Special Report No 15/2003 concerning the audit of microproject programmes financed by the EDF together with the Commission's replies
Date: 2003-12-17
Institutions: European Court of Auditors
Subjects: European Development Fund, audit, development aid, report

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I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 15/2003

concerning the audit of microproject programmes financed by the EDF together with the
Commission’s replies

(submitted under Article 248 (4), second paragraph, EC)

(2004/C 63/01)

CONTENTS

Paragraph

Page

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The multiannual microproject programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Court’s audit

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE DEVELOPMENT OF THE MULTIANNUAL MICROPROJECT PROGRAMMES . . . . . . . . . .

A programming procedure that is iterative, flexible and appropriate . . . . . . . . . . . . . . . . .

Acquired experience not taken into account equally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Insufficient account taken of comparable programmes . . . . . . . . . . . . . . . . . . . . . . . . . . .

Programming choices appropriate to national needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Open definition of beneficiary communities

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unequal but increasing responsibility of the local authority . . . . . . . . . . . . . . . . . . . . . . . .

IMPLEMENTATION OF THE MULTIANNUAL MICROPROJECT PROGRAMMES . . . . . . . . . . . .

Commission central services lack information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Specific rules inconsistent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Proper independence of management procedures in the ACP countries . . . . . . . . . . . . . . .

An appropriate and, in principle, binding management procedure . . . . . . . . . . . . . . . . . .

Programme implementation rate sometimes too slow . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial organisation, organisation of the accounts and controls satisfactory but open to
improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Proper respect for the principle of co-financing by the beneficiaries . . . . . . . . . . . . . . . . .

Monitoring satisfactory but open to improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

RESULTS OF MULTIANNUAL MICROPROJECT PROGRAMMES . . . . . . . . . . . . . . . . . . . . . . . .

Immediate results very positive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Impact nonetheless difficult to measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-III

1-7

1-4

5-7

8-16

8-9

10

11

12-13

14-15

16

17-37

17-20

21-23

24-26

27-28

29

30-33

34-35

36-37

38-56

38-40

41-47

4

4

4

6

6

6

6

7

7

8

9

9

9

10

10

11

11

12

13

13

14

14

14

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Paragraph

Page

Continuity of response to needs often uncertain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Social sectors: education and health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Economic sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CONCLUSION AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48-56

51-54

55-56

57-65

57-64

65

ANNEX I — Microprojects financed by the sixth, seventh and eighth EDFs (situation at 31/12/2002) . . . . . . .

ANNEX II — Microproject programming and management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ANNEX III — Microproject programmes slected for the Court of Auditors’ audit . . . . . . . . . . . . . . . . . . . . . . .

ANNEX IV — Number of microprojects inspected by the Court of Auditors . . . . . . . . . . . . . . . . . . . . . . . . . .

The Commission’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

16

17

18

18

19

21

22

24

25

26

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ABBREVIATIONS AND TERMINOLOGY USED

AIDCO - EuropeAid Co-operation Office

ACP

- African, Caribbean and Pacific States signatory to the Lomé Convention

EDF

- European Development Fund

OLAS

- On-line accounting system

NGO - Non-governmental organisation

REFERENCES USED

Lomé Convention: Articles 252, 290, 299.

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SUMMARY

I.
Some 2 % of EDF aid takes the form of multiannual microproject programmes which finance small-
scale infrastructure projects. The Court examined the management and control by the Commission’s central
services and, in six ACP countries (Ghana, Madagascar, Malawi, Uganda, Zambia and Zimbabwe), by its delega-
tions. The Court also checked whether the aims of the programmes had been achieved.

II.
The main observations concern the formulation of the programmes, their implementation and the
concrete results achieved by them in the countries selected. The Court’s opinion of the microproject pro-
grammes is positive but it nevertheless noted (1) that:

— the Commission’s central services have insufficient information about these programmes and did not
provide the delegations with appropriate guidelines (paragraphs 18-23). The legal status of the units that
manage the programmes in the ACP countries is not always clear (paragraphs 24-26). Implementation of
the programmes by means of ‘programme estimates’ can be confused or slow (paragraphs 27-29).
Although the rules on management and control are, on the whole, satisfactory, deficiencies remain and
the information systems are often poorly designed or not used satisfactorily (paragraphs 30-37);

— although the difficulties of precisely measuring impact are under-estimated, the fact that microprojects
are useful to the communities concerned is widely attested and verifiable (paragraphs 38-47). The condi-
tions that impact on the sustainability of projects appear to be satisfactory, but they may be affected by
the weaknesses of local authorities (paragraphs 48-57).

III.

Following its audit, the Court requests the Commission to:

— improve the organisation of its central services in order to exploit this form of cooperation more fully;

— provide the delegations with precise and consistent guidelines that are appropriate for microprojects,
exercise greater control over the management system and provide it with a better legal framework, so that
programme implementation can be monitored more easily;

— ensure that implementation of the programmes allows the project cycle to be monitored and time limits

respected in accordance with the priority expectations of the communities concerned;

— adopt realistic methods of measuring results, examine in greater depth ways of securing the medium-
term sustainability of microprojects in ACP countries, particularly with respect to the role of local authori-
ties, and encourage appraisals that deal with more than one country.

INTRODUCTION

The multiannual microproject programmes

1.
The European Development Fund (EDF) microproject pro-
grammes, which have been in existence since the first Lomé Con-
vention (1975-1980), finance many small-scale, local infrastruc-

ture projects (schools, clinics, small reservoirs, etc.). Under the
terms of the fourth Lomé Convention (2) the aim of these projects
is to ‘respond to the needs of the local communities with regards
to development’. At the end of the year 2002, for the sixth, sev-
enth and eighth EDFs combined, the financing for these pro-
grammes represented a total of 618 million euro, approximately
2 % of total financing decisions (Annex I).

(1) These observations are based on the detailed reports sent to the cen-
tral services and to the delegations concerned at the end of each of
the six audit visits carried out between November 2002 and March
2003.

(2) The fourth Lomé Convention was signed on 15 December 1989 for a
period of ten years (March 1990 to March 2000) and accompanied
by a five year financial protocol corresponding to the seventh EDF; it
was revised on 4 November 1995 and accompanied by a second five
year financial protocol corresponding to the eighth FED.

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Because they fit in well with some of the aims of Commu-
2.
nity co-operation, namely support for civil society and the fight
against poverty (1), these programmes were retained by the Coto-
nou agreement (2) and linked to decentralised co-operation (3).

Under the terms of the Lomé Convention (4), microprojects
3.
must have ‘an economic and social impact on the life of the
people’, meet a ‘demonstrated and observed priority need’ and be
‘undertaken at the initiative and with the active participation of
the local community that will benefit therefrom’. Under no cir-
cumstances may EDF aid exceed 300 000 euro or, in principle,
75 % of the cost of the project. The remainder is financed by the

local community concerned, in kind or in the form of services or
cash, and, exceptionally, by the ACP State.

4.
Implementation of the multiannual microproject pro-
grammes is decentralised. In an ACP State, they are implemented
by a management unit, which takes decisions, under the direction
of a steering committee in which the Community authority and
the national authority are represented. This management unit has
three main functions: to publicise the programmes, to select eli-
gible projects from those submitted by the potential beneficiaries
and to ensure that they are carried out (see Table 1 and Annex II).

Table 1
Principal actors

Source: Court of Auditors.

(1) Declaration by the Council and the Commission of 25 April 2000 on

the European Union’s development policy.

(2) The Cotonou partnership agreement was signed on 23 June 2000 for
a period of 20 years, with a clause allowing for revision every five
years; it is accompanied by a five year financial protocol for 15,2 thou-
sand million euro, corresponding to the ninth EDF.

(3) Cotonou partnership agreement: Part 4: Development Finance Coop-
eration, Title II: Financial cooperation, Chapter 5: Microprojects and
decentralised cooperation.

(4) Article 252.

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The Court’s audit

THE DEVELOPMENT OF THE MULTIANNUAL MICROPROJECT
PROGRAMMES

5.
The audit focused on the Commission’s central depart-
ments and six (1) ACP countries which, at the end of the year
2002, were beneficiaries of 44 % of the financing decisions for
microproject programmes under the sixth, seventh and eighth
EDFs (see Annex I).

A programming procedure that is iterative, flexible and
appropriate

8.
The development of microproject programmes follows an
iterative procedure, which involves all the actors shown in Table 1
and Annex II. For the Community to undertake to finance over
several years (4) a programme that has been submitted by an ACP
state, the state in question must be able to identify its own needs
and priorities and evaluate its capacity for managing the opera-
tions involved.

9.
The so-called ‘global authorisation’ procedure allows dif-
ferent national programmes to be financed on the basis of a single
authorisation by the EDF committee for a maximum of 30 mil-
lion euro. The relatively low total value of microproject pro-
grammes submitted by the ACP countries means that this proce-
dure, which is reserved for programmes involving less than eight
million euro, is frequently used instead of the standard procedure,
thus avoiding overloading the EDF committee.

On-the-spot check of an irrigation project

Acquired experience not taken into account equally

6.
In each country the Court examined one programme under
the seventh EDF, one programme under the eighth EDF (2) and at
least twenty microprojects. The 144 completed projects, which
were all examined on the basis of individual files and, in 104
cases, by on-the-spot checks, were mostly finished before 2001.
They represent the principal sectors concerned: education, health
and rural development (3). Twenty accounting transactions for the
financial year 2002, relating to microprojects in the selected
countries, were also audited. The projects to be audited on the
spot were selected at random, but the Court took the delegations’
views on accessibility and security into account (Annexes III and
IV).

7.
The audits were carried out on the premises of the Com-
mission’s central services, delegations, microproject management
units, national and local authorities in the ACP countries and final
beneficiaries. The Court’s investigation sought to assess the Com-
mission’s management and supervision of the microproject pro-
grammes and to determine whether the programmes had achieved
their aims. It covered the programming, implementation and
results of these programmes and took account of the risks already
identified by the Commission’s audits and assessments including,
in particular, the risk of non-continuation of projects.

(1) Ghana, Madagascar, Malawi, Uganda, Zambia and Zimbabwe.
(2)

In Zimbabwe the twelfth multiannual programme is financed by both
the seventh and eighth EDFs.

(3) The different meanings given to this term are examined below.

