Djibouti Monitoring & Evaluation System The overall objective of the project is reinforce the capacity of the Government of Djibouti to effectively implement their poverty strategy (INDS - National Initiative for Social Development). In particular the project seeks to assist the Secretariat of the INDS within the Prime Ministry to establish a full-fledged monitoring and evaluation system. This includes:  - ensuring a better management and coordination of the INDS process through developing a framework for monitoring and evaluation of the actvities in the context of the INDS which allows for an improved flow of information between all relevant Minsitries and implementing agencies. - the development of relevant performance and poverty indicators. - statistical capacity building to improve the production of stastistics (quantitative and qualitative) across relevant Ministries -  hands-on training in data generation, analysis and reporting of information to monitor the implementation, evaluate the ouctomes and track general poverty and sector performance trends. - support in stakeholder consultations and concertation of entities involved in the implementation of INDS activities. The overall objective of this project is to help the government of Djibouti to establish and operationalize a effective Monitoring and Evaluation system for their National Initiative for Social Development (practically a second generation PRSP) with a specific focus on monitoring poverty, social, and economic outcomes of the initiative. In particular, the proposed project seeks to enhance the institutional and technical capacities and competencies of staff in the INDS secretariat as well as of focal points in all line Ministries and agencies concerned with the implementation of the INDS.  Background  In January 2007 Djibouti's government launched the national initiative for social development (INDS), designed after the Moroccan model for poverty alleviation (INDH). This initiative represents a second generation PRSP. It was designed in recognition of the shortcomings of the first PRSP which did not produce the desired outcomes to overcome the deep structural problems of poverty and income inequality. Its major objective is to reduce poverty by promoting access to basic social services and improve the quality and effectiveness of delivery. It further aims at modernizing the economic production process to alleviate the high unemployment rates, estimated at 60% of the available labor force.  The social and economic development process is at a turning point since the launch of the INDS which is widely regarded as a reference framework for all development efforts in the country. As a first step, the government agreed on an action plan, prepared with the help of the World Bank and UNDP, that includes milestones for 2007-11. In order to implement the INDS, several programs and institutions have been already merged and re-structured. A permanent secretariat was established at the Prime Ministry that will be in charge of monitoring the implementation of the INDS and to coordinate all efforts among the different actors.  Building on the experiences of the first PRSP, the INDS set the following priority actions in order to improve the efficiency and effectiveness of the implementation:  - Making the INDS operational and actionable in consultation with all stakeholders  -  Establishing an integrated system of planning and management of public finances.  -  Improvement planning instruments and developing a system for effective monitoring and evaluation.  -  Strengthening the capacities needed for the implementation of the INDS in all Ministries involved.  -  Accelerating structural reforms and reinforcing good governance.  A recent Bank assessment of the PRSP 2004-06 highlighted that the lack of proper monitoring and evaluation tools and mechanisms hampered the effective implementation of the PRSP. The recognition of this weakness led to the prioritization of monitoring and evaluation in the context of the INDS.  Very basic monitoring capacities exist in different line Ministries but are not sufficient to effectively monitor the various public spending programs. Over the past year, the INDS secretariat (Secretariat Technique Permanent de l'INDS - STP) began to improve the M&E system based on the recommendations of a M&E strategy developed in 2004 within the framework of the first PRSP. This strategy was never implemented. The proposed M&E architecture is still largely appropriate for the purpose of the INDS, however, some refinements are needed in order to reflect the recent institutional changes and the scope of the INDS which is broader than the first PRSP. Extending the M&E system to all relevant public entities concerned with the implementation of the INDS and making it fully operationable is one of the biggest challenges the government has to meet to reach the objectives of the INDS. The outcomes of this project will have implications beyond the INDS: First, the enhanced M&E capacity developed will help in the implementation of other public spending programs - particularly pertinent in the health and education sector where M&E capacities are weak but very relevant. Second, it will help to generate new sector specific information that is presently not available and better inform decision making.  And third, it can provide a basis for performance-based budget management should the government decide to move into this direction.  The primary beneficiary and counterpart of this project is the INDS secretariat (Secretariat Technique Permanent de l'INDS - STP) within the Prime Ministry. However, the project will involve and benefit all focal points in line Ministries and agencies involved in the implementation of the INDS.  The proposed project directly covers one of the focus areas of the Institutional Development Fund - Results-oriented monitoring and evaluation. All proposed activities meet the eligibility criteria and represent good practice in that they will strengthen the incentive system for M&E, build capacity in all relevant Ministries, strengthen data analysis and production and foster dialogue and exchange with the civil society. A baseline (country) diagnostic will be prepared prior to the IDF project through a BB financed TA activity.