence ultimately relies on the quality of

what they bring to the debate in terms of novel analysis or effective representation of broader constituencies. 19

Ghana Anti-Corruption Coalition (2010) Pilot Review of Six World Bank Assisted Projects in Ghana. 20

The choice of instrument and financial aspects were also informed by the “Budget Support, Aid instrument and

Environment Ghana Case Study” (ODI, 2007), the annual national External Reviews of Public Financial Management

and the draft (2009) Public Expenditure Financial Accountability report.

21 Roughly US$245,000 of US$600,000.

13

34. The Program design also drew on lessons from previous Bank interventions in the NRE sectors in

Ghana, the ongoing Multi-Donor Budget Support program, a Bank environment DPO in Mexico and

an environment sector budget support program in Senegal supported by EKN. Similar Bank

environmental DPOs in Gabon and Cameroon were not cited amongst the lessons learnt, presumably

because they were considered too young during NREG preparation. Lessons focused on the need for

ownership, establishing an effective monitoring and evaluation system with sound baseline data and the

importance of public participation.

Choice of instrument

35. At the time of preparation, there was general consensus amongst DPs and GoG to make increased

use of budget support. Following earlier donor-supported interventions for the environment and in the

natural resources (particularly forestry) sectors, there was a desire to move away from isolated investments

to a sector-based approach that could tackle systemic governance issues and elevate the level of the

dialogue. A conventional, sector-wide approach was discussed, but around the time of preparation, sector

budget support (SBS) was becoming increasingly popular with a number of donors, and was seen by both

GoG and DPs as a more mature approach that would provide for enhanced ownership against a relatively

strong record of governance and development performance in Ghana. Development policy lending provided

an instrument by which the Bank could contribute to the NREG Program. In line with the donor

harmonization agenda22

and Ghana‟s good track record of implementing the EGPRC as part of a Multi-

Donor Budget Support program, close to 59 percent of lending under the current CAS is currently via

DPOs. Flexible sector-based financing is considered to have been instrumental in strengthening sector

ownership and engaging MoFEP and NDPC in the substance of the Program, ultimately leading to much

stronger support for reform.

36. Nevertheless, the transition from traditional investment lending, and the combination of SBS

(emphasizing predictable support to implementation of broad programs of activities through

strengthened sector systems) and development policy lending (focused specifically on policy reform)

within a single instrument, engendered a steep learning process and a degree of compromise. The

NREG PAF included a range of activities, which did not always have a very strong policy focus, and many

staff working on NREG have a tendency to focus on technical activities23

. At a practical level, many

activities could have been achieved through a technical assistance (TA) investment operation, such as the

development of social responsibility guidelines and monitoring in the mining sector, the preparation of

climate change strategies, or the strengthening of environmental assessment systems. Some activities, such

as expansion of forest plantations, were GoG sector priorities, but were not fully reflected in NREG as they

were more investment than policy focused. The PAF contained targets for facilitation of private sector

investments in forest plantations, but two thirds of the recent growth in plantations has still come from

direct government investment. The transition to programmatic support also requires effective sector

systems, which were not well developed at the start of NREG. Progress has been made on sector systems

through the Program, but the work is ongoing. This is discussed in more detail in section 3.4b.

37. The Bank was constrained in its choices during preparation by the availability of instruments and

an initially modest financial contribution. The Bank does not have an instrument specifically designed to

work in an SBS modality (although the Program-for-Results instrument is currently in development). A

DPO could have been designed to combine with or to complement the sector support instrument being

supported by other DPs, but the initial commitment from the Bank was to provide only US$3 million

22

The 2007 Ghana Joint Assistance Strategy, signed by 16 partners, included a specific commitment by DPs to

increase the amount of aid being channeled through budget support. 23

Evidenced by the assertion during PAF formulation that targets on policy adoption are inappropriate as they can

only be delivered by senior decision-makers.

14

towards an expected first phase financing pool of US$15 million. The Bank‟s relatively minor financial

contribution was therefore intended to leverage the contributions of the other DPs, and an explicit decision

was taken during preparation not to formulate a separate policy matrix for the Bank‟s operation. The

eventual US$20 million IDA credit for the first operation was not made available until late in preparation.

38. The choice of instrument has allowed GoG to feel that it is being treated as a mature partner with

full ownership of the program, but issues of capacity and the policy content of the matrix suggest a

weakness to using a DPO alone to provide predictable funding to a multi-faceted sector program. In

hindsight, a clearer distinction between the Bank‟s DPO series and other donors‟ SBS would have helped to

sharpen the focus on key policy results.

Complexity

39. NREG is institutionally complex. The Program encompasses forestry, mining and environment,

stretching across two Ministries and three semi-autonomous government agencies, in addition to the

Ministry of Finance. The program is supported by 5 DPs, 4 of whom were active in the technical dialogue.

The scope of the dialogue leading up to NREG was originally focused on governance of natural resource

rents from forestry, mining and fisheries, but environmental management and climate change were added as

cross-cutting issues affecting the natural resource sectors. Fisheries was eventually dropped from the NREG

program as the Department of Fisheries is housed within the Ministry of Food and Agriculture, which

receives policy lending through the World Bank‟s Agricultural Development DPO series. Discussions

around the mooted inclusion the oil and gas sector are summarized in section 1.6 above.

40. This complexity brought benefits, but also came with costs. The inclusion of three NRM sectors is

felt by both GoG and DPs to have been beneficial in terms of sharing lessons on parallel activities such as

revenue management and participation of local communities, and raising the profile of cross-cutting themes,

such as environmental management and climate change. The harmonization of the support of 5 DPs around

a single program was highly appreciated by GoG, although adding to the burden of coordination, reporting

and dialogue for the MDAs. From a DP perspective, transaction costs have been higher due to the need for

greater donor coordination. An informal understanding between the DPs on division of labor in supervision

support did not function as well as intended. Overlaps in the technical dialogue remained because individual

DPs were still accountable for results across all sectors, whilst some specific gaps occurred, such as

adoption of clear responsibility for support to a second-phase PSIA study. Conversely, the need to present a

coordinated DP position limited agility at times, particularly with respect to the oil and gas sector, where the

Bank‟s interest in using NREG to respond to emerging national priorities was greater than that of other

development partners. Even within the Bank team, supervision involved both the African Environment and

Natural Resources and the Gas, Oil and Mining sector units, and staff from the latter at times felt that they

lacked the freedom and resources to engage to the extent for which separate mining operation would have

provided.

41. Multi-sector and multi-donor programs do work, but require a lot of effort, efficient working

relationships take time to crystallize, and some degree of complementarity is usually required. DPOs

routinely work across several sectors. The ICR for PRSCs 1-3 in Ghana, which provided Bank support to

the Multi-Donor Budget Support (MDBS) program, discusses similar themes of transaction costs and

compromise, and indicates the need for both high investment of staff resources and time for effective

working relationships to evolve. Typically however, PRSCs are able to draw on a wealth of other sector-

specific operations to support technical dialogue, and do not go into the same level of detail and breadth on

sector-specific planning and systems as NREG attempted to do under its SBS approach. This again supports

the argument for a greater differentiation of donor support and instruments than occurred under NREG.

15

Technical assistance & related operations

42. The NREG Program involved considerable TA, but the impact has been mixed, and overall, the

approach has not been as systematic as was originally envisaged. Development of a complementary TA

facility based on a comprehensive needs assessment was discussed during preparation and referenced in the

DPO-1 program document24

, but was not hard-wired into the design – i.e. no binding commitments and

funding sources were established. Many TA activities have taken place, but the systematic approach

envisaged at design did not materialize, and the results have been mixed. Some TA has been provided

directly by DPs in addition to the budget support, and in other cases, DPs took a very active role in advising

GoG on the identification of appropriate expertise, for example:

Robust support on public financial management (PFM) has been provided through periodic visits of

a PFM advisor, funded by EKN and much appreciated by MDAs.

Considerable analytical work has been carried out as part of a dialogue on Climate Change

supported by NREG. Individual studies were largely implemented by separate DPs25

, rather than

through NREG or the National Climate Change Committee, leading to some complaints that

pooling funds would have allowed for a more comprehensive approach.

An Independent Monitoring and Advisory Team (IMAT), financed by the EU, was mobilized to

backstop monitoring against the 2009 PAF, but was not fully welcomed by the MDAs and has not

been institutionalized (see section 2.3).

High-quality work on modeling mining revenues was carried out with the assistance of a leading

international expert, identified with assistance of the Bank. This helped to ease concerns over laxity

in the mining fiscal regime.

These instances have sometimes (but not always) been more effective than where TA inputs have been

managed by GoG more independently and typically limited to the use of national consultants, for example:

Useful social analysis around conflict and CSR has been conducted in the mining sector, leading to

the production of sound voluntary guidelines.

A survey was conducted of the domestic timber market, but the analysis of options for increasing

the legal supply of wood for internal consumption was cursory, and led to little implementation

since.

SEAs have been produced for key sectors, although translating them into tangible action has been

more challenging.

A local TA firm contacted by MoFEP to support the development of sector M&E systems has

added only modest value to date.

43. The NREG DPO series has been the Bank’s central instrument for engaging in the forestry,

mining and environmental protection sectors over the last three years, although a number of other

activities have made some contributions. The Bank has supported some TA activities related to NREG

through trust funds, notably the EITI Trust Fund and work on economics of adaptation to climate change

using a number of funds. Linkage to other lending operations has been limited. Sustainable land

management, fisheries and land administration investment projects have all been worked on natural

resource issues outside the scope of those covered by NREG. An oil and gas TA project was prepared in

parallel to NREG implementation. It supported some SEA and capacity-building activities within the EPA,

and there is growing interest in improving the sharing of lessons with the NREG sectors on e.g., revenue

management and civil society engagement issues. Some targets developed under NREG, notably the

establishment of the ENRAC, were linked to Multi-Donor Budget Support program to provide additional

24

DPO-1 claimed that “The DPO series will have a signaling effect in helping Ghana mobilize additional resources,

which are critical to the successful implementation o f the NREG program. This includes . . . capacity building and

technical assistance”, and discussed a technical assistance grant to accompany DPO-2. 25

E.g., the World Bank supported the Economics of Adaptation to Climate Change country case study for Ghana, and

DFID has produced a series of policy briefs.

16

incentives for timely completion. Although the process began too late to inform the existing NREG PAF,

the strongest overlap in subject area has been with the design of support to Ghana from the Forest Carbon

Partnership Facility and the Forest Investment Program. These funds will support planning, capacity and

investments to enhance carbon stocks in Ghana‟s forests, are already driving much of the technical dialogue

on the forestry sector, and should complement future policy support through any continuation of NREG.

Relevance of the risks identified at appraisal and effectiveness of mitigation measures

44. Key risks identified during preparation (see annex 10) were appropriate, but risks associated with

weak implementation capacity were overlooked (other than for PFM). Envisaged political, public

financial management (PFM) and social risks materialized to some extent. The change of government

following the elections in late 2008 and the subsequent reformation of MEST slowed down some aspects of

implementation. Weak PFM systems were in part responsible for delays in release of funds to MDAs and

their effective absorption, and reforms aimed at increasing revenue collection from the commercial forestry

sector have in some cases been resisted by the timber industry in Ghana. None of these issues has been

overwhelming, however, and in the case of the PFM, TA has been effective in identifying remedial actions

and gradually strengthening performance. In hindsight, more attention could have been given to risks to

broader implementation performance, including capacity constraints on program execution, defining and

monitoring against clear policy targets, and addressing emergent sector issues.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization:

M&E design

45. The M&E framework for NREG was weak. At the heart of the problem was an overly extensive

Program Assessment Framework (PAF) that substituted for under-developed sector planning

systems and did not provide sufficient focus on key results. The PAF included a set of policy objectives,

targets, outcome indicators and means of verification that were jointly identified and revised with the

Government on an annual basis. Though it was agreed that the PAF should be limited in size and comprise

only the most crucial objectives and targets of the three sectors, the DPO-1 matrix ended up including 24

program / policy objectives, and more than 60 targets for each of the first 3 years. From the outset, the PAF

was used not only to capture key policy reforms and outcomes, but a much wider set of activities and

intermediate steps. MDAs familiar with investment projects used the PAF to plan NREG-related activities

and justify their claim on resources to MoFEP. Many PAF targets were therefore output-oriented, which led

to issues of subjectivity in the subsequent performance assessments – i.e. outputs were produced, but there

were sometimes disagreements between GoG and DPs over the acceptable level of quality (see annex 3).

46. Commitment to GoG ownership hindered rationalization of the PAF. As mentioned above, the

decision was taken during preparation avoid using a separate policy matrix for the DPO, but instead to work

with the PAF resulting from broader SBS goals and a highly GoG-led process. During preparation of DPO-

2, an M&E specialist from the Bank was mobilized to support streamlining the PAF, resulting in a modest

decrease in the number of policy objectives to 16 and annual targets to 35. Three and 5-year outcome

indicators were also included for each of the 16 policy objectives. Despite agreement of the TCC on the

need to streamline, the push to achieve this within a short-term Bank mission jarred with the established

GoG-led approaches and the process left some disgruntlement on the side of the MDAs.

47. World Bank disbursement triggers did attract greater focus, but the PDO indicators linked to

them were flawed. Selection of 6 annual triggers did provide more focus, as evidenced by the higher

performance against triggers in comparison to other annual PAF targets. Three-year outcomes linked to the

6 triggers were established during preparation of DPO-2 as Key Outcome (effectively PDO) Indicators for

the DPO series. Of the 12 indicators identified, however, 5 are actually outputs (such as the design of

17

survey tools, application of fiscal models or preparation of an investment plan), mostly copied directly from

annual targets, rather than representing downstream outcomes. Those that are genuinely outcome-oriented,

typically did not have established baselines even by DPO-2, and some presented attribution issues, such as

the target to increase timber revenues by 15 percent. Each of the 3-year outcomes from which the PDO

indicators were drawn was also linked to a number of PAF targets, which explains some of the disconnects

identified in section 2.1 between the achievement of triggers and PDO indicators.

