Nov 30, 2013 (3 years and 4 months ago)




Report No.:

Project Name

Yemen Civil Service Modernization Project Additional Financing


Middle East and North Africa


Public Administration, Law and Justice



Project ID



Government of Yemen

Implementing Agency

Ministry of Civil Service and Insurance

Environment Category

[ ] A [] B [X ] C [ ] FI [ ] TBD (to be determined)

Date Original PID

May 31, 1

Date PID Updated

January 22
, 2008

Estimated Date of
Appraisal Authorization

January 24, 2008

Estimated Date of Board

April 3
, 2008

Country and Sector Background

For nearly a decade after the 1990, Yemen has achieved a reasonable annual G
DP growth rate
(around 5.2 percent), securing a 2 percent per capita growth. The integration of North and South
Yemen provided a bigger market; new oil wells came on stream in 1994, boosting oil production
by 80 percent; and a successful macroeconomic sta
bilization and reform program in the second
half of the 1990s controlled inflation, liberalized trade, reduced subsides, unified the exchange
rate regime and reformed the financial sector. Economic growth peaked in the period 1995 to
1998. Since 1999, GDP
growth has slipped and the production of oil

the main source of export
and government revenue

ed since 2001. With an annual GNI per capita of US$760 in
2006 and with 35

percent of its population of about 21 million living in poverty, Yemeni peo
remain, on an average, among the poorest in the region. Yemen has some of the lowest social
indicators in the Middle East and North Africa region: a 28 percent literacy rate among women,
18 percent malnutrition, girls’ primary enrollment at 55 percent
, and access to safe water at 31
percent. Poverty is higher (40 percent of population poor) in rural areas, where 70 percent of the
population resides. The dispersion of the population and the difficult topography pose a serious
challenge to delivering s
ocial services. Yemen is an oil
dependent economy with oil revenues
projected to decline unless new reserves are found and with no good short to medium
alternative income generating sources to finance the delivery of essential social services.

s public administration was in a precarious state following the unification of North and
South Yemen and a destructive Civil War in the early 1990s. During the early part of the 1990s,
Yemen’s Civil Service acted as an employer of last resort and a centra
l component of Yemen’s
safety net. This situation created a large civil service which interfered in private sector activities
and impeded its development, represented a large burden on public finances while producing
little value added in terms of deliver
ing needed services to the population at large.

Meanwhile individual wages of public servants eroded significantly and public sector salaries
remain largely inadequate. In 2006, senior managers earned only 2.5 times the lowest level civil
servant (interna
tional benchmarks place vertical compression at about six to seven). These low
wages made the civil service unable to attract high quality workers, with lack of effort on the part
of existing staff with many persons holding more than one job (either within

the public or private
sector), and increased the reliance of civil servants on petty corruption to top
off salaries. It has
also reinforced the concept that wages paid to a civil servant are nothing more than a safety

As a result of merging the admin
istration of North and South Yemen, the organizational structure
became antiquated and excessively complex and centralized with little ability by lower level
management to take decisions or be held accountable for activities even as mundane as approval
annual leave for individual staff. Organizational structures and work flows were duplicative
and unnecessarily complex, and modern human resource
management practices were virtually
absent. The result was a bloated civil service with extremely low pay sca
les, weak capacity,
opaque hiring and promotion practices, and relatively few effective enforcement mechanisms.

A decade ago, the government embarked on a comprehensive program to reverse this situation
with encouraging results. Given the dire situation
of Yemen’s public administration, and
consistent with worldwide experience in this area, it was clear at program inception that reforms
to address these deficiencies would require an incremental, phased approach, initially focusing
on building a solid inst
itutional basis for the management of public resources and subsequently
building on these achievements to create a modern and performance
oriented civil service.

Starting in 1997, with assistance from the World Bank, the Government of Yemen devised the
ivil Service Modernization program, which was envisaged as the foundation and first building
block of this longer
term reform strategy. The specific objectives of this operation were to create
the capacity, institutions and systems for effective deployment

of human and financial resources
of the Government of Yemen and increase the overall efficiency of the civil service. Towards
this end, the project aimed to put in place core personnel and financial management systems,
establish a mechanism to reduce the
number of unqualified civil servants, and initiate a
restructuring process in selected individual ministries. To make this foundation as solid as
possible, the project also sought to enhance management capacity in the civil service.