10.
The microproject programmes form the subject of apprais-
als whose recommendations are taken into appropriate account
during the development of subsequent programmes. However,
these appraisals are usually made either half-way through pro-
grammes or shortly after their closure. For example, although in
many countries multiannual microproject programmes have been
in operation for more than 20 years and project continuity is fre-
quently discussed, there are almost no appraisals that have been
carried out after a long period and could provide useful informa-
tion on this particular aspect (5). Furthermore, as the Commis-
sion’s central services make no systematic comparison of the
available appraisals, they thus deprive themselves of useful man-
agement information. Appraisals that deal with more than one
country are too rare and too old (6) to be of use to the Commis-
sion.

(4) Under Article 290 of the Lomé Convention, certain financing deci-

sions may relate to multiannual programmes.

(5) For example, on projects that are five to ten years old.
(6) The most recent is dated February 1997 (Appraisal of microproject
programmes under the fourth Lomé Convention, Research and Tech-
nological Exchange Group, GRET). Countries concerned: Uganda,
Senegal, Comoros Islands and Malawi.

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Insufficient account taken of comparable programmes

11.
The EDFs multiannual microproject programmes are not
the only form of aid for small projects that meet priority needs.
The Member States, other multilateral and bilateral sponsors,
NGOs and the national authorities themselves manage similar
programmes. However, this aid is not always taken sufficiently
into account in the microproject programmes. This is a particular
aspect of the compartmentalisation of information between spon-
sors, particularly between Member States and European Commu-
nity programmes (1).

Zimbabwe: a decentralised European cooperation programme
3.
launched in 1999 is responsible for activities including a fund to
finance small-scale urban and rural infrastructure projects that are in
every respect comparable with microprojects. Nowhere in the pro-
gramme is account taken of this partly overlapping mandate, and the
twelfth microproject programme that was launched a few months
later makes no reference to decentralised cooperation.

Box 1

Comparable programmes

Malawi: a programme of small infrastructure construction
1.
projects in poor rural areas is being financed by the World Bank. In
terms of its objectives, scale and means of action, this programme is
very similar to the EDF microproject programmes. Local communi-
ties can present projects for funding under both schemes. No real coor-
dination was observed. For example, two schools were financed by the
different systems very close to one another. This failing has been par-
tially overcome by the inclusion of specific provisions in the fourth
multiannual microproject programme, which is financed from the
ninth EDF.

Zambia: a joint management unit was set up in 1991 to

2.
oversee management of the multiannual programmes of EDF micro-
projects and the programmes financed by the World Bank. From June
2000 to January 2002 the difficult relations between the two types
of programme (due to uncertainty concerning organisational support
for each type of programme) caused significant problems for the EDF
microproject programmes. In many regions, starting in January 2003,
the date of the administrative separation of the two types of pro-
gramme, officials from the districts concerned were transferred to
World Bank programme activities, at the expense of the EDF pro-
grammes. Although the two types of programme are complementary,
the lack of coordination and cooperation that characterised their man-
agement precluded any form of positive synergy.

(1) EC Treaty, Article 180 (ex Article 130 X)

1. The Community and the Member States shall coordinate their
policies on development cooperation and shall consult each other
on their aid programmes, including in international organisa-
tions and during international conferences. They may undertake
joint action. Member States shall contribute if necessary to the
implementation of Community aid programmes.

2. The Commission may take any useful initiative to promote the

coordination referred to in paragraph 1.

Programming choices appropriate to national needs

12.
The microprojects are either included in the aid concen-
tration sectors fixed by the national indicative programmes (NIP),
or treated as a separate sector (2). The most frequently selected
sectors are either social (education and health, including water
and sanitation) or an economic sector covering agricultural and
craft activities, improved communications and various income-
producing activities.

An income-generating activity: a maize-flour mill

As well as the intervention sectors, programming choices
13.
are concerned with the geographical area covered (all or part of
the territory), the priority criteria (greater or less concentration
on the poorest areas or peoples), the type of operations financed
(construction or renovation of infrastructure such as schools,
clinics or water supply systems, training measures), and the type
of financing (loans or subsidies). In almost every case the pro-
grammes are implemented in a rural environment.

(2) This diversity reflects the Lomé Convention, which treats micro-
projects either as an instrument (Article 252), or as a sector of inter-
vention (Article 229).

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Box 2

Programming choices

Ghana: the fourth and fifth programmes, with allocations of
1.
8,89 and 27 million euro respectively, focus on the renovation of
existing infrastructure in the education and health sectors, the aim
being to increase take-up in these sectors by rural populations.

Madagascar: the third programme, which was financed by
2.
the seventh EDF and launched in 1998 with an allocation of one
million euro for a period of one year, targeted the nationwide con-
struction and renovation of education, health, water supply, agricul-
tural and rural roads infrastructure. The fourth programme, which is
financed by the eighth EDF and was launched in March 2000 with
a budget of eight million euro, has established the transfer of knowl-
edge as an additional major objective of this infrastructure-building
activity.

Malawi: the first, second and third programmes cover the
3.
entire country and have allocations of 3,1, 6,38 and 21 million euro
respectively. Their common objective is to provide rural populations
with basic infrastructure in education, health, communications (roads
and post offices) and natural resources. They incorporate a microloans
scheme. Renovation and construction are accorded equal importance.

Uganda: the main programme under the eighth EDF, has an
4.
allocation of 15 million euro and is being implemented in eight of
the country’s 29 districts, selected for their poverty levels. The sectors
chosen for intervention are education (in conjunction with the national
universal primary education plan), health and rural development.
Renovation and new construction are accorded equal importance and
training activities are planned. A specific programme to build water
and sewage networks is being implemented in parallel.

Zambia: seven multiannual microproject programmes have
5.
been implemented since 1985. Under the fourth Lomé Convention,
some 38,5 million euro have been committed since 1998, 22,4 mil-
lion of this sum under the eighth EDF. The main sectors concerned
are education (which has received more than half of the financing),
health, water and sanitation.

Zimbabwe: the six programmes financed by the seventh and
6.
eighth EDFs cover the entire country and have a total allocation of
47,6 million euro. They focus on the renovation of existing infra-
structure, since the country is already well equipped. The sectors tar-
geted are education, health and rural development, which covers
small-scale infrastructure projects relating to water supply and rural
electrification and a few projects supporting rural crafts.

Open definition of beneficiary communities

14.
Various meanings may be attached to the term ‘local
communities’, which is not defined by the Lomé Convention. It
can refer equally to a group that is subject to a traditional author-
ity (the village and its chief), a group of people having material or
other interests in common (an association) or the population of
an area that has its own administration and legal representatives
(a local community within the meaning of public law).

15.
The diversity of the interpretations adopted allows each
country to adapt implementation of the microproject programmes
to its own structures and politics. Consequently, the eligibility of
a project meeting the same needs, submitted by the same number
of people, for the same cost and with the same technical features,
may vary greatly from one country to another.

Box 3

Defining the local community

Ghana: eligible communities have between 20 and 700
1.
members, this being the number of persons that a project committee
is authorised to represent.

Madagascar: the beneficiary population is represented by the
2.
local authorities. Aid applications are endorsed by both the local
authorities (in a minute from the municipal council) and the people
(in a minute from a meeting of the people concerned with the project).

Malawi: no formal definition has been established, but a
3.
group of at least five persons with shared interests is deemed to be a
local community within the meaning of the Lomé Convention.

Uganda: the term denotes a group of persons with shared
4.
interests and support from the local authorities (sub-county and dis-
trict), which act as intermediaries. While no numerical limits are set,
priority is given to the projects with the largest number of potential
beneficiaries.

Zambia: a local community comprises everyone who has an
5.
interest in a project, is prepared to take part in carrying it out and
will benefit from the results. No practical difficulties have arisen as a
result of the lack of a strict definition or numerical limit.

Zimbabwe: by transposition from the national legislation on
6.
cooperatives, the term denotes a group of at least ten persons who can
prove that they have shared a project for at least one year.

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Unequal but increasing responsibility of the local authority

16.
The microproject programmes contain provisions involv-
ing the local public authorities. In practice, however, this involve-
ment takes various forms and can sometimes be very limited in
scope. Where significant responsibilities are entrusted to local
authorities, the aim is usually to develop their management capa-
bility. In fact, in addition to aiming to satisfy priority social needs,
programmes are increasingly focusing on assisting the develop-
ment of local institutions and supporting policies of decentralisa-
tion. Although not set out in the Lomé Convention, this more
ambitious objective is in accordance with the general principles
of ACP-EU cooperation.

Box 4

The role assigned to the local authorities

Ghana: the district assembly is regarded as the focal point for
1.
the decentralised implementation of the fifth microproject programme.
An ad hoc local committee is responsible for selecting and ranking
projects within the district and for overseeing their implementation in
the context of local annual programmes.

Madagascar: the main microproject programme under the
2.
eighth EDF is the Programme d’Appui aux Initiatives des Com-
munes et des Associations Locales - PAICAL (Support Pro-
gramme for Municipality and Local Association Initiatives). Its pur-
pose is to promote institutional development by strengthening the
management capabilities of the associated municipalities. By involv-
ing them very closely in the various phases of the project cycle, the
programme aims to transfer expertise so that they can assume respon-
sibility.

Malawi: the local authorities (rural districts) usually do no
3.
more than register aid applications and forward them to the micro-
project programme managers. In certain cases they take part in the
ex ante evaluation of projects.

Zimbabwe: the rural districts are not contractually involved
6.
with the programmes and their role is summarily defined. They deliver
opinions on the projects submitted to the management unit, and their
representatives attend project evaluation and management meetings.
While the supervisors and other interested parties sing the praises of
this approach, its impact is difficult to assess.

IMPLEMENTATION OF THE MULTIANNUAL MICROPROJECT
PROGRAMMES

Commission central services lack information

17.
The Directorate-General for Development organises the
general pattern of the programmes. Responsibility for monitor-
ing their implementation lies with the directorate of the Europe-
Aid Cooperation Office (AIDCO) with responsibility for pro-
grammes in the ACP area.

Although the microproject programmes have been in
18.
continuous implementation since 1980, there are some weak-
nesses in the Commission’s central services knowledge of them.
For want of a specific accounting field in OLAS, AIDCO’s depart-
ments were not able to produce a full list of multiannual pro-
grammes that have either been implemented or are in the course
of implementation. As they cannot make the link between pro-
grammes and the contracts that relate to them, for example tech-
nical assistance contracts, they are unable to determine the real
cost of microprojects or to check how efficiently they are man-
aged.

Identification of the areas of activity concerned by the
19.
microprojects is just as defective. AIDCO’s most recent study on
this subject (1) showed that the education sector represented
26,5 % of the allocations and the health sector 18,7 %. However,
in the absence of adequate information, this study classifies
54,81 % of the expenditure under the heading ‘other’. The central
services omit to ask for (2) the summarised information already
put together in the ACP countries by managers of microproject
programmes.