M&E implementation

48. The need to develop sector M&E systems has been accepted, but implementation progress has

been slow. At least since 2009, and with the support of a new country-based Bank M&E specialist,

development of comprehensive M&E systems for each of the NREG agencies has been on the agenda.

Recognition by the MDAs of the need for comprehensive sector M&E systems is in itself a significant

achievement that is unlikely to have been pursued under earlier project-based lending. Credible efforts have

already been made in this direction, including the establishment of Planning, Monitoring & Evaluation

Units, and the FC commissioned its own study on M&E design. Unfortunately the MDAs were let down by

weak performance of a consultancy intended to support all three. After agreement on the TOR and some

delays, a local team was engaged by MoFEP during the first half of 2011, but their value-added has been

limited as they have focused on the design of a needlessly elaborate information system, rather than

establishing appropriate indicators and monitoring protocols for each of the agencies.

49. An attempt to establish an Independent Monitoring and Advisory Team (IMAT) to reduce the

burden and increase transparency of the PAF assessment was not successfully adopted. To

systematize the PAF assessment, it was originally proposed that the government would establish, at first for

the NREG triggers and ultimately for all targets, a methodological data sheet (clarifying responsibilities,

data collection methods, means of verifications, etc.), but this was not carried through26

. For the 2009 PAF

assessment, a small group of international and national consultants was recruited as the IMAT to carry out

an independent assessment. The intention was to reduce the transaction burden of the annual PAF

assessments on MDAs, MoFEP and DPs, whilst providing a more objective and transparent process, and

M&E TA support to the MDAs more generally. Nevertheless, the MDAs received it unenthusiastically as

more of a policing than a support function, due to an accident to one of the IMAT members the forestry

sector was not covered, and a joint GoG-DP performance assessment was still required. The exercise was

not repeated for the 2010 assessment.

50. The 3-year outcome indicators, including the DPO series PDO indicators, have not received

appropriate attention. With GoG focused on a 5-year NREG lifespan, the 3-year outcome targets were

inserted into the PAF essentially in relation to the Bank‟s financing schedule, but have not received

effective follow-up since 2008. There was no systematic attempt to report against the indicators at the end

of DPO-3, nor were they updated during DPO-3 preparation, despite the fact that many of the

corresponding PAF targets had changed. As a result, several of the indicators were no longer realistic in

comparison to the PAF targets expected by the end of DPO-3. Resulting disconnects between the PDO

indicators and the DPO series triggers were detailed under section 2.1.

M&E utilization

51. Use of M&E data has been limited by its availability. Information on the attainment of triggers and

broader PAF targets has been used as a basis for disbursement by the Bank and other DPs, respectively.

Assessing the contribution that PAF target have made to overall progress within the NREG sectors is harder

due to weaknesses in the outcome indicators and sector M&E systems. Weak sector M&E also made it

26

The NREG mid-term review report, September 2010

18

difficult to monitor implementation in a more detailed or real-time manner. For example, information on

EIA processing performance by the EPA was available in 2011 to verify if the 2010 target and outcome

indicator was met, but was not available in time to adjust performance ahead of the milestone.

2.4 Expected Next Phase/Follow-up Operation (if any):

52. GoG’s 5-year NREG Program was predicated on the need for predictable, and coordinated

medium-term donor support. NREG DPs are mostly continuing support, but with some degree of re-

configuration. EKN, EU and AFD have undertaken to support the Program for the full 5 years (up to

2012), whereas the World Bank (and DFID) committed to provide support for the first three years and then

assess progress, with a view to determining the best course for further support. The indication in the NREG

Program Documents was that the Bank would be likely to continue support at least for the remainder of the

original 5-year program, but that the NREG Mid-Term Review, conducted in July 2010) and the World

Bank ICR process itself would be critical to confirming and shaping that intent.

53. Following the MTR and ICR process, an active dialogue is currently underway on preparation of

a second phase of NREG support from the World Bank. This is expected to involve a further

programmatic DPO series (likely 2 operations). The design will draw on the lessons learnt from the

previous NREG series (see Section 6) through: (i) focusing on a smaller number of key reforms,

complementary to broader investments supported by other DPs, and to FCPF and FIP activities in the

forestry sector; and (ii) including a linked TA operation to strengthen policy analysis and stakeholder

consultation. Focal areas for the DPO and TA operations will be:

i. Forestry: (i) establish enabling environment for increased private sector, farmers and community

involvement in forest management, (ii) enhance forest monitoring capacity.

ii. Mining: (i) strengthen revenue forecasting; (ii) improve environmental management of small scale

mining activities; (iii) encourage and monitor local procurement of goods and services by the

mining industry.

iii. Climate Change: (i) strengthen institutional structures for mainstreaming climate change; and (ii)

strengthen capacity to design bankable projects and assess climate financing.

iv. Environmental Management: (i) establish Strategic Environmental Assessment as a mandatory

environmental management tool for government sectors; and (ii) enhance capacity to manage and

monitor environmental impacts of large infrastructure development.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation (to current country and global

priorities, and Bank assistance strategy):

54. The development of the NREG PAF was strongly government-led, and drew heavily on joint

analysis supported by the DPs. The operation is therefore generally considered to be well-aligned with

national priorities, although some DPs put particular emphasis on specific activities (e.g. the VPA, which

was strongly supported by the EU), and some key policy areas (e.g. increasing government plantations)

were not emphasized as they were more investment- than policy-focused. The 2009-2010 IMAT review

also concluded that NREG activities were aligned with sector policies, whilst recommending the inclusion

of more institutional development targets, as well as attention to environmental management in the mining

sector. Many of the recommendations made in the CEA were incorporated into the NREG PAF, although

some differences exist:

The CEA had a strong emphasis on competitive bidding for timber and wildlife management

concessions, whilst the PAF focused on improving stumpage fee collection, perhaps as a more

achievable target.

19

The CEA focused on community-based natural resource management concepts and the scaling up

of Ghana‟s Community Resource Management Areas. DPO-1 included assessment of existing

groups for collaborative forest management (NGOs, CBOs, Protected Areas Management

Advisory Boards), but subsequent targets focussed on local Forest Forums and dissemination,

rather than active community management.

Increasing the supply of legal timber on the domestic market was not recommended in the CEA.

In the case of the mining sector, most of the CEA‟s recommendations are found in the NREG

program, but additional activities are included in the PAF, such as the development of corporate

social responsibility guidelines and the creation of the Multi-agency Revenue Task Force.

Environmental protection activities, including establishment of an inter-ministerial coordination

body and the need for a sustainable funding, were taken from the CEA‟s cross-cutting

recommendations, but climate change strategy and institutionalizing SEA reflect recent priorities.

The CEA also covered land resources and fisheries, but these were not reflected in PAF due to the

desire to limit the number of sectors involved.

55. The NREG PDO statement is relevant to policy priorities over the last three years, but was very

broad, and could have provided more focus, particularly in regard to tackling informal forestry and

mining activities. Illegal timber harvesting and artisanal and small-scale mining (ASM – particularly

unregulated gold-mining known locally as galamsey) were already well-recognized at preparation.

Unregulated chainsaw operators are estimated to cut up to 70 percent of the trees harvested in Ghana,

supplying almost all timber for domestic consumption, and galamsey is estimated to employ several times

the formal gold-mining industry workforce. Nevertheless, whilst “forest law enforcement” is mentioned in

the PDO, the emphasis of the PDO indicators and triggers was on ensuring legality of timber supplied by

the formal sector, and informal mining is not explicitly mentioned in the PDO at all. The approach was to

build momentum by tackling more tractable issues first27

, and PAF targets related to illegal forestry and

mining emphasized putting in place viable alternatives as part of the approach to “social issues”, rather than

law enforcement. These alternatives, specifically legal sources of domestic wood supply and areas for

establishing regulated ASM cooperatives, have proved hard to identify, however, and the ongoing impact of

the informal sector urges a more explicit and comprehensive strategy.

56. Overall design of the Program was relevant to the objectives, but specific design issues are

apparent. Whilst the use of a DPO was appropriate to the systemic issues that NREG was aiming to

address, tying it into a single instrument with an SBS approach that emphasized predictable inputs to the

annual budget cycle constrained the ability to condition triggers on ambitious reforms, particularly in

contentious and complex sectors such as mining and forestry. In addition, the absence of a separate TA

facility weakened the consistency of ongoing policy analysis that was needed to elaborate incomplete sector

strategies and respond to emerging priorities. Whilst triggers were realistic and generally relevant, there

were specific disconnects with the PDO indicators (as detailed in section 2.1) which compromised the

realism of achieving certain indicators by the end of DPO-3. There was also a disconnect between the

forestry PDOs and the related PDO indicators and triggers. No PDO indicators or triggers clearly addressed

“social issues in forest . . . communities” and the only indicators or triggers related to “forest law

enforcement” were restricted to verification of the formal sector and increasing legal domestic timber

supply. For mining and environment, the PDO indicators and triggers were largely based on outputs, rather

than defining unambiguous outcomes related to the development objectives.

27

In forestry, it was hoped the establishment of robust FLEGT mechanisms in the formal, export industry under the

VPA would eventually pave the way for extension to domestic timber supply chains.

20

3.2 Achievement of Program Development Objectives (including brief discussion of

causal linkages between policy actions supported by the operation and outcomes):

57. Of the 6 PDO indicators (encompassing 12 targets) three are rated as partially achieved and three

as mostly achieved, but weaknesses in the results framework are more to blame than poor

implementation performance. As noted above and discussed under sections 2.1 and 2.3, there are

numerous disconnects between the triggers to which GoG committed under legal agreements, and the PDO

indicators, which were retrofitted in late 2008 and then largely neglected. In particular, the failure to update

unrealistic indicators during preparation of DPO-3 means that it would be unreasonable to judge

implementation performance solely on the basis of targets that were unachievable under the agreed program

of actions.

58. Achievements in relation to the PDOs have been substantial to the extent that these were

translated into clear triggers and targets:

(i) Ensure predictable and sustainable financing for the forestry and wildlife sectors and

effective forest law enforcement. An emphasis on financial autonomy for FC around the time

of NREG preparation has since diminished as Government has increased funding. In practice,

the indicators and targets related to “predictable and sustainable financing” focussed on

increasing gross forest revenue to Government, and in those terms there has been some success

through improving revenue collection performance, updating national park fees, and significant

growth in plantations (which will increase long-term revenues). Fundamental reforms to timber

fees were largely blocked by industry lobbying, however, and the greatest determinant of

revenues remains the volume of legally harvested timber, which has recently been in sharp

decline, especially for high value wild hardwoods. FC has demonstrated its ability to advance

implementation of a complex international FLEGT agreement, forest reserve boundaries have

been demarcated, and a significant reduction in the incidence of wildfires has been achieved in

northern Ghana, following implementation of the FC‟s fire management program to protect

savanna forests. Achievements in these areas of forest law are at risk of being overshadowed by

uncontrolled informal harvesting, however, which remains unaffected by efforts to increase

legal supplies of domestic timber, and will also require attention to issues of tree tenure,

reliance on wood fuel and strengthened law enforcement.

(ii) Improve mining sector revenue collection, management, and transparency. Very

commendable achievements have been made under this objective. Creation and effective

operation of the multi-agency Mining Revenue Task Force has clarified that fiscal performance

is better than the average for international comparators, and has led to a process of both

simplifying and strengthening of the fiscal regime. Current proposals for the 2012 budget

would result in significantly higher revenues and a more progressive regime. Ghana has been

validated as EITI compliant in the minerals sector, and is pioneering application of EITI

methodologies to local revenue-sharing arrangements. MC has also developed guidelines for

use of mining revenues by District Assemblies, although its ability to influence the behaviour

of both Districts and traditional authorities is limited.

(iii) Address social issues in forest and mining communities. Greatly increased attention and

discussion has been focused on conflict and human rights issues in the minerals sector, bringing

together Government, mining companies and CSOs. Social Responsibility Guidelines for

mining companies have been developed and disseminated, and monitoring tools developed.

Although instances of conflict persist, the trend is believed to be positive, and should be subject

to more systematic monitoring in future. Key social issues for forest communities have been

less clearly elaborated under NREG, but establishment of district-level Forest Fora has

provided for more regular consultation between forest managers and local communities.

(iv) Mainstream environment into economic growth through Strategic Environmental

Assessment, Environmental Impact Assessment, and development of a climate change

21

strategy. Ghana‟s SEA model has been extended to a number of sectors, including the nascent

oil and gas sector, and to routine local government planning. SEA activities have resulted in

more transparent and participatory planning, training of more than 100 central Government and

more than 440 district officials, more funding for environmental activities in sector plans, SEA

tools being incorporated into NDPC planning guidelines, and mainstreaming of environment in

government planning as evidenced by (i) strengthening of line agency and district

environmental units and new budget lines for environmental activities, and (ii) environmental

issues incorporated into medium-term development plans of all 170 District Assemblies and

into 10 sector policies / plans. The EPA is now giving training to other African countries on

mainstreaming environment into their planning system. Sectoral EIA guidelines have been

developed and EIA service delivery and monitoring has been improved through new on-line

systems. Awareness of and activity on climate change has greatly increased. An overall climate

change management framework has been developed as a step towards a comprehensive

investment plan, and several key sectors, including agriculture, forestry, transport and energy

are moving ahead with their own climate strategies.