The project struggled
in the initial three years as a result of strong bureaucratic resistance and
lack of institutional capacity to carry out a complex multi
faceted reform program. It was
restructured in December 2005 to attempt to address some of the problems that had arise
n. As a
result of project restructuring and determined leadership on the Yemeni side, important project
milestones have been achieved. Among them, (i) the development of a wage strategy designed
to effectively link wage increases to the implementation of
reform objectives and passing of the
Wage Bill law, which provides a legal basis for its implementation across the GoY; (ii) the
referral to the pension authorities of approximately 67,000 individuals who had effectively
passed the retirement age and as a

result more than doubling its enrolment; (iii) the elimination
from the payroll of approximately 11,000 individuals whose main activity was working for
political parties, (iv) the transfer of civil servants salaries to their agency, thereby decentralizi
the workforce at the governorate level and increasing wage management transparency; (v) the
building of a consolidated and centralized civil service database, which includes relevant
information regarding qualifications, seniority and wages of all civil

service employees.
; (vi) the
identification and freezing of salaries of over 50,000 suspected double dippers, roughly 13
percent of the total civil service, (vii) the development and successful introduction of a
personnel retrenchment program (the Civil

Service Fund) and the processing of over 7,000
employees by August 2007 (approximately two percent of civil service) and (viii) the
development of an Accounting and Financial Management Information System (AFMIS) with
pilot implementation in four large mi
nistries (Ministry of Finance, Ministry of Health, Ministry
of Education and Ministry of Public Works) in the first phase slated for December 2007 after
completion of testing, which will greatly assist the Government of Yemen in the management of
its publi
c financial resources.


The aim of the additional financing is to consolidate reforms that are currently under
implementation, and to selectively deepen aspects of the reforms where value added can be
achieved. Given the current rate of imp
lementation, there will be insufficient funds to complete
targeted and deserving activities. Over 67 percent of the funds have already been disbursed
and the totality of remaining resources has been committed to activities currently under
on. IDA' s support through Additional Financing will further help the Government
to implement key policies which are essential to the country's macroeconomic stability and
sustainable development and carry out capacity building activities in support of the
se reforms.
The proposed additional financing is necessary to push forward all components of the program,
but with strong emphasis on restructuring under the reengineering component of certain other

The Project development objectives remai
n unchanged: the Government of Yemen has adopted
a comprehensive longer
term strategy for modernizing its civil service. The vision of the
Government is to have in place a civil service that efficiently and effectively provides a reduced
complement of go
vernment services that encourages and supports the private and non
government sector; that operates with transparency where performance measurement serves as
the key management tool; and where merit principle is applied in hiring and promoting staff.

he activities proposed to be financed through this additional financing proposal fall squarely
within the existing project objectives and description. Given that the sustained efforts in pursuing
the reform program are finally beginning to bear fruit, it i
s necessary to maintain and increase the
momentum of this operation to ensure that there is no interruption in the current implementation.
Therefore, the team has chosen to process the proposed support using OP 13.20, Additional
Financing for Investment Le

All other solutions, including identifying alternative sources of funds and the possibility of a
freestanding operation, have been evaluated. The Bank and the Yemeni authorities have jointly
concluded that an additional loan is the best, most cos
t effective and timely instrument to
successfully implement this vital civil service modernization and administrative reform project.