Uganda: under the eighth multiannual EDF programme, the
4.
local authorities are responsible for identifying and analysing the
needs to be met and for planning and managing the microprojects,
which are included in district development plans. The programme
aims to develop the local authorities’ management capabilities by
assigning them extensive responsibilities; to this end it includes an
element for the training of local officials.

20.
It is natural for the Commission’s central services to leave
the delegations the task of monitoring in detail the implementa-
tion of the thousands of projects involved. However, it is regret-
table that the central services are unaware of the main outlines of
the national multiannual programmes. As a result, the Commis-
sion is unable to take advantage of the experience gained by the

Zambia: the districts and the regional coordinators combine
5.
to promote programmes, perform documentary and on-the-spot
appraisals of project proposals and, where necessary, recommend them
to the national steering committee for approval.

(1) Study of the social content of the multiannual microproject pro-
grammes under the sixth, seventh and eighth EDFs, AIDCO,
28 June 2002.

(2) Article 290(3) of the Lomé Convention provides that the national
authorising officer is to forward a report to the Commission on the
implementation of the multiannual programmes.

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delegations in the field of microprojects to identify and dissemi-
nate good practice. The restructuring associated with the Com-
mission’s transfer of management responsibility to local level (1)
did not include any specific provision for improving this situa-
tion. For example, none of the thematic support groups that are
being set up covers microprojects.

authority and the delegation. Depending on what is involved, they
are attached to the ministries of finance, local affairs, agriculture
or rural development. They are also supervised by the technical
ministries that deal with the various sectors concerned (educa-
tion, health, agriculture, water and sanitation), which may be rep-
resented in the steering committee.

Specific rules inconsistent

21.
The Commission has not drawn up internal rules and
management guides that relate specifically to the microproject
programmes and supplement the Lomé Convention, the internal
agreement, the financial rules and the legal instruments imple-
menting them (2). The page on microprojects in the user’s guide
to the financial procedures of the seventh and eighth EDFs can-
not be regarded as constituting sufficient guidelines. In managing
the programmes in the ACP countries, the Commission’s general
practice guides are used and interpreted inconsistently.

22.
To make up for this lack of specific rules, national man-
agers have drawn up practical guides that are generally clear and
useful but rather different in terms of detail, presentation and
content. This profusion of local guides, which, are sometimes
very well prepared (as in the case of Madagascar), does not replace
the clear and simple central guidelines needed for the exercise of
the decentralised powers that have to be developed.

The lack of specific internal rules is even more regrettable
23.
given that interpretation of the Lomé Convention varies from one
country to another, the microproject programmes have been in
existence for more than twenty years and they are managed by
independent bodies.

Proper independence of management procedures in the ACP
countries

24.
The microproject management units are placed under the
authority of the national authorising officer and report to a steer-
ing committee (3) that includes representatives of the national

(1) See the interim report on decentralisation of 30 April 2003, point II,
External Relations Directorate-General, which says that headquarters
role must develop in the direction of coordination, quality control,
management control, technical support and improving working prac-
tices.

(2) For example, Council Decision No 3/90 laying down general condi-

tions relating to works, supply and services contracts.

(3) Depending on the projects, known as executive committee, policy
committee, appraisal committee. It is sometimes divided into two
committees (appraisal and steering), as in Zimbabwe.

25.
This dependence in relation to the national authority is
mitigated by considerable de facto autonomy. The management
units have their own operating resources. In some countries they
may freely recruit contractual workers from the private sector or
from the civil service. They are sometimes headed by a technical
assistant who holds a service contract and has wide freedom of
action. The quality of the staff appointed to these units appeared
to be generally good.

26.
This independence of the units is an efficiency factor, in
particular when supported by a clear legal framework which
enables the unit to define precisely in its contracts its relations
with third parties. On the other hand, when, as is the case in a
number of countries, the management units do not have the legal
status to sign enforceable contracts, their relations with the other
parties involved in programme implementation, i.e. central gov-
ernment, local authorities, specialised technical agencies, benefi-
ciary communities, and delegation, are too imprecise for it to be
possible to identify the various parties responsibilities when prob-
lems with implementation arise.

Box 5

The legal framework of the management procedures

Madagascar: the role of management unit belongs to an
1.
agency established by decree that is also responsible for decentralised
cooperation. The agency has full authority to conclude contracts with
the municipalities. These contracts are separate from those drawn up
by the national authorising officer.

Uganda: the eighth EDF programme is being implemented
2.
as prescribed in an agreement concluded between a body called the
‘EDF microproject programme’, which is defined as an autonomous
programme of the Ugandan Government, and each of the participat-
ing district councils. However, the same document states that the
management unit, the head of which signed the contract, represents
the national authorising officer and the European Union. It remains
to be seen what impact this contract will have, since it is not even clear
how many contracting parties there are.

Zimbabwe: on the recommendation of a legal expert, exami-
3.
nation has begun of a draft private-law statute under which the
national authorising officer would be just one senior member of an
executive board. However,
this proposal are
questionable.

the advantages of

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An appropriate and, in principle, binding management
procedure

27.
The multiannual microproject programmes are imple-
mented in successive instalments, which, in turn, are subject to
programming as programme estimates. These programme esti-
mates specify the microprojects to be delivered during each refer-
ence period, contain an estimate of their cost and provide for
their financing through advances. They also form the budgetary
framework for the operation of the management units. As far as
possible, the performance periods and the financial tranches
relating to them should be annual (1) or, at least, should be at
specified intervals and last for reasonable periods, so that attain-
ment of the objectives can be monitored without delay and the
advances paid can be rapidly discharged. Programme estimates
lose their usefulness if they are not closed in due time or if they
are systematically extended by means of riders. There have been
several exceptions to these rules of sound management.

28.
Expenditure related to microproject programmes is some-
times effected alongside the programme estimates. This is gener-
ally the case of audit activities and technical assistance recruited
by means of service contracts, and sometimes the case of certain
expenditure on supplies or equipment.

Box 6

Programme estimates

Ghana: the national programme estimates cover periods of
1.
eighteen months or more. They are coordinated with the district pro-
grammes and are the subject of a central accounting commitment (2).

Malawi: the programme estimates contain details of all pro-
2.
gramme expenditure. Each one is the subject of a separate commit-
ment.

Uganda: the programme estimates are detailed and tied in
3.
with the district development plans. They are the subject of an
accounting commitment. Alongside the programme estimates, the
administration of the service contract for the senior staff of the man-
agement unit led in 2002 to an unrequited payment that should have
required a legal opinion.

Zimbabwe: the programme estimates contain only summary
4.
objectives such as the number of projects foreseen per sector for the
year in question. They are not the subject of a separate accounting
commitment. Detailed information on approved projects is contained
in separate batches of descriptive sheets that are sent to AIDCO for
successive accounting commitments; these are nonetheless registered
on each occasion as ‘programme estimates’. Coupled with the fact that
the twelfth programme is financed by both the seventh and the eighth
EDF, this fragmentation of the accounts makes it extremely difficult
to monitor the financial aspects of the projects.

(1) The current term is ‘annual programme estimates’.
(2) The accounting commitment referred to in this box is that applied in

OLAS.

Programme implementation rate sometimes too slow

29.
There are numerous priority needs to be satisfied and the
demands of local people remain strong. As a result, the capacity
of the ACP countries to absorb the funds for microproject pro-
grammes is very high. Nevertheless, significant delays were
observed in the execution of some programmes under the sev-
enth and eighth EDFs. These delays further increase the adminis-
trative costs of the programmes and are a source of disappoint-
ment to the people concerned. There are various causes: sometimes
external constraints and sometimes shortcomings in internal man-
agement.

Box 7

Programme implementation rate

Ghana: although the first phase of the fifth programme was
1.
approved on 31 May 1999, the first programme estimate was not
signed until 15 June 2000, and the initial advance was not paid into
the districts accounts until May 2001. Beginning in May 2001,
there were six successive amendments extending the programme period.
Implementation of the second programme estimate, which was
launched in July 2002, was already well behind schedule at the end
of 2002.

Malawi: owing to a lack of coordination between the central
2.
management unit and its local offices, the third programme was
unable to finance all the projects that had been approved. In 2002,
the policy committee issued instructions for more selectivity in the
local examination of projects.

Uganda: the programme launched in 1996 in the Karamoja
3.
region was not closed in 2001, due in part to local insecurity. The
first programme estimate under that programme, for the period
1998-1999, was amended on three occasions and extended until
31 July 2002. The programme estimates under the eighth EDF pro-
gramme were affected by several extensions and excessive overlap
between programme estimates. As of December 2002, three pro-
gramme estimates were open simultaneously in connection with one
and the same programme.

Zambia: as of March 2003, more than a year after the sign-
4.
ing of the financing agreement for the programme’s phase II, virtu-
ally all the funds had been committed to fewer than half the number
of projects planned. At the same date, 125 projects were still pend-
ing even though many of them had been approved more than a year
previously.

Zimbabwe: in 2001 and 2002, the state of the national
5.
economy — which is characterised by hyperinflation and irrational
exchange rates — meant that the budget funding allocated to several
projects under the twelfth multiannual programme became insuffi-
cient in the course of the year. In several cases it was necessary to
postpone completion of those projects.

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Financial organisation, organisation of the accounts and
controls satisfactory but open to improvement

Box 8

30.
The funds needed for the projects and for administrative
expenditure by the management units are paid into the accounts
in advance. The initial advance is usually 30 % to 50 % of the esti-
mated requirement. Further payment into the accounts is condi-
tional upon the advances being used correctly. Implementation of
this procedure is risky, as sizeable sums are paid before any work
has been done.

Another inherent risk of the microproject programmes
31.
stems from the fact that operations are dispersed over a large
number of sites, making them difficult and expensive to super-
vise. Setting up regional offices or increasing the role of the local
authorities has improved project monitoring but has not reduced
the administrative costs that result from dispersion. The budget-
ary cost of administrative expenditure (1) varies greatly from one
country to another (10 % in Malawi, 17 % in Zambia, 20 % in
Madagascar and in Zimbabwe). However, a comparison of admin-
istrative costs is not enough to show comparative management
efficiency. In practice, the importance of the tasks entrusted to the
local administration and the geographical and economic con-
straints differ greatly from one country to another.