3.3 Justification of Overall Outcome Rating (combining relevance, achievement of

PDOs):

Rating: Moderately Satisfactory

59. NREG was designed to broaden reform within the NRE sectors beyond what could be achieved through

inclusion of one or two targets under the PRSC operations, and it has achieved that goal. Achievements

have been significant, especially viewed in the context of previous NRE sector initiatives. Donors have

been engaged in supporting the NREG sectors for many years in Ghana, often with disappointing outcomes.

Implementation of new sector-based approaches and instruments has been a learning process and design

weaknesses have become apparent, but more has been achieved though NREG than in several previous

projects in terms of specific reforms, and strengthening the institutional platform for continued action (see

section 3.4b). Performance against the stated PDO indicators and broader demonstration of outcomes on the

ground has been compromised by weakness of the M&E framework. Realism is also required in comparing

to what could realistically have been achieved within 3 years, with relatively modest funding, and in the

face of long term negative resource trends driven by complex factors. Nevertheless, it has produced a step

change in the dialogue and government ownership within areas, such as improved revenue management and

transparency, and systematic application of SEA.

3.4 Overarching Themes, Other Outcomes and Impacts (if any, where not previously

covered or to amplify discussion above):

(a) Poverty Impacts, Gender Aspects, and Social Development

60. The Stakeholder & Risk Analysis, conducted during the latter stages of Program preparation as

the first stage of a PSIA, made a number of recommendations for reducing social risks in the NRM

sectors, many of which were pursued by NREG, e.g.: establishing an inter-sectoral coordination

mechanism at Cabinet level; simplifying EIA processes and strengthening related consultation

requirements; developing a policy on corporate social responsibility; encouraging private investment in

forestry; and strengthening the role of communities in forest management. One area in which NREG

activities were identified as potentially increasing social risks was regulation of informal forestry and

mining activities. To date, however, activities undertaken have emphasized carrots rather than sticks,

primarily attempting to identify alternative sources of legal timber for the domestic market and areas where

artisanal mining can be accommodated. The Stakeholder & Risk Analysis concluded that risk of social

22

conflict was at the heart of the NRM sectors, as a result of discretion in decision-making due to weak

regulatory frameworks and of unclear policies on access and compensation. Conflict has been most evident

in the minerals sector, in the recent past. Activities during the NREG program have begun to lay a

foundation for dealing with these issues. CHRAJ conducted an assessment of human rights issues in the

sector, and a social conflict monitoring tool has been developed.

61. There are some indications that exploitation of Ghana’s natural resources has brought social

development benefits, but a solid information base for assessing NREG’s impact on poverty and

gender issues is only starting to be assembled. A recent (and preliminary) re-assessment of the costs of

environmental degradation in Ghana suggested that increased extraction mineral wealth in the 5 years to

2009 was compensated by increased investments in human capacity28

. A focused PSIA of policy reform in

the minerals sector is now underway with support from the Bank PSIA Trust Fund, but the results were not

available in time for inclusion within the ICR. On conflict issues, work remains to be done to strengthen

resolution / redress mechanisms, and to institutionalize regular monitoring of levels, locations and causes in

order to assess the impact of NREG reforms aimed at reducing it, such as development of social

responsibility guidelines, improved transparency around local revenue-sharing, and development of local

content policies.

(b) Institutional Change/Strengthening (particularly with reference to impacts on

longer-term capacity and institutional development):

62. Technical capacity within Government has been enhanced through the NREG program,

particularly in cross-sectoral areas. MC has gained considerably more understanding of social and

revenue management issues through NREG activities, helping to broaden its focus away from simply

promoting mining investments. FC has developed capacity to implement wood-tracking and FLEGT

systems, as well as to strengthen consultation processes with CSOs and local communities. EPA has

improved its capacity to process and track EIA application through its on-line register, and more than 500

government officials have been trained in the use of SEA tools. MoFEP has gained a better understanding

of objectives and activities within the NREG sectors, and is forming a Natural Resources, Environment and

Climate Change unit, which should further strengthen technical engagement in areas such as management

of natural resource revenues and climate finance. A comprehensive capacity needs assessment for the

NREG sectors was never carried out, however, and hiring restrictions continue to place constraints on the

manpower available to MDAs.

63. Institutional strengthening was the focus of the NREG Mid-Term Review (MTR). Considerable

progress has been made through NREG in comparison to earlier donor projects in the NRE sectors

which gave limited attention to broader sector management issues. The MTR employed an EU

conceptual framework for sector budget support based around 5 pillars, namely sector policy, budget and

PFM systems, sector coordination, institutions & capacity, and M&E. Key findings are summarized in

annex 11. Work remains to be done in this area in order to establish a fully effective sector program, but

awareness and willingness to act have been transformed.

Sector policy: Attention has been given to sector policies under NREG, for instance through review

of the Forest & Wildlife Policy, and revision of the Minerals Sector Policy. Key priorities and

strategies would benefit from further clarification, however, in response to evolving issues.

Numerous NRE objectives have been stated in a range of high level policy documents, and the

challenge is to: (i) condense these into a single coherent set of high-level objectives for each sector;

and (ii) fill the missing middle between high-level sector objectives and activity plans with a set of

clear strategic goals. Policy documents are currently being developed which should address this,

28

IDL Group (2011) Capacity Building for the Assessment and Monitoring of the Cost of Environmental Degradation

in Ghana

23

including a number of strategic plans and a revised Forestry Development Master Plan. The EPA‟s

draft (2011) Strategic Plan already provides a good model.

M&E: M&E systems remain weak within the NREG sectors, lacking of a stable set of high-level

and strategic indicators, but development of sound sector M&E systems is firmly on the agenda.

The Department of Forestry has been working on a set of sector objectives and has started reporting

against quantitative annual performance targets, and EPA has set out a sound results framework in

their draft Strategic Plan, although linkage to high-level objectives and indicators should be

approved. Agreement has been reached that each of the three key agencies should: (i) incorporate

clear output indicators in annual Medium-term Expenditure Frameworks (MTEFs29

), and (ii)

develop sector results frameworks which link a coherent set of high-level and strategic objectives to

SMART30

indicators and targets.

Budget planning & financial reporting: The quality and comprehensiveness of financial reporting

within the NREG MDAs has been gradually improving following periodic targeted TA inputs,

resulting in adoption of up-to-date government MTEF and financial statement formats, and

recognition of the gains in the NREG sectors in Government Public Expenditure Assessments.

Work remains to be done to improve inclusivity and credibility of budgeting (particularly reducing

under-spending) and establishing integrated technical and financial reporting.

Coordination: The Technical Coordination Committee has generally functioned well.

Establishment of the ENRAC has been delayed, but it is now operational and expected to provide a

key platform for defining sector policy going forward. Vertical linkages between MoFEP (and also

NDPC) and the three NRE agencies have been significantly strengthened. EPA, in particular,

believes this has been instrumental to mainstreaming environment, particularly in the roll-out of

SEA tools. Although contentious issues remain between the NREG MDAs over issues such as

mining within Forest Reserves, dialogue and understanding has increased.

Civil society engagement: Consultation processes and transparency have increased through a

number of activities (see section 2.2 and annex 9). Local CSOs are now more actively engaged in

the ENR sectors, and are learning to work more effectively with media.

Human capacity: NREG MDAs have established human capacity goals (albeit constrained by

government restrictions on hiring new staff), and capacity has been built in specific areas via

NREG, e.g. on PFM, on revenue modelling in the minerals sector, etc. A systematic assessment of

capacity requirements would be beneficial, however.

Ownership: There is consensus that the NREG Program has been game-changing in increasing

government ownership of donor support. From the DPs‟ perspective, challenges remain in terms of

improving the substance and comprehensiveness of sector dialogue, but expected improvements in

sector strategies, M&E and reporting will help immensely.

(c) Other Unintended Outcomes and Impacts (positive and negative):

N/A

3.5 Summary of Findings of Stakeholder Workshops:

64. Since the start of the NREG Program, annual Environment and Natural Resources Sector Summits have

been convened, which provide a platform for the NREG MDAs to present and discuss achievements in the

presence of CSOs and media. With support from Kasa, CSOs have held their own meetings ahead of these

summits to elaborate a shared position on sector activities. In general, the CSOs raise a lot of issues and

criticisms of specific activities, particularly within the forestry and mining sectors. They also re-affirm the

need to strengthen and further formalize their own role and community engagement in sector management

29

A Government budgeting tool. 30

Specific, Measurable, Attainable, Relevant & Time-bound

24

activities. But they are very supportive of NREG in general, consistently urging extension of the program to

other natural resource sectors. Annex 2 summarizes discussions from the 2011 Summit.

4. Assessment of Risk to Development Outcome

Rating: Moderate

65. Ownership of the NREG program is strong, reforms are largely incremental, and there is little risk that

the main achievements will be reversed – e.g. on the implementation of the VPA, mining revenue scrutiny

through the work of the Task Force and EITI, and promotion of SEA as a key tool for mainstreaming of

environmental concerns. Ongoing financial support to the sectors by EKN and EU until 2013, and planned

additional support from the Bank slightly beyond that should guarantee continuation. There is more risk to

those areas which have been subject to studies and policy dialogue, but where the process of reform is still

at an early stage – e.g. increasing the supply of legal timber to the domestic market, managing ASM and

social conflict in mining sector. Here, ongoing policy engagement and technical support is also needed to

ensure design of workable interventions and maintain momentum.

5. Assessment of Bank and Borrower Performance

66. On the side of both the Bank and Borrower, a huge amount of hard work and dedication was put

into the NREG Program, and has resulted in significant achievements. Where achievements have not

matched initial expectations, it has been largely due to the adjustment to a new modality of support and

related structural issues that were not fully addressed, rather than to a lack of effort or commitment.

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry:

Rating: Moderately unsatisfactory

67. Overall, the Bank preparation team produced a valiant effort to convene both DPs and

government agencies and construct a complex and coordinated program responding closely to the

findings of the CEA. The Bank is regarded by both Government and DPs as having played a critical role in

the development of the NREG Program and much of the analytical work that under-pinned it, motivating

and coordinating other development partners, and providing much of the drive and international experience

for the development of a sector support program. Mobilization of a PHRD grant during the preparation

phase also started to lay a systematic basis for addressing broad sector management and governance issues,

including on PFM, stakeholder analysis, etc.

68. A number of issues were identified and discussed, but not fully resolved, during preparation,

including provision for systematic TA support, institutional strengthening and a complementary civil

society facility. The PAF was also overly extensive and output-focused, with poorly defined outcome

objectives and indicators. The selection of triggers left some disconnect with the PDOs related to forestry,

and insufficient focus on the informal mining and forestry, or on environmental impacts of mining. To the

extent that these issues were not sufficiently addressed during supervision, some responsibility is also

shared with the design of a combined DPO-SBS instrument which reduced subsequent flexibility.

69. The performance of the Bank preparation team must be viewed in context of the limitations on

independent action, and the novelty of the approach. When the Bank joined NREG preparation, it was a

minor financial contributor looking to influence, rather than direct the approach taken by other DPs, who

25

under an SBS modality had a slightly different set of priorities. Even after the Bank contribution was

increased, freedom of action was constrained, as evidenced by the appeal other DPs made directly to the

World Bank Board to block the inclusion of oil and gas sector issues in NREG. Sector DPOs, especially for

natural resources and environmental management, were a relatively new instrument in Africa, as was the

approach of combining one with a multi-donor SBS program. Programmatic DPO series were considered

very flexible instruments, and therefore assumed to provide for adaptive management during

implementation. Also, at the time of preparation, the template for results frameworks under DPOs was less

clearly developed and standardized than at present.

(b) Quality of Supervision:


70. The supervision team inherited a complex program structure including multiple sectors and a

broad technical agenda, but managed to deliver DPOs in both of the two years following DPO-1.

Delivery of DPO-2 and -3 to schedule was a considerable achievement, helping to maintain momentum and

belief in the NREG process, and contrasting with the typical experience of slippages in sector programmatic

DPO series, including in the case of both the other environment / natural resource DPOs in the Africa

Region, in Gabon & Cameroon.

71. The processing requirements for these annual operations imposed a burden, however,

particularly given the need to coordinate across multiple sectors and donors. In a reversal of its

perception as a galvanizing force during preparation, the Bank was now seen as difficult to deal with due to

the heavy process requirements of preparing new operations each year. These requirements constrained the

annual Program cycle, whilst also diminishing the quality of technical interactions around the policy

content. GoG technical staff complained that Bank technical engagement was limited, and which led to

divergence in expectations over the form in which triggers should be met. DPs also felt that there was less

Bank engagement in joint decision-making in comparison with the preparation phase.

72. Efforts were made to address outstanding design issues, but with limited results. Given the

complex operating environment and resistance to major changes, it is likely that there would have

been a trade-off between effecting more fundamental changes and adhering to the anticipated

disbursement schedule. The Bank-led process to streamline the PAF required significant effort was spent

during preparation of DPO-2, and led to substantial, if incremental improvements, but was poorly received

by MDAs, as it was felt to be at odds with government-led processes. Efforts to improve broader M&E

systems also received a sluggish response. Support on sector planning and budgeting systems came mostly

from the Netherlands Embassy, as did the direct support to civil society. Although perfectly appropriate in

the context of donor division of labor, this generated an impression in some quarters that the Bank was

insufficiently focused on the civil society aspects of NREG. Potentially, more effort could have been made

by the Bank to improve provision of TA, M&E, and the overall focus on and clarity of objectives, but

considering the time and political capital required, any fundamental changes would probably have meant

delaying the schedule of operations. The amount of staff time spent on NREG during DPO-3 preparation

dropped significantly31

in comparison to previous years, perhaps because pushing for major changes seemed

less appropriate just prior to the end of the agreed period of support and to the scheduled MTR and ICR

reviews.