This database is currently being updated and complemented with biometric information which will enable the government to
effectively eliminate
the overwhelming majority of double dippers and ghost workers from its payroll

Rationale for Bank Involvement

The original CSMP constituted a first step in a longer term strategy of implementing pub
sector reform and the 2002 CAS made provisions for a follow up project to the present Civil
Service Modernization project. The project’s closing date was then extended to December 2007.
Because of the accelerated project implementation pace, the tang
ible reform success in terms of
establishing controls and the increase in Yemen’s allocation in 2007, the government has
requested the continuation of IDA support for the reform program. The Government wanted to
move quickly and since the needed financing
was mainly focused on enhancements and
expansion of the original project, additional financing of CSMP was deemed to be the best
option. The proposed program was narrowed down to exclude subprojects that build on current
achievements and can be immediatel
y implemented. In July 2007 the Government of Yemen
sent a formal request for the additional financing and confirmed that the proposed investments
would be a top priority of the Government of Yemen.

The proposed additional credit will permit the scale
p of activities to enhance the development
impact of a well
performing project. Additional financing is the optimal mechanism, at this
juncture, to maximize the project effectiveness and its development impact for multiple reasons.
First, the proposed ad
ditional financing is timely, in that there
is a narrow but significant window
of opportunity for achieving important milestones in the short term
. The proposed core system
activities are intended to scale up the program of support to government managemen
t at a
propitious moment and would build upon the achievements of the original project, while being
reasonable in scope and enjoying strong ownership and commitment on the part of the
Government. Second, the proposed investments could reasonably be made w
ithin the two and
half year implementation period as they are of a much smaller scale than the original project,
and would build upon now established processes. Additionally, the project would rely on a
capable PMU to implement the activities, and wou
ld benefit from lessons learned. Third, the
proposed activities have the same profile as those implemented under the original project and
therefore are consistent with the DOs and aligned with the current Country Assistance Strategy.


ents contemplated under this extended credit will consist of scaling
up of activities
related to development of core systems and support services in order to ensure sustainability of
these investments over a long period and to take advantage of substantial

economies of scale.
Additionally, the program will seek to deepen the restructuring work
stream by providing
support for implementing earlier studies and reports. As the matrix in Annex 1 indicates, the
CSMP project initially sought to move forward und
er five main headings: (1) streamlining
government; (2) enhancing human resource management; (3) implementing adjustments in the
public sector labor force; (4) enhancing the management of financial resources; and (5) improved
performance management. In re
sponse to suggestions by the Bank’s Quality Assurance Group
(QAG) for reducing the complexity of the project, the bulk of Bank support under the extension
will focus along two dimensions: a) core systems improvements and b) enhancing the
effectiveness of g
overnment’s apparatus. Both are discussed in greater detail below.

1. Core Systems Improvements

A well
functioning public administration relies upon a number of core systems to assist in the
effective management of its human and financial resources.
Additional CSMP financing will
support reforms that are designed to increase the transparency and efficiency with which public
resources are used and move towards a performance based, professional civil service. The
additional financing will support activ
ities designed to improve the policies, processes, practices,
and procedures in each of the core systems under reform through design and deployment of
appropriate information systems using technology. The financing will also support policies,
which, to th
e extent possible will aim to reduce the adverse social impacts to redundancies.
These investments help to ensure that the current systems are used to their full capability and
remain sustainable over the long run. They are described in detail below.

tablishing a Human Resource Management Framework

This component seeks to improve
employment policies and practices in a phased manner, and establish a modern, merit
public administration. During its current phase, the CSMP project has focused on
existing human resource policies to identify shortfalls; developing a human resource
management strategy; developing polices and practices in line with this strategy; developing and
implementing a new job classification system; and instituting a
program of training designed to
support the development and implementation of modern human resource management polices.
The additional financing will provide continued technical assistance in the development of a
human resource strategy, focusing on estab
lishment of controls and the development of
transparent criteria for the staffing of each position within government. It will include technical
assistance to the Civil Service Fund
which serves as

a public employee redundancy facility
. The
fund has been

in operation since 2005 and has generally been performing well. However, given
the scope of the redundancy problem in Yemen, it will be important to install a process of
continuous evaluation and improvement for the Fund’s mechanisms and outcomes. The
stimated budget for this activity is expected to be around US$0.6 million.