In order to take these risks into account when organising
32.
expenditure flows and planning internal controls, the countries
concerned have combined accounting centralisation and decen-
tralisation, external audit and internal control in different ways. In
some countries, managers open separate accounts for each cat-
egory of expenditure. In others, all the expenditure goes through
the same accounts. Separating the operating expenditure accounts
from those dealing with administrative expenditure makes it easier
to monitor and control administrative costs.

The accounting and financial management systems of the
33.
microproject programmes examined by the Court were, on the
whole, satisfactory but there was room for improvement in both
their definition and their operation, particularly as regards the
control function. Sporadic dysfunctions were shown up, espe-
cially by the financial audit of 2002 transactions selected and
examined in connection with the Court’s statement of assurance
on the management of the EDF. Some of these problems are linked
to a lack of technical competence and sometimes to the impov-
erished state of local administration.

(1) Administrative expenditure provided for in the financing agreements

and the programme estimates.

Financial organisation and organisation of the accounts

Ghana: works are paid for by the districts, which apply their
1.
own ex ante control procedures and hold local accounts into which
the management unit pays advances. Checks prior to replenishment
of the central account are carried out internally. According to the
financing agreement for the fifth programme, however, financing of
the second phase was dependent on an external evaluation of the first
phase that was carried out after the funds were disbursed. It was also
noted that the local tendering procedures were disregarded on several
occasions.

Madagascar: the municipalities manage the accounts assigned
2.
to project expenditure, but ex ante expenditure checks are performed
by the regional management offices. A posteriori expenditure checks,
which determine how the single national imprest account is to be
replenished, are assigned to a section reporting to the national autho-
rising officer that is responsible for verifying all EDF transactions
managed under programme estimates. The deficiencies that were
identified related to occasional gaps in the legal documentation and
the acceptance of arbitrary unit prices during the examination of ten-
ders.

Malawi: there are separate accounts for operational and
3.
administrative expenditure. Purchasing and spending are overseen
centrally by the national management unit, which aims to obtain the
most competitive prices in this way. However, this system is impos-
ing a heavy workload which would justify decentralising in favour of
regional offices. The imprest accounts are replenished on the basis of
external audits commissioned from private firms in the form of peri-
odic physical inspections. However, the auditors’ reports, often con-
taining qualifications, are not followed up.

Uganda: the districts pay for works from local accounts that
4.
are fed by advances from the management unit. They also carry out
ex ante controls of expenditure. Quarterly a posteriori checks are
commissioned from a local audit firm that is simultaneously respon-
sible for auditing the accounts and providing on-the-job training to
the local accountants who keep those accounts. The external audit
and advice functions are not kept sufficiently separate. The valid
observations of the Auditor General of Uganda concerning the dis-
tricts’ microproject accounting procedures are ignored by the manage-
ment unit and the delegation.

Zambia: internal checks on the correct utilisation of advances
5.
should have been carried out by a three-person team, but in reality,
until January 2003 this task was assigned to one person with the
rank of assistant, working alone. The control system was compro-
mised as a result. Moreover, the most recent external audit, of which
the Court’s auditors were notified in March 2003, related only to
administrative expenditure in the financial year 2001 — despite the
fact that no report was available for the year 2000.

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Zimbabwe: ex ante checks are performed centrally on all
6.
expenditure. Operational expenditure passes through a central account
handled by the management unit. The administrative expenditure of
the five regional management offices is effected via local accounts, to
which payments are made from the central administrative account.
Replenishment of the accounts is dependent on the quarterly audits
performed by the local subsidiary of an international firm. The fact
that these audits do not examine account revenue or include on-the-
spot checks limits the usefulness of the certificates that are issued.

Proper respect for the principle of co-financing by the
beneficiaries

34.
The beneficiary contribution provided for by the Lomé
Convention is mostly made in kind (supply of bricks, sand, vari-
ous materials) or in work (participation in construction work),
which makes accounting for it difficult. Where accounts are
judged to be either impossible or too formal, verification focuses
on the existence of a significant contribution. In most cases, a
detailed valuation is entered in the project accounts but, in the
absence of supporting documents and a formal accounting struc-
ture, it is often very difficult to verify.

35.
Application of the Lomé Convention requires a certain
amount of insight as regards calculation of the contribution to be
required from beneficiaries. For example, it is widely recognised
that the AIDS epidemic affects the contributory capacity of the
most badly affected rural populations. In another context there is
unanimous support for the idea that rules on beneficiary contri-
butions must be rigidly applied. In certain very difficult circum-
stances, however, this could deprive some very poor people of a
response to priority needs, which was not the intention of the
Lomé Convention. The possibility of substituting a contribution
from the ACP state, i.e. the local administration, for the benefi-
ciary’s contribution depends on the latter’s ability to contribute.
On-the-spot inspection has shown that a disciplined approach in
managing and measuring contributions is still possible.

Monitoring satisfactory but open to improvement

Box 9

Technical monitoring of infrastructure

Madagascar: the main weakness of technical monitoring lies
1.
in the inadequate supervision of the procedure for the acceptance of
works, which caused the local team to accept a school building of infe-
rior quality.

Malawi: project monitoring takes the form of periodic on-the-
2.
spot visits by specialists from the local offices of the management unit
and, on occasion, by members of the policy committee. Beneficiaries
also play a supervisory role by verifying the availability of materials
that have been purchased centrally.

Uganda: under the eighth EDF programme, responsibility for
3.
technical monitoring and maintenance has been assigned to the dis-
tricts in the capacity of communities owning the infrastructure. Com-
pliance with these obligations is eased by the high technical standard
of the EDF infrastructure, which is superior to that financed by the
national authorities through their capital investment plans.

Zimbabwe: technical supervision is assigned to the districts
4.
or to specialised national technical bodies. The quality of the aid
delivered in this way varies widely between projects, according to the
level of training and availability of the staff concerned and the geo-
graphical and financial constraints with which they are confronted.
In addition, within the limits of their technical proficiency (skill levels
are being raised by training and awareness-raising activities), benefi-
ciaries supervise the work of the contractors on site.

37.
In addition to monitoring the projects on an individual,
technical basis, programme implementation must also be super-
vised by means of appropriate management information on peri-
ods, categories of expenditure or beneficiaries and geographical
areas. In many cases, however, the information systems do not
allow this, as the information received is, in some cases, too little,
in others too much, or confused or irrelevant. The steering com-
mittees receive large numbers of reports containing information
that is often redundant and difficult to process.

Box 10

Information systems

Ghana: under the January 1999 financing agreement the
1.
computer application MISME (Management Information System
Monitoring and Evaluation) was intended as one of the keystones for
the management of the fifth programme, processing not only all
physical and financial project data but also beneficiaries’ appraisals
and ‘baseline data’ (1), but it had still not been implemented as of the
end of 2002.

Despite the inherent constraints of widely-dispersed
36.
operations, the monitoring of construction or renovation work is
generally satisfactory, largely thanks to the involvement of the
beneficiaries. There is room for improvement, however, particu-
larly in the case of the most complex projects, where greater tech-
nical expertise is required.

(1) The ‘baseline data’ method seeks to reconstruct as accurately as pos-
sible the course of events had the programme designed to improve
the original situation not been implemented.

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Madagascar: too much of the information supplied by the
2.
management unit is scattered among different kinds of reports (project
descriptions, spreadsheets, periodic reports, etc.), with no clear indica-
tion of which report contains the correct data. Much inconsistency
could thus be avoided if the information and reports supplied by the
agents were simplified, project-focused and derived from a single
source.

Malawi: information on the projects is recorded in separate
3.
documents, making it impossible to consult all the data for each
project. No use can be made of the information on the communities
socio-economic circumstances, the target sectors and the situation
prior to project launch, all of which could benefit the internal evalu-
ation procedure. The management unit has no computerised system
with which to improve collection and use of existing data.

Uganda: there is an observable tendency to produce numer-
4.
ous reports with no attempt to synthesise. To take the eighth EDF
programme alone, over one hundred separate reports deemed neces-
sary for the management unit were produced in the course of one year.

Zimbabwe: the shortcomings of the information system are
5.
exacerbated by the fragmentation of the projects’ financing into dif-
ferent accounting commitments. In these circumstances, it is all but
impossible to operate a monitoring system that complies with the
principle of project cycle management to which the Commission refers.
The information system grafted on to the accounting system is not
capable of providing a rapid and comprehensive overview of the physi-
cal and financial situation of a microproject.

Many primary schools have been built

40.
In most cases the beneficiaries are organised in project
committees. Sometimes these already exist (in the case of renova-
tions) and sometimes they are specially set up. The committee
representatives met during the audit understood the requirement,
peculiar to the EDF programmes, that final beneficiaries must
make a substantial contribution. Respect for this principle of ben-
eficiary participation is essential to the continuity of the projects;
it can also be seen as a positive achievement in itself. It is, in fact,
a response to the ‘ownership’ objective set out in the Cotonou
Agreement.

Impact nonetheless difficult to measure

RESULTS OF MULTIANNUAL MICROPROJECT PROGRAMMES

Immediate results very positive

41.
Project programming must be based on a measurement
of needs and must define ex ante the indicators that allow an
impact to be measured ex post. The Commission’s programme
management methodology, summarised in logical frameworks,
makes a distinction between programme results (availability of
infrastructure and services) and programme impact (improve-
ment in the life of the people concerned).

The Lomé Convention expects microprojects to have an
38.
economic and social impact on the life of the people and to
respond to demonstrated and observed priority needs.

39.
The detailed review of the microprojects selected by the
Court in the six countries visited, carried out on the basis of the
files and on-the-spot inspections in association with beneficiaries,
certainly brought to light a number of dysfunctions that need cor-
recting, some significant examples of which are set out below.
However, in most cases the review showed that, as required by the
Lomé Convention, essential needs had received an appropriate
response.

42.
In the ACP countries, priority needs and the response to
them are measured at the national level. For example, the response
to the need for drinking water can be measured by the proximity
of water supply points (1). The response to the need for health
care can be measured with the help of WHO criteria and the
response to the need for education can be measured by the per-
centage of children in full-time education or the number of pupils
per class.

(1) The distance to be covered to reach drinking water is a current crite-

rion.

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However, the impact of EDF programmes cannot be
43.
defined by looking at trends in national, or even regional, statis-
tics alone. Their impact must be distinguished from that of com-
parable programmes, which are all the more numerous because
the projects financed are small-scale (1).

Box 11

Measuring impact

44.
Donor countries, NGOs and ACP countries do not share
information on their work in the area of microprojects. It would,
however, be useful to know the total number of classrooms, clin-
ics, water supply or sewage systems constructed or renovated in
each country during any given year, whatever the sources of
finance. The impact of the EDF microprojects could then be
assessed by taking account of their relative significance in terms
of development aid.