73. Following approval of DPO-1, the documentation of the management of NREG is fairly sparse.

The Program was supervised from the country office and Aide Memoires and ISRs essentially reflected the

31

35 staff weeks in FY10 as opposed to nearly 60 during FY09 and slightly less than 100 during the original

preparation of the Program in FY07/08.

26

achievement of triggers and processing of new operations, rather than chronicling substantive sector and

technical discussions related to the Program32

.

(c) Justification of Rating for Overall Bank Performance:


74. NREG was a valuable, ambitious and in some respects experimental undertaking, for which Bank

leadership was both critical and highly appreciated. The new approach brought significant benefits in

terms of specific policy achievements and advancing broader sector management and governance

issues, but it also represented a high risk strategy in the context of a multi-sectoral operation with

weak existing sector systems. Inevitably weaknesses became apparent in the design. These were identified

relatively early, but the complexity of the Program, working across 5 MDAs, plus MoFEP, with 4 DPs in

addition to the Bank, and under a modality that emphasized government leadership, made it difficult to

effect timely changes, particularly in the short window between effectiveness of one operation and

preparation of the next. Ultimately, supervision prioritized adherence to the expected disbursement schedule

and letting the initial years run their course, over pushing hard for profound early changes. It also stressed

maintaining Bank support and engagement in the joint sector program, as opposed to focusing efforts on the

much smaller number of triggers. That approach has achieved significant results, and allowed GoG to learn

from their own experience, but it also permitted certain weaknesses to persist.

5.2 Borrower Performance

(a) Justification of Rating for Overall Borrower Performance33

:

Rating: Moderately satisfactory

75. GoG maintained a high degree of engagement and activity across a very broad multi-sectoral

agenda, with strong involvement from MoFEP and NPDC in sector activities. Progress has been

impressive in a number of important areas, such as the implementation of the VPA, analysis of mining

revenues, the application of SEA tools to government planning, and the establishment of more efficient and

monitorable on-line processing systems for EIAs. In other areas, progress has been slower, including the

management of ASM activities, providing a sustainable supply of timber to the domestic market and

revising revenue structures for the timber industry. Strong engagement at the technical level, was not

always matched at the senior policy level, which limited progress on the most contentious issues. The lack

of well-defined policy priorities contributed to the difficulty of securing high-level attention, but

establishment of ENRAC should provide a strong foundation for future engagement. Strong leadership from

MoFEP was instrumental to achievements, but staffing constraints also limited MoFEP‟s ability to

effectively manage centralized TA activities under the PHRD and later in support of M&E strengthening,

which retarded the development of sector management systems.

76. Issues that arose should be seen in the context of the novelty of the instrument to NREG MDAs

accustomed to an investment projects, and the need to adjust to new modalities. The change to sector

budget support involves much more freedom in the use of funds, but less structured support for design and

32

A December 5 2008 Aide Memoire summarized discussions on PFM and streamlining the PAF in November 2008,

but AMs since initial preparation have reflected little technical (as opposed procedural) detail. 33

Although the NREG implementing agencies are distinct, they include all the key MDAs responsible for

implementation in the targeted areas, obviating the need for separate assessment of the performance of government in

addition to the implementing agencies.

27

management of activities, broader requirements on reporting and sharing of sector information, and higher-

level accountability than is the case for a narrowly focused set of project activities:

The onus is on the implementing agency to determine and put in place the additional staff, TA, etc.

to absorb the additional funding and associated transaction costs. Lagging budget performance of

NREG MDAs exposed the limitations of the human resources made available, but efficiency of the

working arrangements has been improved over time, and the number of activities expected at the

start was probably unrealistic.

During PAF assessments, DPs expressed frustration at the MDAs‟ focus on delivery of outputs,

rather than discussing their content in the context of broader sector goals. This suggests the need for

a attitudinal shift from reporting on a limited set of activities to comprehensive sector dialogue, and

also for understanding the distinction between triggers and MoVs.

Complaints from GoG officers at the technical level that they are unable to guarantee high-level

policy approvals are understandable, but not ultimately acceptable within the context of a DPO.

77. Sector management and work processes have improved. Sectors in Ghana with established sector

budget support operations, such as health and education, have also taken time to adjust to new ways

of doing business. Although ultimately the responsibility lies with government to deliver, DPs need to

support the transition through clarity on requirements. Progress in NREG has likely been constrained

by the lack of precision on strengthening of sector systems, and the overly extensive and output-focused

PAF. The lack of attention given to defining a limited set of priority outcome objectives diluted the focus of

implementers and decision-makers34

. This is particularly the case in Ghana, where rapid development and

enthusiasm for innovation already tax attentions. GoG is keen to vigorously engage on many innovative

programs, such as FLEGT, EITI, climate change, SEA, etc., but staff and leadership attention is limited,

making the need to focus on priority deliverables all the more critical. Stronger existing sector strategies

would have avoided many problems, and this gap should have received more attention from the outset.

6. Lessons Learned

78. The transition from financing individual projects to sector budget support (SBS) rejuvenated

ownership, and revolutionized multi-agency dialogue. Although difficult to quantify, the adoption of an

SBS program based around a government-led target-setting process resulted in a much greater sense of

ownership, empowerment and enthusiasm amongst the implementing MDA than previous, discrete project

investments. It also engendered a far more active dialogue between the sector MDAs, and more substantive

engagement with both MoFEP and NDPC. Particularly in the case of the environment, this engagement was

considered crucial to improving the understanding of environmental and climate change issues, and to

mainstreaming environment through e.g. development of SEA tools for government planning. It has also

allowed effective collaboration on financial performance, particularly in regard to the work of the Revenue

Management Task Force in the mineral sector.

79. A sector support program should be conditioned on solid sector planning, monitoring and

reporting. Fundamental building blocks of a sector budget support program were not in place within the

implementing MDAs at the start of NREG, particularly clear and comprehensive strategies, resource

planning and M&E systems. As a result, there have been weaknesses in budget realism and execution. More

fundamentally, a lack of clarity in overall program goals and appropriate indicators compromised

demonstration of results. Weaknesses were both understandable and clearly identified at the outset, and

have been subject to considerable incremental improvement over the three years of the Program.

Nevertheless, general assurances to improve these systems in the Framework Memorandum should have

been hard-wired through clear milestones and conditionality, to ensure basic pre-requisites of an effective

sector program were in place in more timely fashion.

34

And also made it harder to evaluate the progress that was made.

28

80. The NREG Progress Assessment Framework (PAF) was too broad and output-focused during the

first three years; a policy matrix should focus on a small number of strategic and highly

consequential reforms to avoid losing the wood for the trees. The NREG PAF included a large number

of targets (initially 66, later reduced to around 40), many of which were based on outputs that were more

investment- than policy-focused, or yielded opaque policy outcomes (i.e., draft policy documents of

indeterminate status). This tended to obscure the dialogue on key policy reforms and outcomes. More time

was spent tracking and assessing a myriad of small activities and outputs, than on identifying strategic

priorities and analyzing the political economy or engaging senior decision-makers around critical reforms.

Bank disbursements were based on a more selective set of 6 annual triggers, which attracted greater-than-

average attention and levels of achievement. But the triggers were not qualitatively different from the far

larger number of PAF targets from which they were drawn, and upon which most efforts were concentrated.

The size of the PAF was recognized as a weakness from the outset, but once the precedent was set, major

changes were hard to effect. Ultimately, reforming the PAF was very difficult without first strengthening

sector strategies and planning tools (such as MTEFs and multi-year results frameworks). Ideally, the PAF

would have been drawn from these, but instead partially substituted for them.

81. Development policy lending has limitations when used as the primary vehicle of support to a

sector program, and may be more effective when complementing other instruments. NREG was

worked in two parallel arenas – policy reform (the primary focus of DPOs) and strengthening sector

management systems (the primary focus of SBS). These should be complementary, but delivery through a

single instrument may have complicated both. The SBS modality emphasized broad engagement in sector

activities rather than focusing on select policy issues, whereas use of a World Bank DPO template as the

key program document encouraged the use of the PAF as a primary planning tool and de-emphasized

specific investments in sector systems, such as M&E and TA. A broad sector program, addressing

challenges in institutional capacity as well as policy reform, may be better supported by a DPO in

conjunction with other types of instruments. In practice, sector DPOs, such as the forestry and environment

DPO in Cameroon, are often supported by an additional TA facility. Structured TA support would have

been especially important in NREG as the initial analytical work established a policy agenda, but not the

detailed reforms needed to pursue it.

82. Working across three sectors (forestry, mining and environment including climate change),

involving 5 MDAs and MoFEP, and harmonizing inputs of 5 DPs, multiplied transaction costs.

Structures should have been put in place to manage this complexity. Given the context at preparation,

shortly after the Accra Declaration and with only a modest initial contribution from the Bank, NREG

probably could not have gone ahead except as a multi-donor program. The multi-sector approach provided

sufficient gravitas to the program to attract strong engagement from both MoFEP and DPs, and also

strengthened cross-sector learning and cooperation. But multiple sectors and donors greatly increased

transaction, and the Bank found its freedom of action constrained. A more structured division of labor

between DPs would have increased efficiency, and could have been achieved through:

A formal agreement between the DPs on areas of technical leadership and additional TA inputs

(such as support for a PSIA);

Differentiation of disbursement triggers between DPs in line with areas of technical focus; and/or

Donor coordination based on unity of purpose rather than unity of process, i.e., designing a range of

instruments coordinated around a single sector dialogue, rather than consolidating all inputs into

one instrument.

One possibility would have been for the other NREG DPs to support a core SBS program based around

institutional strengthening and TA, whilst the WB DPOs focused specifically on identifying critical policy

reforms, and on high-level engagement around them. PRSC series regularly combine many sectors and

29

donors in annual operations35

, but tend to be able to draw on policy dialogue supported by a range of

separate sector activities, and do not get into the level of detail of sector implementation as the NREG SBS.

83. The complexity of the policy agenda in the NREG sectors required more time and flexibility in

timing to implement ambitious reforms. The NREG policy environment is complex and demanded

ongoing policy analysis and adaptive management, for instance to address the serious challenges posed by

diffuse, informal sector activities in Ghana. However, NREG was envisaged as an SBS program with

annual disbursements providing a predictable budget supplement to each of the implementing MDAs.

Annual DPOs left less than 6 months between disbursal of one operation to delivery of prior actions for the

next, and practically no window to assess outcomes from the preceding set of actions. The imperative to

adhere to annual budget cycles constricted the space in which to address systemic issues (e.g., to strengthen

strategy, M&E or provision of TA), and created pressure to retreat from ambitious targets, rather than to

pursue contentious policy reforms36

. Flexibility on the timing of targets should not have had a severe impact

on the implementation of work plans given that spending by the NREG MDAs has lagged behind budgets

and available funds. It has also been the case for many other sector DPOs, particularly in the NRE sectors37

.

The CEA noted that “DPs are supporting a reform process that is not linear, and engagement mechanisms

must be flexible, responsive, and capable of being scaled up or down as appropriate.” Locking all

disbursements into the same, rigid schedule hindered a graduated and flexible response to performance.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/Implementing Agencies:

84. Borrower comments (see annex 3) reflect appreciation for sector-based support and pride in

achievements, but also reveal some of the frustrations and difficulties in the dialogue around the use of the

new instrument, particularly in terms of results requirements that diverge from those of investment

operations. The flexibility and additional autonomy of budget support are welcomed, but there is still an

expectation that funding should be provided up front, and that activities and outputs are sufficient measures

of progress. Such frustrations would have been reduced by: (i) clearer sector strategies, providing for

mutual understanding of the expected linkage between activities and results from the outset, and distinct

from the PAF so that changes to PAF milestones would not be seen as changes to the sector program itself;

(ii) a smaller set of targets, which could be more reliably delivered, rather than setting numerous annual

targets, at least some of which would inevitably slip; and (iii) more results-oriented phrasing of targets to

avoid confounding the means of verification (e.g., a report) with the target (i.e., an unambiguous measure of

progress towards a specified goal as evidenced in the report). Issues raised on donor coordination and flow

of funds also reflect teething problems of introducing a new approach.

(b) Cofinanciers: N/A

35

And also involve huge transaction costs and time to develop effective working relations – e.g. see the ICR for

PRSCs 1-3 in Ghana. 36

For instance, 2 successive triggers on development and implementation of a Financial Framework for the FC were

assessed as achieved on the basis of financial reports, despite proposals for revising forestry fees being largely

blocked. 37

The multi-sectoral Gabon NRM DPO achieved concrete targets across diverse sectors, after considerable delays to

the release of the 2nd

tranche that reflected the need for time to overcome resistance to reforms. Experience with sector

policy lending across many countries suggests that initial time-lines for ambitious reform programs are typically over-

optimistic.

30

ANNEXES

Annex 1. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

38

Supervision of the current and preparation of the next annual operation were essentially conducted together once the

program was underway.