Movement towards a Merit Based Civil Service
. The additional financing will support the
overhaul of the current civil service law and enabling legislation to ensure the developmen
t of a
modern civil service. Under this expanded work stream, assistance will be provided to the
Government in developing a testing service within the civil service to ensure that any staff
assigned to a position is capable of undertaking the task that ar
e assigned to that post. Support
for the development of a mechanism to ensure that identified dependent employees who are
eligible to be reassigned to vacancies are qualified to handle the roles and responsibilities of their
new jobs. Changes will be appr
oved by cabinet and submitted to parliament. In addition,
assistance will be provided to the government in defining an action plan for the development of a
performance enhancing wage structure which fundamentally changes performance incentives
with the fo
cus on developing the modalities for implementation in a budget friendly way. The
estimated budget for this activity is expected to be around US$1 million.

Ensuring the Reliability and Consistency of Personnel Information Management:

The aim of
this act
ivity is to complete the work already undertaken in the compilation and verification of
personnel records and their regular updating in the appropriate distributed physical location. In
the first phase of the project, an employee census was conducted and
an Employee Database
(EDB) was developed and populated. Procedures to maintain the EDB current and the technical
infrastructure necessary for this purpose were also developed. Currently, permanent employee
identification cards are being issued to civil s
ervants using a biometrics identification system to
ensure that each employee has only one job in the civil service.

To ensure sustainability of the system, The additional financing will be used to implement HR
data archiving procedures through the deve
lopment of an Electronic Document Archival System.
The digitized records backed up by the paper version of the Human Resource files will ensure
that Human Resource database is not lost, misplaced or tampered with, thereby enhancing the
integrity of the sy
stem. The estimated budget for this activity is US$0.7 million.

he additional financing will provide support for technical assistance,
computerization, and training related to development of a full fledged Human Resource
Management Information

System, which can be updated on
line based on information entered at
remote Regional Information Centers (RICs) located in each governorate. The estimated budget
for this activity is US$2.5 million consisting of US$1.65 million in technical assistance an
US$0.85 million in equipment.

Improving Payroll Procedures
The additional financing will focus on the introduction of a
computerized nominal payroll system that links the financial resource management and the
personnel management systems. During the

current phase of the project the payroll procedure
has been standardized and streamlined. The architecture for the whole system has been
developed. The additional financing will focus on the implementation of this system. The
estimated budget for this
activity is approximately US$0.7 million, mainly in equipment.

Completing the Roll
out of the AFMIS System to Ministry Headquarters in Sana’a
Using web
enabled technology and taking advantage of the biometric system infrastructure and hardware
procured u
nder the project, the AFMIS system will be rolled out to all government agencies in
Sana’a. Additionally, under the additional financing an off the shelf Cash Management and
commitment control module will be included in this stage of implementation. The
budget for this activity is approximately US$1.5 million, divided evenly between technical
assistance and equipment.

By rolling out the system to the whole Government in
, the system will be able to provide
comprehensive data on expenditur
e for the central Government. This is an important but
intermediate achievement. To ensure that the system is fully utilized, it will have to be extended
to the governorate and district level. While this cannot be achieved in the time horizon
ed by the project it remains a development priority in ensuring that public financial
management is improved in Yemen.

2. Enhancing the Effectiveness of the Government Apparatus

This is the second pillar of reform. It will continue to focus on the need t
o enhance the quality
and efficiency of specific services provided by government institutions. The restructuring
process will aim to: (1) streamline organizational structures; (2) simplify business processes
(workflow, policies, procedures, decision making
, staffing requirements); and (3) put in place
basic information systems. To do this, additional financing will be provided in a number of key
areas. They include continuing the process of restructuring and reengineering in pilot agencies,
consistent wit
h the designed program. This will entail development the project charter, project
design document and the project implementation plan for five of the six pilot agencies. Finally it
includes analyzing staff requirements, introducing job descriptions, and
identifying surplus staff.
Each is discussed below in greater detail.