45.
Lack of information about the environment is not the
only obstacle to measuring the impact of microprojects. The over-
ambitious measurement indicators provided for in the pro-
grammes are another source of difficulty. The logical framework
method sometimes gives rise to theoretical excesses. For example,
certain programmes provide for the use of over-sophisticated
‘objectively verifiable indicators’, which in many cases are not
available, as the statistical work on which they are based is over-
expensive.

46.
A further difficulty derives from the existence of an
undeniable but diffuse indirect impact which is more pronounced
and visible in the short term for some projects. For example,
while irrigation and electrification microprojects meet the needs
of the communities that are directly behind them, they also offer
possibilities for economic development to everyone in the areas
concerned.

Ghana: the objective of the fifth programme, which was to
1.
rehabilitate social infrastructure and thus increase take-up, was not
accompanied by any suitable arrangements for measurement. In par-
ticular, the beneficiary-led evaluation provided for in the financing
agreement did not produce the desired results. The impact indicators
contained in the logical framework were of no use at all.

Madagascar: the results forecast under the programme
2.
financed by the seventh EDF were verifiable and expressed quantita-
tively in terms of infrastructure. Apart from the works that have been
completed, it is difficult to quantify the results that PAICAL is seek-
ing to obtain, e.g. an increase in the delivery of basic services to the
population, better consultation between civil society, elected represen-
tatives and local government, and enhanced local management skills.

Malawi: the third programme specifies that the results
3.
obtained, in terms of improvements in living conditions and the fight
against poverty, are to be verified by means of indicators to be pro-
vided by the Ministries of Education and Health. No indicators of
this kind were used.

Uganda: the intended impact study on the microprojects
4.
financed from the eighth EDF did not come to pass. The logical refer-
ence framework specifies both ‘objective and verifiable indicators’
which, because of the inadequacy of the available statistical tools, can-
not be verified for the EDF alone at the level of the districts concerned,
and more realistic indicators focusing on material results rather than
impact. Taken together, the indicators cannot be used to assess whether
living conditions have improved.

Zimbabwe: the twelfth multiannual programme makes use
5.
of realistic results-based indicators, such as the number of economic
or social infrastructure projects completed, and avoids impact indica-
tors, which are very difficult to use. The external evaluation of the
programmes showed that it was impossible to quantify the benefits
derived from microprojects, or even to establish incontrovertibly the
total number of beneficiaries. The evaluation of the seventh EDF pro-
grammes highlighted the absence of quantitative data and based its
conclusion (an extremely favourable one) on qualitative indicators, the
substance of which, however, is not explained in detail.

A reservoir: numerous indirect beneficiaries

In these circumstances, it is better to accept that the
47.
impact is not precisely measurable, rather than putting forward
figures that cannot be verified.

Continuity of response to needs often uncertain

(1) Small-scale projects are a preferred area for action by NGOs.

48.
The response of the multiannual microproject pro-
grammes to the needs of the people behind the projects is easier
to assess if the distinctive characteristics of the main areas

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concerned (education, health and rural economic development)
are taken into account. Even though not referred to in the Lomé
Convention, the sustainability of this response is an essential cri-
terion in assessing the result.

49.
The initial quality of the works is still the primary guar-
antee of their sustainability. Even so, an effective support policy
is still needed in order to ensure their durability. Where works
generate revenue, a maintenance budget is allocated to them.
Conferring ownership on the beneficiaries is a further condition
of the viability of completed projects.

In the education sector, the microproject programmes
52.
finance the construction and renovation of primary and second-
ary schools and in some cases their equipment in the form of fur-
niture, books and laboratory equipment. This sector is well-suited
to microprojects. The level of education and motivation of the
project promoters, teachers and parents of pupils, is a primary
success factor. The simplicity and standardisation of the school
buildings are another favourable factor. The resources needed to
fund small-scale maintenance work are obtained by the national
authorities where the school is free, or by parental contribution
where it is not free. The sociological reasons set out above mean
that these resources are generally well administered.

53.
In the health sector, microprojects are subject to greater
constraints and the results obtained are more vulnerable. The pro-
grammes finance construction and renovation of clinics, small
hospitals, lodgings for health-care staff and the acquisition of
simple medical fittings. Supplying medication is the responsibil-
ity of the national authorities. One of the inherent difficulties in
this sector is due to the fact that the population of beneficiaries is
more diverse and they are less positively involved than the parents
of schoolchildren, even though users’ committees play an active
role. Moreover, the regularity of the medical supplies provided by
the national authorities is a more sensitive question than the pro-
vision of educational equipment, which is renewed less frequently.

50.
At the end of the missions carried out in the six selected
countries the Court considers that the efforts made to secure the
sustainability of the microprojects are satisfactory. With few excep-
tions, sustainability conditions for the projects inspected were
seen to be satisfactory or, in the case of the oldest projects, they
were in an acceptable state of preservation. However, as indicated
above, the fact no studies have been devoted to the oldest projects
makes it difficult to have any knowledge of the overall sustain-
ability of microprojects. In the context of most African countries,
whether or not microprojects can be seen to be operating satis-
factorily at a particular moment is still uncertain. The main cri-
terion of sustainability continues to be the support of the national
authorities, whether central or local.

Social sectors: education and health

51.
The education and health sectors have special character-
istics which stem from the beneficiary communities, the techni-
cal complexity of the microprojects and the need for expertise
and assistance from national or local authorities.

Can clinics continue to operate on a regular
basis?

Many secondary schools successfully built or equipped

54.
Projects for the supply of drinking water and sanitation,
such as wells and latrines, contribute to the improvement of pub-
lic health but are subject to fewer constraints.

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Box 12

Microprojects in the social sectors

Ghana: most of the infrastructure inspected was being used
1.
as originally intended, although there were a few, rare cases of misuse.
A rural clinic financed by the fourth programme was also doing duty
as a nurse’s kitchen and living quarters; her original accommodation
was being used by a midwife and a primary school teacher. Another
clinic had seen no medical use for over a year. Approximately one
quarter of the infrastructure inspected had obvious problems, such as
cracks, that required repair work often beyond the capacity of the ben-
eficiaries and necessitated intervention by the district authorities. As
well as the funding of major repairs, there were staffing problems
because of the large number of schools located in isolated rural areas.
Although the increased take-up of the public social services had clearly
improved people’s lives, the sustainability problems affecting the pre-
vious programmes (insufficient support by the technical ministries
(Health and Education), failure to supply and replace equipment) had
not been eliminated.

Madagascar: with the exception of one secondary school, all
2.
the projects visited were of a satisfactory standard and met the ben-
eficiaries’ needs

Malawi: microproject management committees are being set
3.
up and will take over the projects once they have been completed. Staff
from the management units are conducting awareness-raising activi-
ties with these committees in order to engender the sense of owner-
ship and responsibility necessary for the correct maintenance of infra-
structure. Since the secondary schools are fee-paying, their management
committees have set up permanent funds to meet regular maintenance
costs. In the case of the primary schools, which are free, the benefi-
ciary communities generally regard the government as responsible for
regular maintenance and have not set up funds with parental contri-
butions.

Uganda: the two programmes inspected are financing the
4.
building and renovation of primary schools. Particular importance is
given to providing the children with school meals, which encourages
attendance, and to housing teachers on the premises, which makes it
easier to appoint motivated staff. The principle of free schooling is
enforced by the State under the voluntary programme of universal pri-
mary education. In return, schools are allocated maintenance budgets.
The schools and health centres visited were in a satisfactory state of
repair, but there were huge disparities in the standard of furnishing.

Zimbabwe: the decision by the Council of the European
5.
Union to freeze all aid not directly benefiting the population has
turned the spotlight on microprojects, the main objective of which is,
in fact, to provide direct aid.

— The monetary situation in Zimbabwe is adversely affecting the
poorest sections of the population, which should be the ones to
benefit from EDF aid. In 2002, the financial budgets assigned
to infrastructure projects under the twelfth multiannual micro-
project programme thus proved insufficient on several occasions,
owing to the combined effect of the very adverse exchange rate
and sudden price increases suffered by contractors. As a result,
additional packages were agreed and the work originally agreed
was scaled down, to the detriment of the beneficiary communi-
ties, which had nonetheless paid their required contributions
towards carrying out the projects.

— For example, a project to supply drinking water was completed
only because of an additional contribution from the beneficiary
community. Another project, although virtually complete, could
not become operational, leaving the local population with no
service at all. At one rural clinic located in a region given prior-
ity status because of the AIDS epidemic, funds had run out and
only half of the equipment financed by the programme had been
supplied. The beneficiary community had opted to retain the
construction materials and to forgo the plumbing in the nurse’s
living quarters, together with additional medical equipment.

— The education objective of the ninth and twelfth programmes,
which was to improve the standard of training being offered,
was overwhelmingly attained. The installation of science labs in
secondary schools will enable the schools to obtain a higher level
of Ministry of Education accreditation and offer a higher level
of qualifications. Considerable thought has been given to the
housing of teachers. The EDF-funded equipment in the schools
inspected was generally carefully stored and well maintained.

Economic sectors

The problems affecting projects that support revenue-
55.
generating commercial activities are linked to the low level of
training in the communities in which projects originate, the tech-
nical complexity of the projects, the difficulty of fitting them into
existing economic channels and climatic risks. In the event, the
audit revealed a greater number of dysfunctions in this sector.
There are fewer economic microprojects and the unit cost is often
higher. Their need for expertise and technical assistance is greater.
But the benefits which they bring in terms of development and
lasting improvements in living standards is justification for the
programmes that are exposed to these risks.

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Uganda: the use of loans to finance economic projects, as
2.
provided for in the Karamoja microproject programme, suffered a set-
back which resulted in its being transferred to an autonomous pro-
gramme run by a specialised microloans unit. The microproject pro-
gramme nonetheless subsidised the construction of several fenced
enclosures, a veterinary building and a fiscal building for two projects
to facilitate the holding of cattle markets and the collection of local
excise duties on the sale of livestock. These construction projects,
which had suffered interruptions preventing their official handover to
the beneficiaries, were being under-used at the end of 2002. Less than
three years after work had been completed, one of them had fallen into
considerable disrepair (fencing not designed to withstand the pressure
of livestock).