Name Title Unit Responsibility/

Specialty

Lending (preparation of original Program under P102971)

Jean Christophe Carret Senior Environmental Economist AFTEN Task Team Leader

Paola Agostini Senior Economist AFTEN Environment & NRM

Edward Dwumfour Senior Environmental Specialist AFTEN Environment & NRM

Allison Berg Senior Operations Officer COPCO Mining & operations

Boubacar Bocoum Senior Mining Specialist COPCO Mining & EITI

Caroline M. Kende-Robb Lead Social Development Specialist SDV Social development

Jan Bojo Lead Environmental Economist ENV Environmental

economics

Carlos Cavalcanti Senior Economist AFTP4 Macroeconomic

assessment

Manush Hristov Senior Counsel LEGAF Country lawyer

Rajiv Sondhi Senior Finance Officer LOAFC Loan officer

John Nyaga Senior Financial Management Specialist AFTFM PFM

Christine Kimes Senior Operations Officer AFTRL Results

Robert Wallace DeGraft-Hanson Financial Management Specialist AFTFM PFM

Sandra Bulls Program Assistant AFTEN Team support (HQ)

Victoria Ahlonkoba Bruce-Goga Program Assistant AFTEN Team support (CO)

Supervision/ICR (including completion of preparation of P113173 & P118188)38

John W. Fraser Stewart Senior Natural Resources Management

Specialist

AFTEN Task Team Leader

Peter Kristensen Sector Leader AFTEN Climate change, oil &

gas SEA

Alyson Kleine Operations Analyst WBICC Operations

Kristina Svensson Operations Officer SEGOM Mining

Carolyn Winter Senior Social Development Specialist AFTCS Social development

31

(b) Staff Time and Cost

Stage

Staff Time and Cost (Bank Budget Only)

No. of Staff Weeks US$ Thousands

(including travel and consultant costs)

P102971 Lending

FY07 34 160.49

FY08 63 316.77

TOTAL: 97 477.26

P102971 Supervision

FY08 0 13.79

FY09 19 107.79

TOTAL 19 121.68

P113172 Lending

FY09 39 187.58

TOTAL: 39 187.58

P118188 Lending

FY10 35 172.13

TOTAL: 35 172.13

P118188 Supervision

FY11 23 90.90

TOTAL 23 90.90

Franke Hendrik Toornstra Adviser AFTDE Policy matrix revision

David John Santley Sr. Petroleum Specialist SEGOM Oil & gas SEA

Sunil Mathrani Sr. Energy Specialist AFTEG Climate change /

energy

Smile Kwawukume Sr. Public Sector Specialist AFTPR Governance

Anders Jensen Monitoring & Evaluation Specialist AFTDE M&E

Sebastien Dessus Lead Economist AFTP4 Macroeconomic

assessment

Ferdinand Tsri Apronti Procurement Specialist AFTFM PFM

Virginie Vaselopulos Program Assistant AFTEN Team support (HQ)

Jayne Kwengwere Program Assistant AFTEN Team support (HQ)

Ernestina Aboah-Ndow Program Assistant AFCW1 Team support (CO)

Rose Abena Amapadu Program Assistant AFCWI Team support (CO)

Stephen Ling Natural Resources Management

Specialist

AFTEN ICR

32

Annex 2. Stakeholder Workshop Report and Results

The 3rd

Environment and Natural Resources Stakeholder Summit was held in July 2011, involving

112 participants representing GoG (including the Ministers of Lands & Natural Resources and of

Environment, Science & Technology, and the CEOs of FC, MC & EPA), traditional authorities,

more than a dozen NGO representatives, several DPs, and a small number of private sector

organizations. The Summits largely present an opportunity for the NREG MDAs to present annual

progress for discussion, but the 2011 Summit also included presentations from representatives of

chainsaw operators and the National Association of Small-scale Miners, who stressed the

importance and their willingness to work together to find comprehensive approaches to informal

forestry and mining activities that recognized the reality that these activities are well-established,

economically important, and do not focus simply on a law enforcement response. As in previous

years, a communiqué was presented from a parallel civil society review of the sectors, which was

supported by Kasa and involved more than a hundred CSO representatives. The following notes

summarize main points presented in the civil society review and/or discussed during the Summit in

response to the GoG presentations.

A number of GoG activities were particularly commended:

The formation of the Environment and Natural Resources Advisory Committee (ENRAC)

to bring together key ministers for senior policy coordination and guidance.

FC‟s attempts to increase the involvement of CSOs, especially in the VPA process and in

the review and formulation of a new Forest and Wildlife Policy.

The establishment of the AKOBEN system by EPA for environmental rating and public

disclosure of large private sector developments, including mining operations.

The general effectiveness of the NREG Program for highlighting issues and promoting

policy reform, transparency and engagement was recognized in the request that additional

sectors be included under the Program, including fisheries and land degradation /

desertification issues.

However, more efforts were urged in a number of areas. To further promote civil society

participation and transparency, the following were proposed:

An NREG communication and media strategy, including more frequent programs on key

issues, establishment of a media resource center, and an awards program to recognise

quality journalism on NRE issues.

Disclosure of environmental audits of mines.

Strengthened representation of CSOs on the FC Board.

Publication of a list of timber rights holders and status of their financial obligations.

Clearer reporting back on activities and achievement in relation to the agreements of

previous Summits.

Increased participation of the private sector in the Summits and in consultation structures

more generally.

In relation to specific policy issues, the following were proposed:

Minerals – MC‟s mission statement should emphasize promotion of local investment and

linkages to local economies, rather than simply providing a more attractive environment for

33

external investment. Mining should not be allowed in forest reserves. New mining

developments should be subject to free prior informed consent of local communities,

comprehensive cost-benefit analysis, and the principle of polluter pays.

Forestry – More should be done to promote establishment and operation of Community

Resource Management Areas, and SMEs in the forestry sector. More should be done to

increase the legal supply of timber for the domestic market. Gender analysis should be

included in review of the Forest and Wildlife Policy.

Environment – Development of the comprehensive Climate Change Policy Framework

should be accelerated, and emphasis should be given to local adaptation needs. Application

of the AKOBEN scheme should be extended to additional projects and developments,

including in the state sector.

34

Annex 3. Summary of Borrower’s Comments on Draft ICR

The document has been well written and the issues well articulated, including both the programme

design and the implementation. We generally agree with most of the challenges mentioned,

especially those faced by GOG, and certainly that the programme was complex. We would

question why the Borrower performance rating is only moderately satisfactory instead of

satisfactory, given that triggers of all the 3 DPOs were met.

We would like to highlight a number of issues which presented particular challenges from the

Government perspective:

Donor dialogue. Donor coordination and harmonization was not strong enough, which

produced heavy transactions cost, and sometimes parallel discussions on the same topics.

Development partners (DPs) also wanted numerous changes in the focus and objectives of

the programme.

Differing expectations of MoVs. Even where the means of verification (MoV) for a target

was provided, DPs in certain instances rated the performance as “partially achieved”. For

example if an MOV states “Report of Exploration” it means that we have to produce a

report on mineral exploration work being carried out in the area. It does not necessarily

mean that the exploration should have been finished as it is a complex process.

Impatience for results. Reform processes take time, and the activities conducted under

NREG were designed to lead to longer-term outcomes. Hence the suggestion by some DPs

that they are not seeing results is too premature at this stage. For example, to address the

explosion of illegal mining activities in Ghana due to the unprecedented rise in gold prices,

a quick fix could be following by simply using security agencies to flush out illegal miners

to, but this is not a sustainable method of solving the problem as it will simply push them

elsewhere, or they will return after a short time, and in the meantime conflict with formal

mines and authorities is increased. It is not realistic to see instantaneous results in dealing

with the illegal small scale mining problem.

Delays in release of funds. DPs generally released funds late in each fiscal year for which

the activities were supposed to take place, with the result that there were constraints on

funding and some activities and targets were then deferred to the next year. The time taken

to process internal applications for release of funds to the implementing agencies was also

part of the problem.

Having noted some problems, however, we also want to emphasis that on balance, NREG has been

a very positive development. Sector Budget Support has proven for us to be the most efficient

method of DP support, and the programme has been very useful in resourcing the NREG sectors to

address most of their challenges. Financing of the sectors have also increased tremendously from

the 2008 levels through both DP and GoG contributions. Furthermore, intersectoral collaboration

amongst the NREG agencies is stronger than ever before.

We particularly want to highlight the following specific achievements in each of the sectors:

35

1) Environment

Strategic Environmental Assessment (SEA) is emerging as a major tool for developing and

analyzing Government policies, plans and programmes (PPPs) to ensure that they

adequately mainstream sustainability. Decision-makers have increasing confidence that

SEA enhances sustainability of policy and planning frameworks. SEA activities have

resulted in more transparent and participatory planning, training of more than 100 central

Government and more than 440 district officials, more funding for environmental activities

in sector plans, SEA tools being incorporated into NDPC planning guidelines, and

mainstreaming of environment in government planning as evidenced by (i) strengthening of

line agency and district environmental units and new budget lines for environmental

activities, and (ii) environmental issues incorporated into medium-term development plans

of all 170 District Assemblies and into 10 sector policies / plans. The EPA is now giving

training to other African countries on how Ghana achieved so much success in

mainstreaming environment into their planning system.

Online EIA registration has helped shorten the EIA process and strengthen decentralization

of the EIA system in Ghana. It has also helped EPA improve its record keeping of projects

which have followed the EIA process.

2) Forestry

Notwithstanding the challenges encountered during implementation, the NREG programme has

significantly improved the business processes within the forestry sector including the following:

Revision of Forest and Wildlife Policy

Improved systems for securing forest boundaries

Increased revenue collection rates and improved disbursement mechanisms

Enhanced dialogued processes between major stakeholders (private sector, civil society

organizations, resource owners and forest fringe communities)

3) Minerals

There is now better collaboration between sectors, evidenced by the joint work of EPA and MC to

strengthen environmental guidelines for the mining sector. Substantial progress has been made

towards a solution to unregulated mining by identifying areas to be set aside for formalized small-

scale mining under organized cooperatives. Under the NREG programme, about 61 areas which

had been blocked out countrywide for demarcation to small scale miners are now under a process

of being explored. So far 7 of these areas are under exploration and 8 more will be added next year

subject to availability of funds. However, robust processes take time, and progress in both these

areas will not be reflected in immediate major changes on the ground.

Also, in an attempt to reduce social conflict in mining communities, fiscal models have been

developed and are being applied to the mining companies to monitor mineral revenues that mining

companies pay to Government. The model has been applied to various mines in the country. In

addition, Guidelines for use of mineral royalties at the local level have been developed. Similarly,

Guidelines for Corporate Social Responsibility by Mining Companies in Mining Communities

have been developed and sensitization of the various Districts and Municipal Assemblies as well

as all stakeholders is on-going.

36

Annex 4. Comments of Cofinanciers and Other Partners/Stakeholders

Development Partner feedback on the findings of the ICR was not received in time for inclusion.

The DP Sector Leader (representative from EKN; joint head of the GoG-DP Sector Working

Group) provided some factual updates in response to the draft document, but due to pre-occupation

with Durban Climate Change meetings, and then the end-of-year holidays, formal comments on

the conclusions of the ICR was not provided before the end of Decemember 2011.

37

Annex 5. List of Key Supporting Documents

Official Bank documents

Project documents – Program Documents & Legal Agreements for NREG DPOs 1-3

Formal records – Aide Memoires, minutes of Concept & ROC review meetings for NREG DPOs

1-3

ISRs for NREG DPOs 1&2 (not completed for DPO-3)

NREG PHRD GRM

ICRs for Ghana: Natural Resources Management Project and Ghana: Poverty Reduction Support

Credit (1-3)

Background analytical and policy documents (including PHRD studies)

Ambale, D. (2008) Support to Civil Society to Increase Accountability in Natural Resource

Governance

EKN (2006) Ghana Environment Sector Study

ODI (2007) Budget Support, Aid instrument and Environment Ghana Case Study

Sync Consultant Ltd (2008) NREG Stakeholder & Risk Analysis

World Bank, AFD, RNE, DFID (2007) Ghana Country Environmental Analysis

Analytical and policy documents produced during NREG

Development Management Consultants (2010) Monitoring and Evaluation (M&E) Situation of

Ministry of Lands and Natural Resources, Forestry Commission, Minerals Commission and

the Ministry of Environment, Science & Technology and the Environmental Protection

Agency (EPA)

EPA (2011) Draft Strategic Plan

EPA & NDPC (2010) SEA of Oil and Gas Sector

FC (2011) Draft Forest and Wildlife Policy

FC (2011) The Wood Tracking System in Ghana: evaluation of the pilot project

FC & Forestry Research Institute of Ghana (2009) Ghana Domestic Timber Market Study

Ghana Extractive Industries Transparency Initiative (2007) 1st Report on Aggregation /

Reconciliation of Mining Benefits in Ghana

Ghana Extractive Industries Transparency Initiative (2008) 2nd

Report on Aggregation /


Ghana Extractive Industries Transparency Initiative (2008) 3rd

Report on Aggregation /


GoG (2009) Statement of Policies on NRE (27 May 2009)

GoG-EU (2009) Voluntary Partnership Agreement [on import of timber products into the EU]

Kron (2011) Development of Sectoral Monitoring and Evaluation (M&E) System for NREG

MDAs

MEST (2010) Ghana Goes for Green Growth [National Climate Change Framework]

MC (2010) Development of CSR Guidelines for Mining Companies

MC (2010) Draft National Mining Policy of Ghana

MLNR (2009) Draft Strategic Plan for the Mining Sector (2010 – 2020)

MoFEP (2009) Public Expenditure Financial Accountability report

van der Linde, M. (2009) Report of the Financial Management Support Mission November 2009

van der Linde, M. (2010) Report of the Financial Management Support Mission March 2010

38

van der Linde, M. (2010) Report of the Financial Management Support Mission September 2010

External reviews and commentary

FC (2011) Environment & Natural Resources Summit 2011

Ghana Anti-Corruption Coalition (2010) Pilot Review of Six World Bank Assisted Projects in

Ghana

IDEG, ODI & ECORYS (2010) The NREG mid-term review report

IDL (2010) Validation of the Extractive Industries Transparency Initiative in Ghana

IMAT (2010) Monitoring Report No.1

Kasa (2011) Civil Society Organizations (CSOs) Annual Review of the Natural Resource and

Environment Sector

MC (2010) Environment & Natural Resources Summit 2010

Nordic Consulting Group (2011) Final evaluation of Kasa

Vaa, J. (2010) Lessons Learned from NREG SBS [Note circulated to DPs by EU team member]

39

Annex 6. Full text of PDO indicators and triggers.