Reengineering of Pilot Institutions:

Under the original CSMP project, reengineering plans have
been developed for four pilot ministries and agencies. The European Union proceeded with

parallel financing for three agencies. This process has led to the development of diagnostic
studies for seven agencies. The additional financing will support the phased implementation of
these studies. The
Ministry of Civil Service
will be the only age
ncy to proceed with restructuring
on an expedited basis. This ministry has already undertaken extensive work in the development
its project charter and project implementation plans and is therefore ready to proceed with the
remaining phases to complete th
e re
engineering process. Additionally, given the lack of
capacity evidenced during the current phase of implementation, it is expected that the
restructured agency will provide dynamic management and support to the overall reform process
and therefore ob
viate some of the capacity constraints that have been hampering implementation
so far.

The remaining pilot agencies will focus on developing a project charter, a project design
document and a project implementation plan, following a consistent phased ap
proach outlined in
the Re
engineering Program Management Framework developed during implementation of the
current phase. During the initial period, the authorities will determine if the current pilots are
still meeting the requirements of political commit
ment and progress. Those agencies that do not
effectively meet these criteria will be phased out of the reform process. The additional financing
will support technical assistance to the agencies in developing the required outputs and to
support implement
ation of the project plan.

The estimated budget for this activity is approximately US$6.1 million for technical assistance to
five or six pilot agencies.

Additionally, under this component, work will be undertaken to provide support to the
Government Man
date Reform
During the current phase of the reform program, with the
assistance of an international consultant, a diagnostic study addressing the mandate and functions
of government and possible approaches to mapping these functions into a streamlined
vernment structure was completed. The next phase of the reform requires that their
approaches and recommendations be internalized by the Yemeni authorities before they
deliberate and arrive at a consensus on the mandate and functions of the government. T
o do this,
the President in October 2007 appointed a Presidential Commission on the Mandate of the
Government, headed by a very influential member of the Shura Council and incorporating
members of the government, parliament, the judiciary and civil society
. The Commission will be
assisted by a technical secretariat. Its job will be to ensure that the Presidential Commission has
all the appropriate information and develops various options for the commission to evaluate so
that the members of the commission
can take these into account in their deliberation and perform
the difficult task of defining the mandate of the Government that the President has entrusted to

Under the additional financing, resources will be allocated to provide long term technical

assistance to this secretariat. The estimated budget for this activity is US$500,000.

Improving the Operation of the Innovation Fund

The Innovation Fund is an important
instrument to reward enterprising public officials and support “bottom up” reforms

within the
public sector. Under the current phase of the project, the Innovation Fund has been halted
because of its inefficiency and lack of resources. There is a need to review its first year of
implementation and invest additional resources to enable

it to succeed. If successful, the
Innovation Fund will complement and add to the portfolio of reform initiatives taking place to
streamline, rationalize and re
engineer government operations. Additionally, the government
could use the IF to harness and c
hannel resources from donors interested in providing technical
assistance to support similar reform initiatives, thereby ensuring a broad, overall consistency in
the reform efforts, with less chance of duplication in efforts, and within a framework where
ctivities and results are monitored, controlled and reported using a common yardstick.

The estimated amount for this activity is US$1 million, of which US$300,000 will be dedicated
for technical assistance and US$700,000 will consist of seed money for t
he second round of
implementation of projects.

Improve Monitoring and Evaluation
Under this component, resources will be devoted to
continue the human resource development and capacity building for a fully functioning reform
program management structure

across the government based on: (1) a clear chain of command
and reporting structures; (2) clear job descriptions; (3) clear performance evaluation criteria for
individual managers and implementation staff; and (4) a well
defined, functioning program
orted by a monitoring and evaluation system. On
going technical support for program
management (procurement, auditing, and project management) will also be provided. This
component will support the development of a full fledged monitoring and evaluation s
ystem for
the government of Yemen, building upon the diagnostic studies undertaken under the original
program and with the benefit of the Bank’s just in time support in this area. This issue was
highlighted by QAG as one of the shortcomings of the project
to date. The estimated budget for
this activity is US$0.4

million, mainly for technical assistance.