Zimbabwe: economic projects are grant-funded. The man-
3.
agement unit favours simple low-cost technology such as gravity-fed
irrigation. Notwithstanding major constraints such as silting and the
rapid natural growth of the beneficiary population, the renovation of
a gravity-fed irrigation system that had been started in the south-
east of the country in 1932 is a positive example of aid for existing
projects which have proved effective in the past and also offer signifi-
cant development potential. By contrast, in the case of another irriga-
tion system located in the same region, it was not possible to meet the
condition set for the project’s success — namely, the production and
marketing of a good harvest. Being a plain, the area concerned neces-
sitated the use of delicate technology (an electric pump) instead of the
far more durable gravity-fed system. At the time of the visit, the threat
to sustainability was serious, and the electric pump had already partly
rusted and was liable to leak.

The profitability of this flour mill is by no
means secure

56.
The main activities in this sector are the construction of
facilities needed, in particular, for irrigation (reservoirs, canals,
pumps), crop storage (silos), their processing (mills), the market-
ing of produce (market places), their disposal (local roads) and
veterinary care (vaccination crushes) (1). Local craft activities are
also financed. Loans financing is practised in certain countries
although it has been abandoned in others by reason of low levels
of repayment or lack of management expertise in this area.

Box 13

Income-generating activities

Malawi: the main dysfunctions observed concerned loan-
1.
funded income-generating projects under the direct control of the
national management unit. A pig farm run by a five-person team
had received an initial 1½-year loan and a grant that had not been
officially approved. As at the inspection date, repayments were subject
to a five-month delay because the project team had been unable to
feed the animals in such a way as to fetch a reasonable resale price.
One project, a bakery, was ineligible because the loan had been
awarded to a single beneficiary who, moreover, held an administra-
tive post at the delegation on the date of the decision. Another project,
a sawmill, was not operational because of an unrepaired technical
fault.

CONCLUSION AND RECOMMENDATIONS

Conclusion

57.
While respecting the rules of the Lomé Convention and
the principles of initiative and participation, the multiannual
microproject programmes are able, with limited funds, to render
a real service to people in poor countries. By doing so, they pro-
vide a convincing example of the effective, economical and effi-
cient use of EDF resources (see paragraphs 38-40). Each country
has been able to adapt implementation of the microproject pro-
grammes to its own structures and politics. The eligibility criteria
for multiannual microproject programmes can differ greatly from
one country to another, depending on the interpretation given to
the terms of the Lomé Convention (see paragraphs 14-15).

(1) A crush is used to immobilise animals that are to be vaccinated.

58.
Although the specific impact of the EDF programmes is
not measured and appears difficult to measure except in relation
to individual projects (see paragraphs 41-47), microprojects do

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provide an appropriate response to essential needs in the great
majority of cases.

The Court’s audit has brought to light a number of man-
59.
agement deficiencies and risks that are inherent in these pro-
grammes and which, although they are not an impediment to the
continuation of the programmes, nevertheless call for corrective
action or particular vigilance.

There are no appraisals of national microproject pro-
63.
grammes that have been carried out a long time after the pro-
grammes and which could provide useful information about the
sustainability of older projects and enable similar questions to be
taken into account in respect of future projects. Appraisals that
relate to more than one country are too rare and too old to be of
use to the Commission (see paragraph 10). The lack of reliable,
consolidated information on financial aid to small-scale infra-
structure in ACP countries means that it is not possible to assess
the EDF’s own contribution in this area (see paragraph 44).

60.
The Commission’s central services have insufficient infor-
mation about the multiannual microproject programmes, which
limits any assistance that they might be able give to the delega-
tions (see paragraphs 17-20). Comparable programmes are not
sufficiently taken into account in the design and appraisal of the
EDF programmes (see paragraph 11).

64.
Although projects were usually found to be in good con-
dition several years later, their sustainability is still, in many cases,
an open question and the quality of the service provided is uncer-
tain, particularly in the areas of health and rural economic devel-
opment (see paragraphs 53 and 55-56).

61.
The Commission has not drawn up internal rules and
management guidelines dealing specifically with microproject
programmes. This results in a proliferation of local guides of
unequal quality (see paragraphs 21-23). The legal status of the
management units is not adequately explained in programme ref-
erence documents (see paragraph 26). The management rules for
programme estimates are not always followed rigorously, particu-
larly as regards extensions of completion periods (see para-
graphs 27-28). Harmful delays have been observed in the comple-
tion of programmes (see paragraph 9).

62.
Although the accounting and financial management sys-
tems used for the programmes are generally satisfactory, there are
weaknesses in the internal control procedures and in many cases
the management information concerning projects is too little, too
much, confused or irrelevant (see paragraphs 30-33).

Recommendations

The Commission is requested to implement the follow-

65.
ing recommendations:

(a)

to organise its central services to receive and analyse relevant
information concerning the general guidelines and overall
results of multiannual microproject programmes, in order to
be able to support, improve and promote this useful local
development tool more widely;

(b)

to provide the delegations with a common microproject
management guide which takes account of the specific char-
acteristics of the instrument and the experience gained in this
area;

(c)

to pay more attention to the legal status of microproject
management units and provide a legal framework for rela-
tions between them and their partners, and local authorities
in particular;

(d)

to ensure that implementation through programme estimates
is better supervised so as to ensure that the project cycle is
properly monitored and that time limits are observed in
accordance with the priority expectations of the people;

Need to maintain the irrigation systems

(e)

to examine more closely the conditions affecting the sustain-
ability of microprojects and, in particular, the part to be
played in that by the local authorities at the different stages

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of each project. The Court considers that a greater effort
should be made to involve the local authorities in the ACP
countries more clearly in the implementation of multiannual
microproject programmes (1);

(f)

to adopt realistic methods of measuring results for each
country; to carry out more appraisals dealing with several
countries, in order to identify best practice and circulate it to
the delegations.

This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 17 and 18 December
2003.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President

(1) See similar recommendations in paragraphs 101-102 of the Court’s
Special Report No 2/2003 on the implementation of the food secu-
rity policy in developing countries financed by the general budget of
the European Union, OJ C 93, 17.4.2003.

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MICROPROJECTS FINANCED BY THE SIXTH, SEVENTH AND EIGHTH EDFS
(situation at 31.12.2002) (1)

ANNEX I

Country

(million euro)

Decided

Malawi
Zimbabwe
Nigeria
Ghana
Zambia
Togo
Uganda
Madagascar
Chad
Mali
Rwanda
Papua New Guinea
Congo
Angola
Lesotho
Swaziland
Senegal
Mozambique
Kenya
Burundi
Dominican Republic
Tanzania
Suriname
Comoro Islands
Guinea
Niger
Central African Republic
Côte d’Ivoire
Mauritius
Botswana
Namibia
Solomon Islands
Sudan
Fiji
Dominica
Cape Verde
Ethiopia
Samoa
Sierra Leone
Tonga
Haïti
New Caledonia
Benin
Gambia
Turks and Caicos Islands
Wallis and Futuna
Grenada
Seychelles
Trinidad and Tobago
Liberia
Guyana
Belize
Cameroon
20 countries without microprojects (2)
Total 6th, 7th and 8th EDF microprojects, all countries
Total microprojects for selected countries
Microprojects for selected countries as % of total 6th, 7th and 8th EDF microprojects
Total programmes audited in the countries selected
Programmes audited as % of total 6th, 7th and 8th EDF microprojects
Total aid under 6th, 7th and 8th EDFs
Total 6th, 7th and 8th EDF microprojects, all countries, as percentage of total aid under 6th,
7th and 8th EDFs

64,47
64,12
63,10
47,72
42,87
36,78
33,32
20,88
18,10
17,91
15,78
15,76
14,28
13,91
10,66
9,75
9,70
9,21
8,24
7,78
7,57
7,53
7,21
7,17
6,25
6,18
6,15
5,64
5,36
4,00
4,00
3,18
3,11
3,03
3,00
2,65
2,17
2,05
1,96
1,50
1,00
1,00
0,49
0,31
0,26
0,25
0,21
0,17
0,09
0,09
0,06
0,05
0,02

618,03
273,37
44 %
148,01
24 %
29 921,20

2,07 %

(1) The programmes inspected for this report are located in the countries printed in bold.
(2) Antigua and Barbuda, Bahamas, Barbados, Djibouti, Eritrea, Gabon, Guinea (Bissau), Guinea (Equatorial), Jamaica, Kiribati, Mauritania,
Democratic Republic of Congo, São Tomé and Principe, Somalia, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines,
Tuvalu, Vanuatu, Burkina Faso.

Source: Commission accounts at 31.12.2002.

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ANNEX II

MICROPROJECT PROGRAMMING AND MANAGEMENT

Source: Court of Auditors.

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MICROPROJECT PROGRAMMES SELECTED FOR THE COURT OF AUDITORS’ AUDIT

ANNEX III

Country

Description

Decided

Committed

Paid

a

b

c (=b/a)

d

e (=d/b)

f (=d/a)

(euro)

Date of
FA/DGA (1)

Ghana

Madagascar

Malawi

Uganda

Zambia

Zimbabwe

4th microproject programme, 7th EDF — first
tranche
4th microproject programme, 7th EDF — sec-
ond tranche
5th microproject programme, 8th EDF — phase
1
5th microproject programme, 8th EDF — phase
2

4 990 590

4 990 590

100 %

4 990 590

100 % 100 %

12.2.1997

3 903 386

3 903 386

100 %

3 903 386

100 % 100 %

2.9.1997

3 200 000

3 101 692

97 %

1 763 932

57 %

55 %

1.1.1999

23 800 000

21 821 263

92 %

11 602 163

53 %

49 %

1.10.1999

Subtotal Ghana

35 893 976

33 816 931

94 % 22 260 070

66 % 62 %

3rd microproject programme, 7th EDF
3rd microproject programme, 7th EDF — bal-
ance from 5th EDF
PAICAL — Support Programme for Municipal-
ity and Local Association Initiatives - 8th EDF

Subtotal Madagascar

2nd microproject programme, 7th EDF
3rd microproject programme, 8th EDF

311 362

311 362

100 %

294 267

95 %

95 %

1.4.1998

788 166

788 166

100 %

743 641

94 %

94 %

1.4.1998

8 000 000

5 483 512

9 099 528

6 583 040

4 547 737
21 000 000

4 547 737
17 985 124

69 %

72 %

100 %
86 %

2 344 064

43 %

29 %

8.9.1999

3 381 972

51 % 37 %

4 547 737
17 965 656

100 % 100 %
86 %
100 %

24.6.1996
3.12.1999

Subtotal Malawi

25 547 737

22 532 861

88 % 22 513 393

100 % 88 %

4th microproject programme — Karamoja
region, 7th EDF
Aid for the Microproject Coordination Unit, 7th
EDF
Technical assistance contract for the 8th EDF
microproject programme
Microproject programme, 8th EDF