NREG’s

Program Development

Objectives

Key Outcome Indicators

(a) Ensure predictable and

sustainable financing for the

forest and wildlife sectors and

effective forest law

enforcement

1) Strengthen institutions and governance as evidenced by: (a)

10 percent increase in legal wood supply to domestic markets;

and (b) first FLEGT license issued.

2) Sustainably finance and promote investment in forestry

sector as evidenced by: (a) Timber Revenues increased by 15

percent; and (b) plantation forest area increased by 15 percent,

through increased private investment.

(b) Improve mining sector

revenue collection,

management, and transparency

3) Improve mining sector revenue collection, management, and

transparency as evidenced by: (a) fiscal model applied to three

mines, resulting in improved overview of revenues due to the

Government of Ghana and a reduction of the “revenue gap”;

(b) up to date data on mining incomes, royalties and local

revenues and their distribution published at the district level;

and (c) survey tool to track perception of use of mining

revenues at district and municipal level designed, and at least

one survey undertaken.

(c) Address social issues in

forest and mining communities

4) Reduce social conflict issues in mining communities and

improve support to small-scale miners (SSM) as evidenced by

(a) design of a survey tool and carrying out of at least one

survey, (b) SSM established through three co-operatives in

mining areas with improved performance.

(d) Mainstream environment

into economic growth through

Strategic Environmental

Assessment (SEA),

Environmental Impact

Assessment (EIA), and

development of a climate

change strategy

5) Promote investment in climate change adaptation and

mitigation as evidenced by the preparation of one long-term

investment plan.

6) Strengthen national environmental impact assessment

system through: (a) updated legislative instrument on Strategic

Environmental Assessment, including sector guidelines for oil,

mining, forestry, energy, transport sectors and consultation and

disclosure procedures for environmental assessment; and (b)

60 percent of EIA applications processed within the prescribed

time frame and with the requested consultation and disclosure

procedures.

40

First Operation in a Programmatic Series

Prior actions from Legal Agreement – The Recipient has: Status

Forestry

made satisfactory progress in the negotiations with the European

Union on a voluntary partnership agreement concerning the

“Forest Law Enforcement, Governance and Trade” initiative, and

has defined the elements of such agreement by December 2007

Achieved.

submitted to the Cabinet a financial framework to ensure

predictable and sustainable funding for the Recipient‟s Forestry

Commission

Achieved.

Mining

prepared, through the Recipient‟s Minerals Commission, a

proposal for new guidelines on social responsibility in mining

activities, which takes into account inter alia experiences with

alternative livelihood programs and community development

schemes in the mining sector, for consultation with relevant

stakeholders

Achieved.

prepared, through the Minerals Commission, and in consultation

with relevant stakeholders: (a) a draft mining policy document to

govern the Recipient‟s strategic directions in the mining sector

over the short, medium and long term; and (b) draft regulations on

royalty, compensation, health and safety and service companies,

following the adoption of the Minerals and Mining Act of 2006

(Act 703)

Achieved.

Environmental protection

completed strategic environmental assessments in the energy and

transport sectors Achieved.

carried out an appraisal of the environmental impact assessment

service delivery processes, and prepared revised environmental

impact assessment guidelines for the general construction, health,

mining, agriculture, energy, tourism, manufacturing and services

and transport sectors

Achieved.

Second Operation


Forestry

signed a voluntary partnership agreement with the European

Community concerning forest law enforcement, governance and

trade, and submitted the said agreement to the Recipient‟s

Parliament for ratification

Achieved.

implemented the Cabinet-approved financial framework for the

Recipient‟s Forestry Commission in a manner satisfactory to the

Association

Achieved. Implementation

judged satisfactory by

DPs, although the

financial report used as the

MoV noted ongoing

performance issues.

Mining

undertaken consultations with mining communities, civil society

and mining companies on the content of guidelines on social

responsibility in mining activities, and published a summary of the

Achieved.

41

consultations

(a) established a multi-agency mining revenue task force including

but not limited to the Recipient‟s Minerals Commission, the

Ministry of Lands and Natural Resources, the Internal Revenue

Service and the Customs, Excise and Preventive Service; (b)

adopted, through the said task force, an action plan to enhance

mining sector revenue collection; and (c) piloted a fiscal model for

one mine

Achieved.

Environmental protection

prepared a draft national climate change adaptation strategy Achieved.

prepared a strategic environmental assessment of the tourism

sector, and conducted a review of the experience with strategic

environmental assessments of different sectors completed to date

Achieved.

Third Operation


Forestry

commenced a pilot program of wood tracking systems to verify

the origin of timber with at least three commercial companies that

are involved in the harvesting, processing and export of timber, as

a means of implementing the Voluntary Partnership Agreement

Achieved.

established procedures to improve transparency of disbursement of

forestry revenue Achieved.

Mining

prepared and issued satisfactory guidelines on social responsibility

for mining activities

Achieved. Guidelines are

non-binding.

commenced the implementation of the Mining Revenue Task

Force action plan to improve mining sector revenue collection,

management and transparency, including: (a) completion of a

collaborative pilot audit by the Recipient‟s Minerals Commission,

the Internal Revenue Service and other relevant departments of at

least one mine; and (b) application of a fiscal model to three mines

Achieved.

Environmental Protection39

submitted a draft Strategic Environmental Assessment of the oil

sector, satisfactory to the Association, and issued guidelines for

environmentally responsible management of oil sector

Achieved.

39

As noted above, the second DPO-3 prior action on the submission of the climate change adaptation strategy to

Cabinet was dropped owing to Government‟s new comprehensive approach to climate change.

42

Annex 7. NREG Program Matrices

SECTOR MATRICES INDICATING TARGETS 2007-2010 & 3-YR OUTCOMES

Forestry Matrix

Program / Policy Objectives Targets 200740 Targets 200841 Target 200942 Targets 2010 EXPECTED OUTCOMES

2010 (End of 3 years)

F1. Institutional

Strengthening and

Governance

Clearly defined

indicators for monitoring

levels of legality based

on GOG definition of

legality

Baseline survey conducted on

percentage of „legal‟ timber in

domestic market

Monitor the percentage change

of „legal‟ timber in domestic

market in reference to baseline

Improved law enforcement in

the Forestry Sector:

-10% increase in Legal Wood

supply to the domestic market.

- 1 FLEGT License issued

Conduct study to

propose policy options

to address the domestic

wood demand

Policy option for

domestic market wood

supply approved by

MLFM

Policy options and

implementation plan for

domestic wood supply approved

by MLFM

Implementation of approved

option piloted

VPA negotiations

between GoG and EU

concerning Forest

Law Enforcement

Governance and

Trade launched and

elements of agreement

clearly defined by

December 2007

VPA agreement

between GOG and EU

signed and submitted

for Parliamentary

ratification process

New wood tracking and

verification system pilot

tested for 3 companies

Piloting of Wood Tracking

initiated with 3 companies

1st FLEGT License issued

F2. Secure Natural Ecosystems

for the benefit of all segments

of society

Strategy for reducing

fire incidence

developed

Baseline for fire

incidence completed

Three key

recommendations of

Strategy Document

implemented

Fire incidence in

transition zone reduced

by 20%

Wildfire strategy fully

implemented

Continue implementation of

Wildfire Strategy

Improved forest health:

- Incidence of wildfires reduced

by 40%

- Presence of keystone species in

Protected Areas increased by

3%

40

DPO1 Prior Actions are in bold. 41

DPO2 Triggers and in bold and performance indicators in italics. 42

DPO2 Triggers and in bold.

43



Boundaries assessed for

10 forest reserves and

30 GSBAs and

gazettment of Kyabobo

National Park initiated

Complete integrated

management plans

(IMPs) for 10 reserves

Survey, demarcate and

re-pillar boundaries of

additional 10 Forest

Reserves, and 1

Protected Area

Implement management

plans for the 30 GSBAs

Develop IMPs for On

Forest reserves,

Protected areas,

savannah and areas rich

in biodiversity

Options for future

financing of SRMC

developed

Develop (10) Review (5) and

implement (5) Management

plans for forest reserves and

Protected Areas (PAs)

Continue the development,

review and implement

Management Plans for forest

reserves

1. F3. Sustainably Finance and

Promote Investment in

Forestry Sector

Financial framework

for secure and

predictable financing

for the FC submitted

to Cabinet

Implement approved

FC framework

Legislation related to financial

framework approved

Approved legislation related to

financial framework

implemented

Predictable and diversified

sources of funding for Forestry

Commission secured:

- Actual Timber Revenues

against potential Timber

Revenues increased by 15 %

due to better collection of

fees and royalties

- Eco-Tourism revenues

increased by 10%

- Process of payment for

environmental services (PES)

initiated

Increased Private Sector

investment framework in Forest

and Wildlife Sector:

-Carbon financing proposal

prepared

-Export of Tertiary Processing

Wood increased by 5%.

- Plantation Forest Area

increased by 15%, through

increased Private investment

Potentials for accessing carbon

credit schemes assessed

Proposals for accessing Carbon

financing developed

Concept note for

encouraging value-

added processing

drafted

Proposal for value-added

processing developed

and endorsed by MLFM

Strategy for tertiary wood

processing developed and

approved

Implementation of two priority

areas in strategy initiated

Land lease and benefit

sharing agreement

submitted and discussed

in Cabinet

Land lease and benefit

sharing agreement signed

with additional 10

investors

Land lease and Benefit Sharing

Agreements with 10 investors

signed and monitored

Land lease and Benefit Sharing

Agreements signed and

monitored with an additional 10

investors

2. F4. Strengthen Monitoring & Assessment of WD Assessment of FSD and M&E System for Forestry M&E System for Forestry Evidence-based management

44



Evaluation / Information

Communication Technology

Systems

M&E system conducted

Assessment of existing

databases for FC HQ

completed

TIDD M&E system

completed

Assessment of MLFM

and FC M&E systems

conducted

Assessment of databases

held by all FC Divisions

completed

Data communication

linkage requirements

between districts, regions

and HQ identified

ICT policy and standards

developed for MLFM

and FC

Commission and MLFM

approved.

Commission and MLFM

developed

decision making system put in

place:

-Data from M&E system being

generated on a monthly basis,

disclosed and submitted to

policy and decision-makers

Comprehensive Database

Management System designed

Data communication linkage for

Forestry Commission districts

and Parks implemented

F5. Promote equitable

resource access rights and

benefits for all segments of

society

Continue reviewing

existing benefit sharing

schemes to allow

equitable benefit flows

Implement benefit

sharing agreement on

modified taungya in 7

forest districts

Conduct a survey ( work to be

contracted to an entity with the

requisite technical expertise and

be undertaken with NGO

engagement) to assess current

level of awareness at community

level on resource access rights

and benefits

Develop framework for

promoting community

involvement in resource access

rights and benefits

Data on revenue collection and

distribution fully and actively

disclosed to local communities

(transparency):

- 40% of local communities

actively informed on revenue

collection and distribution.

Active participation of

communities in decision-making

regarding resource management:

- 25 Forest Fora functional in

forest districts

Dissemination of bi-annual

Revenue Disbursement

Reports within 30 days of

*publication by Forestry

Commission

Continue dissemination of

information based on agreed

timelines

Initiate the

establishment of forest

fora in all 10 regions in

Ghana

Assess existing groups

for collaborative forest

management (NGOs,

CBOs, PAMABs)

10 regional and 1

national forest forum are

operational

Consultation with key

stakeholders on how to

roll out district for a

beyond current 17

districts

10 Regional and 1 National

Forest Forum adequately

resourced and functional

Modalities developed for

integration of Forest Fora into

District Assembly Structures

45



Increase the number of

CRM groups by 5%

46

Mining Matrix Program / Policy Objectives Targets 2007 Targets 2008 Target 2009 Targets 2010 EXPECTED OUTCOMES

2010 (End of 3 years) and level

of achievement

M1. Institutional

strengthening in the mining

sector

Establish HRD plan for

mining sector agencies

(MC, GSD, Inspectorate

Division MLFM) and

start training based on

this plan

Continue training for mining

sector agencies based on short

term HRD plan.

Continue Training and 10%

(increase over 2009) of medium

to long term Human Resource

Development Plan implemented.

Mineral licensing:

- Processing time for 40% of the

mineral licenses in compliance

with the requirements of the

minerals and Mining Act (Act

703).

Study Possibility of

Establishment of the Unit at

Minerals Commission to deal

with Social (and environmental)

issues.

Monitoring of compliance:

- 45% of planned compliance

missions undertaken for

operational mines, 30% of

planned compliance missions

undertaken to exploration sites

M2. Reduced social conflict

issues in mining communities

and improve support to small

scale miners (SSM)

Proposal for social

responsibility

guidelines, including

e.g., ALPs, community

development schemes,

prepared by MC for

consultation with

relevant stakeholders

Consultations with

mining communities/

civil society and mining

companies on content

of social responsibility

guidelines and

summary of

consultations published

Guidelines on social

responsibility for mining

activities prepared

Implementation of guidelines

with annual tracking

mechanisms to include social

conflicts

Monitoring social conflicts and

establishment of small scale

miners cooperatives:

- Survey tool to track perception

of social conflicts in mining

communities designed, and at

least one (first) survey

undertaken

Review areas suitable

for SSM

Carry out exploration

work to prove viability of

areas for SSM

Continue to carry further

exploration activities to find two

(2) new areas for SSM.