International Development Association (IDA)





The additional finan
cing will be consolidated within the Ministry of Civil Service and Insurance
(MOCSAI) and implemented by the existing CSMP Project Implementation Unit (PIU) with
some modification to be introduced to the staffing and project implementation oversight
on. The AFMIS Coordinator will continue managing AFMIS related activities within
Ministry of Finance. The roll out of the system to additional ministries will be coordinated with
other ministries.


Key issues for sustainability of the ref
orm program include: (i) ability to continue in the
implementation of the labor
force restructuring program which will free up resources to
adequately compensate and motivate employees, (ii) Continue to monitor the operation of the
Civil Service Fund to en
sure that assistance packages to redundant workers do not target high
productivity workers and that procedures that have been implement securely guard against re

which in turn will require growth of income earning opportunities outside of the pub
sector, (iii) continued political and public pressure for and support of reform through a long
program, (v) implementation of systems that provide incentives for effective, continued reform
and good performance.

The additional financing is meant to e
nhance the prospect for sustainability of the reform
achievements to date. The digitalization of human resource files will ensure that they cannot be
destroyed by fire or other calamities, the roll
out of the AFMIS project to the rest of the public

will improve coverage of the system and improve its relevance and sustainability. The roll
out of the biometrics to the armed forces, the security forces and the judiciary will ensure that the
system is operating effectively across the government.

ons Learned from Past Operations in the Country/Sector

The Bank’s role in promoting public administration reform in fragile states is delicate and
essential but requires very strong coordination with other development donors.

The Bank’s
influence, alread
y quite strong in the area of governance reform is sometimes enhanced when
other donors coalesce around a single program, especially when it employs policy lending
instruments in tandem with investment/TA lending. While coordination between the Dutch, th
EU and the Bank work has worked quite well, with the Dutch and the EU looking to the Bank to
support their work on Public Administration Reform, the impact of dissonant perspectives
between the Bank and other donors can have negative impacts on the imple
mentation of
institutional reforms. As a result, frequent and close coordination is required between the Bank’s
implementation level activities and other development partner’s broader governance and political
discussions to ensure that the messages that a
re sent are not mis

Complementarity with adjustment operations has positive effects which should continue to be

The twinning of investment and policy
based operations worked well in the public
administration reform project, especiall
y at the end of the implementation phase. In a country
with limited capacity, the investment operations provided the capacity building, transfer of
resources, and implementation push, while the adjustment operation provided the impetus to
ensure that diff
icult cross
cutting and policy agenda items were achieved. This was the case, for
example, in ensuring that the adverse effects on the integrity and independence of the civil
service resulting from the arrival to power of the new government were mitigated

Difficult automation projects, such as the Accounting and Financial Management System
(AFMIS) require adequate project planning ahead of implementation
, especially in terms of
properly identifying accompanying reforms, human resource requirements, cap
acity building
requirements and other peripheral issues. This reduces the risks of delays and reduces the costs
requirements for such investments. Current experience in implementation of core systems seems
to indicate that resource allocation for impleme
ntation of these systems is consistently
underestimated in developing world environment, especially where there are capacity constraints
as in the case of Yemen. When countervailing reasons to proceed with the project, despite lack
of preparation for IT e
lements in a project, project design should take these deficiencies into
account and ensure the project implementation appropriately sequences preparation activities and
the implementation period is lengthened to ensure appropriate implementation of the pr
oject. .

Safeguard Policies (including public consultation)

Safeguard Policies Triggered by the Project



Environmental Assessment




[ ]

Natural Habitats (


[ ]


Pest Management (
OP 4.09

[ ]


Physical Cultural Resources (
OP/BP 4.11

[ ]


Involuntary Resettlement (


[ ]


Indigenous Peoples (


[ ]


Forests (


[ ]


Safety of Dams (


[ ]


Projects in Disputed Areas (


[ ]


Projects on International Waterways (


[ ]


t point

Giulio de Tommaso

Sr. Public Sector Management Specialist

Tel: (202)

Fax: (202)


For more information contact:

The InfoShop

The World Bank

1818 H Street, NW

Washington, D.C. 20433

ephone: (202) 458

Fax: (202) 522




By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on t
disputed areas