2 000 000

1 939 668

97 %

1 918 607

99 %

96 %

16.9.1996

2 002 423

2 002 423

100 %

2 002 423

100 % 100 %

30.9.1996

332 278
15 000 000

332 278
13 085 121

100 %
87 %

332 278
9 789 845

100 % 100 %
65 %
75 %

2.8.1999
6.4.2000

Subtotal Uganda

19 334 701

17 359 491

90 % 14 043 153

81 % 73 %

Microproject programme, 7th EDF (phase II)
Microproject programme, 7th EDF (phase III) —
balance from 5th EDF
Microproject programme, 7th EDF (phase III)
Microproject programme, 7th EDF (phase IV) —
balance from 5th EDF
Microproject programme, 7th EDF (phase IV)
Microproject programme, 8th EDF (phase I)
Microproject programme, 8th EDF (phase II)

5 000 000

4 837 682

97 %

4 820 681

100 %

96 %

16.2.1994

2 361 122
260 850

2 356 489
260 850

100 %
100 %

2 352 993
260 850

100 % 100 %
100 % 100 %

9.11.1995
9.11.1995

711 494
788 506
8 000 000
14 500 000

700 392
760 000
7 994 265
14 444 942

98 %
96 %
100 %
100 %

691 208
644 514
7 312 484
11 472 246

99 %
85 %
91 %
79 %

97 %
82 %
91 %
79 %

10.6.1997
10.6.1997
22.7.1998
14.12.2000

Subtotal Zambia

31 621 972

31 354 620

99 % 27 554 977

88 % 87 %

9th microproject programme, 7th EDF — bal-
ance from 5th EDF
9th microproject programme, 7th EDF
12th microproject programme, 7th EDF
12th microproject programme, 7th EDF — bal-
ance from 5th EDF
12th microproject programme, 8th EDF

720 336
3 713 636
7 821 379

720 336
3 713 636
3 860 723

100 %
100 %
49 %

720 336
3 713 636
1 343 538

100 % 100 %
100 % 100 %
17 %
35 %

15.4.1996
15.4.1996
3.10.2000

2 523 885
12 454 736

2 105 400
9 693 368

83 %
78 %

1 808 212
6 181 905

86 %
64 %

72 %
50 %

3.10.2000
3.10.2000

Subtotal Zimbabwe

26 513 636

19 373 127

73 % 13 047 291

67 % 49 %

Total programmes in selected countries
(1) FA = financing agreement; DGA = global authorisation decision.
Source: Court of Auditors.

148 011 551 131 020 069

89 % 102 800 855

78 % 69 %

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NUMBER OF MICROPROJECTS INSPECTED BY THE COURT OF AUDITORS

ANNEX IV

Project type

Country

Total

Ghana

Madagascar

Malawi

Uganda

Zambia

Zimbabwe

SOCIAL INFRASTRUCTURE

106

23

Education/culture

Primary schools

Secondary schools

Training centre

School for deaf children

Colleges of Education

Sports facilities

Accommodation for schoolchildren

Perimeter walls

Cultural centres

Health

Local clinics

Water and sanitation

Construction of wells

Work on natural water sources

Water supply systems

Sanitation

ECONOMIC INFRASTRUCTURE

Agriculture

Vaccination crushes

Water points for cattle

Irrigation systems

Maize mills

Grain silos

Pig units

Markets

Road infrastructure

Bus stations

Bridges

Rural roads

Other

Sawmills

Microloan systems

Reafforestation

Electrification

Post offices

Bakeries

Flood barriers

TOTAL PROJECTS INSPECTED

Number subject to on-the-spot and
documentary checks

Number subject to documentary checks
only

Source: Court of Auditors.

59

35

15

2

1

1

2

1

1

1

29

29

18

3

3

4

8

38

12

3

2

2

3

1

1

8

5

1

2

2

13

1

3

4

2

1

1

1

144

104

40

9

5

3

1

8

8

6

6

0

23

23

0

16

11

3

4

2

1

1

1

1

4

2

2

11

2

2

5

3

1

1

1

1

1

27

9

18

9

7

3

4

2

2

13

4

3

1

2

1

1

7

1

4

1

1

22

19

3

16

9

8

1

4

4

3

3

5

2

1

1

3

21

18

3

28

16

11

2

1

1

1

10

10

2

2

3

3

3

31

15

16

14

7

5

2

4

4

3

1

2

6

4

2

2

2

2

20

20

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THE COMMISSION’S REPLY

SUMMARY

II.

The Commission welcomes the Court’s broadly positive judgment on microproject programmes (MPPs).

While in the past central services have faced difficulties in monitoring MPPs more closely, they intend to play
an increasingly important role in terms of thematic support and dissemination of best practice, and are prepar-
ing an overall guide for MPPs.

The legal status of the management units has still not been resolved but their main dealings with National
Authorising Officers (NAO) are covered by a memorandum of understanding or contract.

Projects that invest a lot of time in preparation, although slow to start up and disburse funds, have the advan-
tage that communities understand the projects better and enter into the spirit of the project.

The ninth EDF incorporates new rules which should make the management of programme estimates more
reliable and efficient.

EuropeAid Co-operation Office has now completed a register of ongoing microprojects and those closed since
January 2003.

The Commission attaches great importance to institutional capacity-building at all levels, so as to promote
sustainability. Where possible, involvement of local administration and municipalities can support ownership
and sustainability.

III.

EuropeAid Co-operation Office will:

— Take on more of a support role.

— Translate best practice into a detailed guide and ensure more reliable and efficient programme manage-

ment.

— Where possible, involve local administrations and municipalities with a view to supporting success and
sustainability. The provisions set out under Cotonou allow a greater role for decentralised actors.

— Launch a systematic evaluation of MPPs on a cross-cutting basis in 2004.

THE DEVELOPMENT OF THE MULTIANNUAL MICROPROJECT
PROGRAMMES

Box 1 — Comparable programmes:

10.
The Commission attaches great importance to evaluation
activities and has evaluated each microproject programme indi-
vidually. A more systematic evaluation on a cross-cutting basis
will be launched in 2004.

1.
Malawi: The lack of coordination with the World Bank
— Government of Malawi project (MASAF) is because that
project is at risk of frequent political intervention. But infor-
mation is exchanged on requests presented by local communi-
ties. Only in very rare (and usually well justified) cases have the
EDF and MASAF implemented/financed projects with the same
communities in the same places.

11.
A coordinated approach is beneficial to any activity and
this should improve as more and more decision-making autonomy
is given to Delegations in the context of devolution.

3.
Zimbabwe: The Delegation accepts the need for greater
coordination between MPPs and other initiatives. In the case of
the ZDCP, a recent evaluation found the process approach

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applied to be very successful and also noted the similarity of
projects. The MPP has taken a ‘hardware’ approach (building
infrastructure), with ZCDP concentrating more on the ‘soft-
ware’ (how to use infrastructure). The fact that similar projects
emerged at the end of the process has been due to the ZCDP’s
difficulty in developing more innovative projects in its pilot
phase. In the new programmes being developed for both the
MPP and ZCDP, a key issue now being addressed will be the
coordination and complementarity of the two programmes.

15.
The diversity of approaches and the ability to adapt pro-
grammes to local structures and contexts are in fact one of the
strong points of MPPs, as they can take account of the situation
on the ground.

16.
The level of involvement of local authorities depends on
the state of decentralisation: if a country already has a tradition
of decentralisation and strong local institutions with the capacity
to manage the programme, there is every reason to promote a
decentralised MPP. Where decentralisation is less developed, guid-
ance and central support will be vital.

IMPLEMENTATION OF THE MULTIANNUAL MICROPROJECT
PROGRAMMES

18-19.
MPPs are an implementation tool rather than a sec-
tor. With regard to OLAS it is therefore difficult to assign a spe-
cific DAC code to MPP operations due to the wide range of activi-
ties covered. This has created some confusion.

EuropeAid has now completed a register of ongoing micro-
projects and those closed since January 2003. The register includes
information on areas of intervention by sector and sub-sector and
provides a useful database for the monitoring and evaluation of
microprojects. The register has for instance provided the database
for a study of the activities supported by MPPs at sectoral level.
The results of this study will be available in January 2004.

EuropeAid Co-operation Office intends to take on more
20.
of a thematic resource role, providing a guide to current MPPs
(lessons to be learned) and basic information about activities
funded and implementation models used in different scenarios.
This is an achievable goal in the short term; in the medium to
long term, a more detailed framework document could be pro-
vided. Since the Court carried out its audit, the results of MPP
monitoring missions and lessons learned have been circulated to
all Delegations, as will be other background documentation on
MPPs (such as the Government of Botswana’s report on their
workshop on MPPs in East and Southern Africa, held in Novem-

ber 2002 — this is an excellent example of how individual experi-
ences in this particular field can be disseminated to mutual advan-
tage and is an exercise that other regions could take on board).

Information on mid-term reviews (timings, feedback etc) will be
collected systematically.

21-22.
Dissemination of lessons learned could improve
design, but not necessarily through a one-size-fits-all approach.
Experience shows that countries have different needs and very
different levels of capacity. A recent report shows that adaptation
to particular country needs produces the best results — it states
that MPP designs are best when the design reflects the country’s
situation — and that no one design is correct for all countries.
The overall guide for MPPs in preparation will stress flexibility
and provide basic ground rules and acceptable practice. It should
be available by March 2004.

The divergence of projects from the terms set out for
23.
MPPs under the Lomé Convention is an aspect that should be
improved under Cotonou with closer attention to design. The
new provisions also allow a greater role for decentralised actors,
and involve non-state actors more closely in preparation than
before.

26.
The mandate given by the national authorising officer to
the project management unit, and the arrangements for manage-
ment and execution of the project, are set out in a memorandum
of understanding (where the PMU is a public-sector body) or ser-
vice contract (where it is a private-sector body). The mandate lays
down the responsibilities of the management unit, its links with
the ACP State, and the level of powers delegated by the NAO to
conclude and award contracts, which gives project management
units considerable legal autonomy.

The Commission is aware that powers are not always uniformly
delegated; this should be resolved under the ninth EDF with the
adoption of the new practical guide to the management of direct
labour operations. It is true that the issues of legal capacity that
the Court mentions may be problematic and the Commission will
hold discussions with its partner countries about how to deal
with them.