Implement Programs to improve

performance of small scale

miners in existing co-operatives

and establish two (2) new co-

operatives in viable areas (on the

basis that suitable areas are

found in 2009 for the co-ops) -

again dependent on outcome of

exploration activity

SSM established through three

(3) co-operatives in mining

areas with improved

performance

M3. Improve mining sector

revenue collection,

management, and

transparency

Relevant agencies of a

multi-agency Mining

Revenue Task Force

(including MC, IRS,

MLFM, CEPS, etc.)

identified, with the aim

of enhancing

collaboration and

revenue collection

Multi-agency Mining

Revenue Task Force

(including MC, MLFM,

IRS, CEPS, etc.)

established and action

plan to enhance mining

sector revenue

collection adopted by

the Task Force; pilot of

fiscal model for one

Mining Revenue Task Force

action plan under

implementation, including

collaborative pilot audit (by

Minerals Commission, IRS,

and others) and application of

“fiscal” model to one mine in

addition to 2008.

Mining Revenue Task Force

action plan under

implementation, including

collaborative audit (by

Minerals Commission, IRS,

and others) of one more mine.

Fiscal model applied to one (1)

additional mine.

Generation and use of mining

revenues:

- Fiscal model applied to three

(3) mines, resulting in improved

overview of revenues due to

GOG and a reduction of the

"revenue gap" (difference

between paid amounts and

amounts actually due)

47



of achievement

mine set up

First EITI report

published by EITI

Secretariat, in liaison

with MC

Second EITI report

publicly available on

GEITI web site

Fourth (covering 2006) & Fifth

(covering 2007) EITI reports

published by EITI Secretariat

(MOFEP), in liaison with

Minerals Commission.

Sixth EITI report (covering

2008, and also including

information on royalty payments

at local level) published by EITI

Secretariat (MOFEP) in liaison

with Minerals Commission

- Up to date data on mining

incomes, royalties, and local

revenues and their distribution

published at the district level

Draft guidelines on use

of mineral royalties by

District/ Municipal

Assemblies under

preparation

Guidelines on use of mineral

royalties by District and

Municipal Assemblies finalized

Implementation, monitoring and

evaluation of use of mineral

royalties by District and

Municipal Assemblies (using

annual tracking mechanisms,

linked to annual tracking

mechanism under M2)

- Survey tool to track perception

of use of mineral revenues at

district and municipal level

designed, and at least one (first)

survey undertaken

M4. Enhanced policy and

regulatory framework and

effective coordination among

key government agencies to

improve the performance of

the mining sector

Mining Policy

Document prepared

by MC in consultation

with relevant

stakeholders to govern

GoG’s strategic

directions in the sector

over the short,

medium, and long-

term

In follow-up to 2006

Mining Act, draft

regulations on royalty,

compensation, health

and safety, and service

companies under

preparation by MC

Mining Policy Document

transmitted to Cabinet

and under

implementation

Package of regulations

submitted to Attorney

General for review

Draft Mining Regulations, MDF

Bill, finalized for presentation

to Parliament. Mining Policy

ready for presentation to Cabinet

Mining Policy, Mining

Regulations (ie (a)Draft

Minerals (Royalties)

Regulations, 2009, (b)Draft

Mines (Support Services)

Regulations, 2009, (c)Draft

Mines (Compensation &

Resettlement) Regulations,

2009, (d)Draft Minerals and

Mining Regulations, 2009,(e)

Draft Mining Regulations, 2009

(f) Draft Explosives (Mining &

Civil) Regulations and MDF Bill

submitted to parliament by

Government (NB Passage of

these Bills into Law beyond

scope of Minerals Commission)

Reporting by mining companies,

and financing of Minerals

Commission:

- 60% of the mining companies

submitted their quarterly reports

on time

- MDF Bill submitted to

Parliament by GOG (NB.

Passage of bill beyond scope of

Minerals Commission)

MSSP EIA/SEA

finalized and SEA

incorporated into

international review of

SEA experience in

Ghana, with EPA

Workshop held to

improve coordination

among key institutions

having responsibility for

the mining sector

Review of final MSSP EIA

reports to establish baseline on

compliance

Monitor compliance with new

EIA procedures - Minerals

Commission in conjunction with

EPA

EIA compliance:

- Reduction of 40 % of

documented incidences of non-

compliance with EIA

M5. Enhance international

and regional cooperation Adherence to Kimberly

certification scheme

Continued adherence to

Kimberley certification

Register of small scale diamond

miners. 10% more than in 2008

Register of small scale diamond

miners. 5% more than in 2009

International and regional

cooperation:

48



of achievement

scheme

- Compliance with KPCS

49

Environmental Matrix


2010 (End of 3 years) and

level of achievement

E1. Cross-sector natural resource

and environmental management

and partnerships in

environmental management

Draft framework for the

process of developing a

Sustainable Development

Action Plan (SDAP)

Collection of relevant

data and information, and

stakeholder consultations

to prepare the SDAP

Draft SDAP and Action plan

formulated and reflected in

Ghana‟s long-term

development plan

SDAP finalized and

approved by Cabinet,

Review of national polices

from a sustainable

development perspective:

- Formalized SEA review of

all new policies in place

Draft framework for a

formal inter-ministerial

forum on environment and

sustainable development

Cabinet paper on a

preferred option, and

alternatives, for an inter-

ministerial forum and

level of representation,

taking into account

existing bodies and

committees.

Inter-ministerial forum

established

Inter-ministerial forum

meetings held on SDAP,

climate change and

environmental management

of the oil industry.

E2. Strategic Planning for

Environmental Institutions Gain insights in financial

situation and constraints to

secure funding for EPA

Insight in financial flows

and systems, and reflected

in strategic plan and

annual plan to enable

delivery of core EPA

functions.

Review of fee and levies

system.

Ministry‟s and EPA‟s

functions and financing

mechanisms on environment

reviewed;

Institutional functions of

Ministry and EPA approved

by Head of Civil Service

(Management Services

Division

Organization and function of

national environment

institutions:

- New functional

relationships and resource

mechanisms submitted to

Parliament for Ministry of

Environment, Science &

Technology and EPA Initiate consultations for

developing a strategic plan

for MLGRDE, and

evaluation / updating of

strategic plan for EPA.

Statement on ministerial

functions on environment,

action plan with budget

on environment portfolio

in MLGRDE.

Updated strategic plan for

EPA, including functions,

HR and training plan

based on existing strategic

plan and GESS and linked

to SDAP process

Strategic plan improved to

reflect functions of EPA and

the ministry.

Strategic plan endorsed by

the EPA board and Minister.

E3. National environmental

monitoring and reporting

Task force established,

relevant sectors identified,

and inter-sectoral working

paper on assessment

method, indicators and

targets to reduce costs of

environmental

Study on the costs of

environmental degradation

done.

Cost of environmental

degradation calculated for the

forestry sector-

National environment

monitoring and reporting:

- Environmental M&E system

in place and operational.

50

degradation building on

initial study PHRD grant.

ToR to develop an

environmental data-base

and key indicators

(consistent with national

development. priorities)

Agreed set of key national

environmental indicators

and plan for data

collection for sectors and

issues identified in SDAP.

Ghana Environment

Outlook for 2008

prepared

SDAP indicators developed. Agreement on the SDAP /

environmental indicators and

monitoring system.

E4. Decentralized environmental

management

Decentralization of EIA

review process;

Implementation and

training on new sector

guidelines;

Simplified EIA quality

check in region.

30% of districts have

capacity built in SEA tools

and mainstreamed into

District Medium Term

Development Plans (DMTPs)

EIA procedures decentralised

to the ten (10) regional and

three (3)district EPA offices

Additional 20% of districts

(above base year) have

capacity built in SEA tools

and mainstreamed into

DMTPs

EPA regional and district

offices strengthened to

undertake SEA and EIAs

Pilot of Online EIA

registrations in four(4)

Regions

Pilot of Online EA

registrations in four

additional (4)regions and one

(1) district office

E5 Climate change Elements of an inter-

sectoral climate change

adaptation and mitigation

strategy in preparation

Develop a draft national

climate change strategy,

linked to some pilot

adaptation and

mitigation measures.

Adaptation climate change

strategy submitted to Cabinet

Mitigation climate change

strategy approved by Cabinet

Investment in climate

change adaptation and

mitigation integrated into

national budget and planning

processes:

- Long-term investment plan

prepared

E6 National environmental

assessment system SEAs in 2 sectors key for

growth: energy and

transport.

Mechanisms agreed to

ensure that

recommendations are

implemented

8 sector guidelines

finalised

SEAs in one additional

sector (shelter or

tourism).

Review of SEA

experiences to date

(including social issues,

consultation process and

complementarity wih

EIA), in and with

different sectors (incl.

mining

SEA on oil sector is

produced, which

includes guidelines for

environmentally

responsible management

of oil sector

Based on guidelines

produced in 2007-2009,

preparation of an

institutional framework

(including resource

requirements for

environmentally

responsible management

in the oil, transport,

mining, construction,

health, tourism,

agriculture, manufacturing

sectors)

National environmental

impact assessment system:

- Updated legislative

instrument on Strategic

Environmental Assessment,

including sector guidelines

for oil, mining, forestry,

energy, transport sectors and

consultation and disclosure

procedures for

environmental assessment.

- 60% of EIA applications


prescribed time frame and

51

Stock-taking of EIA

delivery

Baseline on EIA

applications processed

within prescribed time

frame

50% of EIA applications

processed within

prescribed time frame

50 % of EIA applications



including required


procedures.

60% of EIA applications



including required


procedures.

with the requested


procedures.

52

Annex 8. DPO1 Program Matrix targets for 2007 & 2008 that were not carried through (as

opposed to re-worked) into the revised DPO2/3 Program Matrix

Original Program / Policy

Objectives

Targets 2007 Targets 2008 Progress against 2008 Targets by end

of DPO1

FORESTRY

To strengthen institutional

capacity to implement

policy

Draft TORs for policy and

Forestry Development

Master Plan (MP) review

prepared and submitted for

discussion at Ministerial

level

Review of Master Plan for Forest

and Wildlife Sector completed

ToR for the drafting of an updated Forest

and Wildlife Sector Master Plan were

prepared and consultants identified; their

engagement was awaiting the availability

of funds.

Restructuring plan for WD

drafted and submitted for

approval within MLFM

Top 2 priorities of restructuring

plan implemented

The implementation of restructuring

actions in the Wildlife Division was also

delayed due to the late release of NREG

funds.

To ensure effective law

enforcement

Initiate review and draft

New Forest and Wildlife

Laws and Regulations for

stakeholder consultation

Draft Wildlife Bill submitted to

Cabinet Ratification of the VPA, and a Draft

Wildlife Bill, have been placed on "fast

track" by the new Government‟s

administration.

To ensure equitable socio -

economic benefits for all

segments of Society from

forest resource

management

Stumpage collection rate of

current and outstanding

debts increased to 68%

Collection rate increased to 75%

Stumpage collection rate for 2008

increased substantially to 90%.

To attract investment in

the forest and wildlife

sector

Organise international

investment forum to

identify investment

potential in the sector

Submission of the conclusions

and recommendation of

investment forum report for

Ministerial approval and

identification of priority areas for

implementation.

Completion of the targets on sector

investments were somewhat delayed.

The Investment Forum Report will be

reviewed, and priorities identified for

further action.

Investment opportunities

marketed and tenders for

concessions launched

Monitor Implementation of

concession agreements

Tender documents for two

additional investment portfolios

developed

Completion of the targets on sector

investments were somewhat delayed.

To ensure a predictable

and sustainable financing

of the forest sector

Approved Parliamentary

Budget allocation from

MoFEP to FC is timely

released

Approved district forestry budgets

are timely transferred by FC. [not reported]

MINING

To improve information

availability and sector

promotion

Establishment of upgraded

IMS under way, with

support of MSSP,

including:

- intranet network;

- external web site;

- database

Implement recommendations for

improvement of IMS

Initiate digitization of old maps,

reports, and data

Adapt cadastre to 2006 Minerals

and Mining Act

The Ghana Mining Portal

(http://www.ghanamining.org/ ) was

updated. Improvements to the mining

sector information management system

continued, with further digitization of old

maps, reports, and data. Minerals

Commission also pursued modernization

of the mineral cadastre (rights/licensing

system), through a consultant engaged to

http://www.ghanamining.org/

53

Framework for review of

IMS established

draft regulations on adapting cadastre to

the 2006 Mining and Mining Act

To address social issues in

mining communities

including equitable

distribution of mining

revenues

Initiate the process to improve

mine closure and post-closure

policies prepared by government

and consultations launched

ToRs for consultancies on mine closure

policies and the use of royalties by

district/municipal assemblies were

drafted, and subjected to validation at

stakeholders‟ workshops

Survey to establish baseline data

regarding social conflicts in

mining communities designed in

consultation with stakeholders

A questionnaire for a baseline survey on

social conflicts has been drafted.

To improve support to

small-scale miners (SSM) Studies for reclamation of 5

areas degraded by small

scale mining completed

Initiate tender process for works

contract(s) for reclamation of 1-2

degraded areas.

ToRs and tender documents have been

prepared for works contracts for the

rehabilitation of two sites degraded by

SSM.

Integration of mining into

economy and

diversification of mineral

production base

Interim studies, supported

by MSSP, on potential for

development of clay and

pegmatites

Conduct market survey of salt

produced in Ghana

Assess potential of one industrial

mineral (e.g., clay, pegmatities)

Mapping for base metals and

other minerals for 1 area

Consultants‟ reports on market

assessments for salt and Kaolin clay have

been prepared.

Improve mining sector

revenue collection,

management, and

transparency

Initiative [sic] consultations with

stakeholders on cost/benefit

analysis of mining

[not reported]

Enhance international and

regional cooperation

Design action plan in line with 1

existing international or regional

[mining] agreement/ or

partnership and begin

implementation

[not reported]

ENVIRONMENTAL

PROTECTION

To improve cross-sectoral

environmental

management

EPA coordinates

development of inter-

sectoral strategic

investment framework

(CSIF) for SLM.

CSIF finalized; Revise and update

land planning and soil

conservation ordinance and its

amended act ;

Initiate pilots on sustainable land-

use plans using SEA guidelines

(District level)

A workshop on sustainable land

management was held, with the

TerrAfrica program and the National

Sustainable Land Management

Committee. A draft Country SLM

Investment Framework (CSIF) and a

road map for developing pilots on SLM

using SEA guidelines has been

developed, with the objective of

mainstreaming and scaling up SLM in

Ghana.

Effective decentralized

environmental

management

Use of SEA / NDPC

guidelines at District level

for medium-term

development plans

Further use of NDPC SEA

guidelines at District level,

Development of land-use pilots

using SEA guidelines (see SLM).

[not reported]

24 District mid-term

development plans

developed using SEA

guidelines with assistance

from EPA

25 more Districts assisted by EPA

in using SEA guidelines [not reported]

54

Agreement on plan for

setting up of Natural

Resources Environmental

(NRE) Departments in

decentralized local

government.

25% of Districts have NRE

departments established by the

Local Government Service, and

capacitated by training on NRE

management and use of SEA

guidelines.

Training on SEAs given to 24 districts.

Natural Resource & Environment (NRE)

departments have yet to be established by

the Local Government service. There has

been some work with District Works

Departments. This now needs to be

revisited in light of the separation of the

EPA from the old MLGRDE.

Strengthening functional

partnerships and

participation in

environmental

management

Consultations on

establishment of national

dialogue forum, including a

broad range of

stakeholders.

Continued consultations on

establishment of national dialogue

forum, including a broad range of

inter-sectoral stakeholders.

Definition of mechanisms for

involvement of CSOs in SDAP

(including private sector,

academia, NGOs, media,

traditional authorities), partly

based on proposed review of

SEAs.

Consultations on a national dialogue

forum were held, and will be built on in

2009.

55

Annex 9. Participation and Demand For Good Governance mechanisms in the NRE sectors

Ghana is seen as a leader in promoting good governance within West Africa, and has relatively strong

formal institutions, such as parliament, local government, the judiciary and the press. Activities under

NREG have reached beond these basic building blocks for engaging with broader society around natural

resources issues.

Across NRE sectors:

Ghana is now EITI compliant. Much revenue information is already available for the mining

sector, and EITI is being extended to the oil & gas and forestry sectors. EITI has also shown that

strong multi-stakeholder collaboration between government, CSOs and private sector is possible

and can lead to strong outcomes.

A lot of dialogue on NREG issues with a range of stakeholders is already happening. Most GoG

agencies in the NREG sector already have some consultation mechanisms for sharing

information and discussing ideas with civil society and the private sector.

KASA civil society funding mechanism. Although only a short-term (18-month) pilot, Kasa has

already yielded lots of valuable lessons on the best way to support CSOs in this sector. It has

helped to solidify some coalitions of CSOs in the sectors such as mining, forestry, water, etc…

Innovations that have worked well in particular sectors:

Forest Fora have engaged forestry officers more pro-actively with local communities, and have

worked closely with the Forest Watch Coalition on processes like the VPA.

EPA has developed the AKOBEN rating and disclosure system “to motivate companies to

improve their performance” in terms of compliance with environmental laws and regulations.

AKOBEN explicitly recognizes the importance of public awareness in incentivizing

environmental performance.

The Commission on Human Rights and Administrative Justice (CHRAJ) has taken an active

interest in conflict issues in the mining sector, carrying out an independent investigation of

allegations of human rights abuse and conflict. The challenge now is to follow up on their

report‟s findings more systematically, including through the legal system in some cases.

The Minerals Commission is building knowledge and capacity to better respond to social

issues in the mining sector. They commissioned a baseline study of conflicts in the mining

communities, and have developed guidelines for Social Responsibility of large mining

companies and for use of mining revenues by District Assemblies. They have also formed two

District Mining Committees as a pilot platform for increased local consultation (drawing in part

on the Forest Forum model). They have also recruited a senior social specialist to lead this work.

56

Annex 10. Six main risks identified at the appraisal of DPO-1

Political risks – the main risks are the that natural resources and environmental governance are

highly political and contested; moreover, the December 2008 Ghanaian presidential and

parliamentary election might impact the policy reforms and lead to an increased level of

spending

Risks of a weak public finance management – the main risk associated with weak PFM are (i)

low capacity of sector ministries, departments, and agencies to prepare comprehensive works

plans that are costed, (ii) low budget ceilings given to line ministries to accommodate the

additional financing requirement for the NREG program, (iii) delays in the release of funds

Economic risks - Changes in the global economy or disruptions in the domestic economic may

lead to a slow down in growth; an increase in non-concessional borrowing could result into debt

distress

Environmental risks – Unintended negative environmental effects may include attracting

investment into the forest and wildlife sector, diversification of the mineral production,

integration of mining into the economy, and technical focus on environment that neglects

capacity to deliver on social and environmental realities at local level. Also increase revenue to

the sector and boosting employment, this could induce greater rates of extraction

Social risks – the three main risks comprise (i) the blockage of reforms by elites and powerful

interest groups, (ii) negatively impact on the vulnerable groups and increase gender differences

due to the NREG intervention and (iii) a limited participation of citizens due to insufficient

benefits accruing to local communities and an increase of social conflict, at last in the initial

stage, as a result of distributional asymmetries becoming publicly visible

Risk of Misperception – the Bank‟s involvement could be misperceived as only aiming to

increase revenues from extractive industries with little concern for social or environmental

impact

57

Annex 11. Key findings of the NREG Mid-Term Review (August 2010) on sector management

systems

A sector policy should be updated and clarified beyond the broad objectives laid out in the

Letters of Development Policy. The 2009 Statement of Policies on Natural Resources and

Environment, provides a good start, but was largely donor-driven, and should be more

focused and specific. Medium-term strategies for each of the NREG sub-sectors are also

needed to link policy objectives to specific targets that will inform annual plans. There is also

need for more stability in the planning process to avoid of multiple incompletely

implemented plans and strategies. Currently, a National Environment Policy is being drafted,

and the FC intends to begin work on a vision for the forestry sector.

The budget management capacity of the NREG agencies was weak at the outset of NREG,

lacking medium term budget frameworks, annual work plans linked to consolidated budgets,

and adequate reporting systems. The Framework Memorandum gave insufficient focus to

PFM within the NREG agencies. Absorption of funds during the initial years has been low,

but with technical assistance from EKN, budget management improved during DPO-2 and

DPO-3: (i) an annual public finance action plan for 2009 and 2010 was drafted for

strengthening financial programming and financial management; (ii) NREG activities were

mainstreamed into the Annual Budget and the MTEF (2010-2012); and (iii) budget

comprehensiveness improved with reporting by the FC and EPA on all funding sources.

The Technical Coordinating Committee has been generally effective for sector coordination

at the senior technical level, but the establishment of the ENRAC has been delayed, and

involvement of civil society, especially the private sector, is not fully institutionalized.

Lack of clarity on the respective roles of the NREG agencies vs their line ministries is one of

the biggest institutional weaknesses. In the case of the EPA, clarification of roles has been a

target within the PAF, but delivery was delayed and the draft National Environment Policy

makes no mention of MEST. General capacity constraints are also an issue, more within MC

and EPA, than FC. During preparation, there was considerable discussion around TA

provision, but it was decided not to develop a parallel TA operation to avoid diluting

government ownership. A planned comprehensive assessment of sectoral TA needs never

took place, and whilst GoG have used NREG funding on TA, including senior international

experts in the case of mining revenues, there is a general perception amongst DPs and some

acceptance within GoG that the quantity and quality of TA has not been ideal, and the quality

of outputs has suffered as a result.

There has been limited progress on the establishment of routine sector M&E systems to date,

but an initial scoping assessment has been conducted, and the need for such systems, linked

to sector strategies, is accepted within each of the three NREG agencies.

REGION

UPPER WESTREGION

R E G I O N

R E G I O N

BRONG-AHAFO

REGION

ASHANTI

WESTERN

CENTRAL

EASTERN

VO

LT

A

EASTUPPER

N O RT H E R N

REG

ION

REGION

REGION

REGION

GREATER ACCRA

G H A N A

THIRD NATURAL RESOURCE ANDENVIRONMENTAL GOVERNANCE PROGRAM

1°0°1°2°3°

5°

6°

7°

8°

9°

10°

11°

3° 2° 1° 0° 1°

B U R K I N A F A S O

C Ô T E D ´ I V O I R E

T O G O

T O G OB E N I N

IBRD37675

MA

RCH

2010

8°

7°

6°

5°

11°

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries.

G u l f o f G u i n e a

Ank

obra

Tano

Ofin

Pra

Birim

Afram

Obosum

PruBlack Volta

Daka Oti

White

Volta

Kulpa

wn

Day i

White

Volta

RedVolta

Sisili

Felin

Sene

LakeVo l t a

Gbele Prod.Game Res.

MoleNational

Park

BuiNational

Park

Boabeng-FiemaMonkey Sanctuary

DigyaNational Park

KalakpaGame

Reserve

Shai HillsGPR

Asin AtandasoRRKakum

NationalPark

Nini-SuhienNational

Park

AnkasaGPR

Bia SouthTributaries

BofombiriGame Reserve

KogyaeStrictReserve

OwabiRamsar

Site

KyaboboNational

Park

Denu Aflao

Keta

Anyako

AnyanuiAda

SogakofeAdidome

Wute

AkatsiKoforidua

TemaPrampram

Akplabanya

Battor

ACCRABortianor

Senya Bereku

Amasaman

Nsawam

Dodowa

Adaiso

Asamankese

Kwanyaku

WinnebaApam

SwedruAjumaku

Esikuma

KpanduGolokuati

Kpedze Shia

Ho

KpetoeAbutia-

Kloe

BosoDominase

Akoroso

AkraSaltpond

Dunkwa

Cape CoastElmina

AbremHeman

Tumfokuro

Foso

Twifo PrasoSamreboe

Elubo

Half Assini

Jewi Whorf

Axim AgonaJunction

Sekondi-TakoradiTakoradi

Daboasi

TarkwaBandae

Ataase

AsankranguaaEnchi

InsuBogoso

Agyempama

BuakaBenchema

Krokosue Juabeso

Bodi

Dadeeso

Amoya

Akwantonbra

Dwokwaa

Jabo

DiasoSefwiBekwai

Sefwi Anhwiaso

BibianiManso

Nkwanta

NyinahinNkawie

Mankranso

Kumasi

Kuntanase

Ejisu

Konongo Juaso

Bekwai

Obuasi

Oda

KadeKibi

Abirem

Akoasi Asesewa

Odumasi Krobo

Somanya

Senchi

Akropong

Oterkpolu

Sekasua

Begoro

MpraesoKwahu Tafo

Odonkawkrom

Anfoeta

EffiduaseAgona

Mampong

Ofinso

Abofoo

Tepa

Bekyem

Teekyere

Sunyani

KenyasiNo.1

Goaso

Shi

Adwumadiem

Yamatwa

Siekabenkuram

Kwadwonkromkurom

Kwakwanya

Dormaa-Ahenkro

Akontaanim

Kotuo Namasua

New Drobo

Wenchi

TechimanTuobodum

Nkoranza

Ejura

Hiawoanwu

Atebubu

Abease

Yeji

Kwame DansoBaantama

Kwadwokurom Kete-Krachi

DambaiBuafri

Ohiamankyene

Zongo-Markyeri

Nkwanta

Jombo

Nakpayili

BimbilaWoribogu

NakpaliJuo

YendiSambu

ZabzuguSabari

Tijo

GushieguKaraga

Saboba

YawguWenchiki

Cherepon

Gambaga

Nakpanduri

Gbangdaa

Bawku

MogonoriKulungugu

KamsorioZebilla

Binaba

DatokoBolgatanga

Tongo

Zuarungu

BongoNavrongo

Paga

Naga

Fumbisi

Sandema

PinaTumuGwallu

Jeffisi

Hamale Gbal

Lawra

Jirapa Sabuli

Nadawli

Wa

Tanina Bulenga

Wechiau

Dorimon

Sawla

Chache

Bole

Larabanga

Damongo

Sorri

Busunu

Fufulsu

Mpana

Mankpan

Gbulumpe

TamaleNyankpala

Tolon

SaveluguNawuni

Yepalsi

Janga

Nasia

Walewale

Diari

Hian

Tuna

Seripe

Teselima

New Longoro

Chibrungo

Kintampo

Jema

Ateso

New-Debiso

Dunkwa

Atobiase

Asaman

NewAdubiase

Bodwesango

AkokoasoAjuafo

Ntronan

Amua

AduamoaObo

Hohoe

BaagloKute

Jasikan

Kadjebi

Ahamasu

Dodo

Asukawkaw

Brewaniase

Kpandae

Makongo

Kimabui

Salaga

Wangasi-Turu

Gbung

Barekese

Awaaso

AdansiAkrofuom

AkimSwedru

Esaaman

Ayiem

AkwidaaPrince´s

Town

Eikwe

Alenda

Apataim

PresteaHuniValley

Nsuta

Bui

Nsawkaw

Dwokwa

Achiasi

Edubia

Obogu

Agogo

Kayoro

Mankarigu

Gambia No.2

PROTECTED AREAS

FOREST RESERVES

RIVERS

SELECTED CITIES/TOWNS

REGION CAPITALS

NATIONAL CAPITAL

REGION BOUNDARIES

INTERNATIONAL BOUNDARIES

20 40 60 80 KILOMETERS0