27-29.
Projects that invest a lot of time in preparation,
although slow to start up and disburse funds, have the advantage
that communities understand the projects better and enter into
the spirit of the project.

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In some cases the running time of programme estimates is affected
by the postponement of the closure stage (which as a rule should
be not later than six months after the end of operations) but this
does not undermine the purpose of the programme-estimates.

programme combining commitments (liabilities) carried over
and new activities, and the old programme estimates can
therefore be closed within a few months.

Box 6 — Programme estimates

Zimbabwe: The economic problems facing Zimbabwe
5.
have led to some activities being cut. However, with the new
exchange rate the MPP is reviewing all recent projects to pro-
vide supplementary funding for projects which had to reduce
or cut out certain initiatives and ensure that they are completed.

4.
Zimbabwe: The move in 2001 to a batch commitment
system was intended to avoid the existence of a single large
commitment which could not be closed down due to the large
number of projects allocated under it, all with different clos-
ing time frames. The move to a batch system was supposed to
allow commitments to be closed more easily and on schedule.
The search for a more user-friendly system is continuing.

Where the project management unit is a private-sector
30.
body a bank deposit is put up to cover the risk. For direct labour
operations ultimate financial responsibility to the Commission
lies with the national authorising officer. Advance payments are
only replenished after expenditure has been checked. These con-
trol arrangements should as a rule ensure that operations are
properly conducted and managed.

29.
Projects that invest a lot of time in preparation, although
slow to start up and disburse funds, have the advantage that com-
munities understand the projects better and enter into the spirit
of the project. Rules and procedures give management the means
to control their projects and allow communities to understand
the nature of the agreement which they have entered into.

Under the ninth EDF, for externalised direct labour opera-
33.
tions a service contract will specify the tasks delegated to the pub-
lic or private sector body responsible for project execution. Such
contracts must make suitable provision for controlling the use of
EDF resources, which should make the management of pro-
gramme estimates more reliable and efficient.

Box 7 — Programme implementation rate

1.
Ghana: Physical implementation suffered delays. One of
the reasons was the central government’s delay in disbursing
the District Common Fund tranches to the districts.

The Commission services and the NAO will examine how to
get all microprojects completed and will start work on a suc-
cessor programme, in order to avoid a hiatus in activities
between MPP 5 and the successor programme.

2.
Malawi: To rectify the situation the steering committee
decided in late 2002 to suspend approval of new projects and
to carry out an extensive systemic organisational audit cover-
ing the whole project period (MPP I, II and III). The steering
committee amended its terms of reference in 2003 following
the audit’s recommendations. The regional offices are due to
get additional resources under MPP 4.

3.
Uganda: The fact that several programme estimates are
open simultaneously and/or have been extended is due to
delays in the work and payment to contractors of the 10 %
retained, resulting in difficulties in closing the commitments.
As from 2003/04, they will be consolidated into a single work

Box 8 — Financial organisation and organisation of the
accounts

1.
Ghana: The mid-term evaluation took place during
implementation of the second cycle and prior to the start of
the third cycle. Its conclusions and recommendations will be
studied, and if found appropriate will be taken into account for
the implementation of the third cycle.

2.
Madagascar: Municipalities do manage the project
account, into which they pay their own cash contribution. The
arrangements for the AMCD’s payments to the municipality
are set out in the financing agreement between them. In addi-
tion to the contractual provision there is a letter of contract
between the municipality and the contractor (endorsed by the
AMCD in its capacity as programme supervisory authority).
As work progresses the AMCD pays the successive instalments
into the municipality’s account. The municipality then pays
the contractor the agreed sum and the AMCD verifies the pay-
ment.

3.
Malawi: The project’s over-centralised financial manage-
ment is a recognised problem, affecting both the steering com-
mittee and the project management; it was mentioned in the
organisational audit carried out in 2003. As a result of the
audit the Government of Malawi, to prevent a recurrence of
the problem, is expected to put forward proposals for increas-
ing the role of decentralised bodies. The results of the certifica-
tion audits by external audit firms are a crucial element for the

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replenishment of accounts. The project management is now in
charge of presenting the results and recommendations of exter-
nal audit reports at each meeting of the steering committee.

Uganda: Starting in the fourth quarter of 2002, the audit
4.
and training/advisory functions have been separated and
another audit firm has been contracted for this purpose.

The microprojects financed by MPP are part of the District
Development Plan, involving district accountability; so the
microprojects accounts are in principle already audited by the
Auditor General. However, the AG does not inform the MPP
about his findings and the districts are reluctant to share them.
The accounting performance of districts therefore has to be
evaluated by means of the MPP’s own internal monitoring and
audits, backed up by the assessment reports from LGDP (Local
Government Development Program, financed by the World
Bank and other donors).

36.
The monitoring and general follow up of programmes is
a key factor in the success of any initiative. The verification and
adaptation of overall design and individual initiatives needs to be
well planned at the design stage of the programme and should as
far as possible include the beneficiaries’ input. The programmes
must be flexible enough to allow constant evaluation and action
in response to findings.

Box 9 — Technical monitoring of infrastructure

1.
Madagascar: With very few exceptions project quality is
satisfactory. Following the Court’s recommendations a system
has been set up to check the progress of the work before each
instalment is paid. A two-hour inspection visit to some of
these projects may involve a day’s travel by dug-out canoe or a
40-kilometre walk.

37.
The Commission agrees with the need to further improve
and simplify the monitoring and reporting system at implementa-
tion level, and in most cases the Delegations have already taken
the necessary steps.

Box 10 — Information systems

Madagascar: The system has been revised, consolidated
2.
and streamlined with the aim of speeding up and simplifying
direct access to information. There is now a single monitoring
support. Full particulars can be obtained from the technical
and financial reports.

3.
Malawi: This issue was covered by the organisational
audit in 2003. Its recommendations were discussed in full by
the steering committee, which decided in 2003 to replace the
project manager.

Following the 2003 audit the programme acquired the PAS-
TELt programme with a view to improving the management
of accounting data. When MPP 4 gets under way a database
will be set up for technical reports, evaluations etc..

4.
Uganda: The reporting procedures bring the total num-
ber of reports to around 70 per year, but these are condensed
into less than 10 reports for external distribution.

5.

Zimbabwe: See reply to box 6.

RESULTS OF MULTIANNUAL MICROPROJECT PROGRAMMES

It is encouraging to note the Court’s broadly positive

39.
judgement on microproject programmes.

41.
An overall needs assessment must be part of programme
design. This will result in clear criteria for selection of individual
projects and equally clear impact indicators. The logframe should
be used as a development tool and be updated and acted upon
throughout the duration of the programme/individual projects.

42.
Any programme should seek to work within the frame-
work of national strategies and plans. However, microprojects are
not just designed to match traditional indicators (such as number
of water pumps), they also deal with capacity-building. Whilst it
is true that in this context the impact of microprojects is difficult
to measure it is not impossible, depending on the advancement
of a country’s policy framework and priorities.

1.
Ghana: The design of the monitoring system is now
complete and currently undergoing field testing. The response
at community level is rather unsatisfactory, often due to a lack
of literate villagers able to complete monitoring forms.

44.
EuropeAid Cooperation Office has put in place a register
of MPPs, and information on mid-term reviews (timing, feedback
etc.) will be collected systematically. EuropeAid Cooperation Office
is putting in place a system to monitor MPPs more closely.

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Sufficient flexibility is necessary for microprojects to be
45.
effectively ‘process projects’. A log-frame approach is relevant but
sometimes it is not used as a working tool and is too vague, with
unrealistic indicators. Indicators should be refined during the
whole lifetime of the project.

The accuracy of the data sets has further been improved by the
availability of the 2002 census data (population and adminis-
trative units).

46.
Indirect impact is mostly a favourable phenomenon but
can also be the opposite. This again should be taken into account
in design, implementation and monitoring.

47.

Box 11 — Measuring impact

1.
Ghana: Assessment of the performance of the fifth MPP
by beneficiaries was always considered to be necessary and
important. Because of this, during MPP 5, assessment by ben-
eficiaries was included as an integral part of MISME (Manage-
ment Information System Monitoring and Evaluation).

Community and district response, however, proved to be rather
unsatisfactory (see also comment on box 10, paragraph 1).
Districts and communities lack experience in beneficiary assess-
ment. Completion of forms at community level is hampered
by the high level of illiteracy. It is therefore planned to contract
one or more local NGOs during the first quarter of 2004 for
comprehensive beneficiary assessment studies.

2.
Madagascar: It is difficult to measure results for socio-
organisational development and rural organisation. It is worth
noting, however, that the participatory and socially consensual
way in which PAICAL activities were implemented produced a
much lower rate of project failure/discontinuation than earlier
microprojects. Ex post evaluation and consolidation of PAICAL
are scheduled for 2004. This will not be a study carried out on
conventional lines; it will place the emphasis on participatory
methods.

3.
Malawi: The MPRSP (Malawi Poverty Reduction Strat-
egy Paper) identifies a number of indicators but not many of
them are suitable for microprojects. However, the launch of
MPP 4 will be accompanied by studies to establish baselines
and a set of objectively verifiable indicators.

4.
Uganda: The programme’s logical framework was revised
in the second half of 2002 and measurable and verifiable indi-
cators were established for activities, results and purpose. The
programme established baseline data sets in the course of
2002/03 and its effects and impact can be monitored (mea-
sured) with reference to the base year (June 2000). This can be
done at the level of provision (activity), access (result level) and
utilization of social service facilities (purpose), which is directly
related to the quality of life of the population.

Capacity-building results are monitored through qualitative tar-
gets as (1) functioning of Project Implementation Committees, (2)
quality of proposed microprojects and (3) procurement, contract
management and accountability of the district administrations.

49.
Involvement of local administrations and municipalities
(where possible) can support success and sustainability. The 25 %
contribution required does not create ownership alone and is
something that must be cultivated. Without ownership, there will
always be the danger that projects become purely construction
projects rather than community building projects.

50.
The systematic learning of lessons from old programmes
should be improved by the monitoring exercise being undertaken
by the Commission and the planned systematic evaluation phase
(see above). Microprojects are often seen as a panacea for coun-
tries where more traditional types of programme are difficult to
implement due to poor governance. However, they should be
clearly linked to institutional capacity-building at all levels to pro-
mote sustainability.

Box 12 — Microprojects in the social sectors:

1.
Ghana: The quality of constructions and quality-control
aspects need to be improved. The mid-term evaluation pro-
posed that all microprojects under the first and second cycle
should be assessed by quality control engineers in order to
determine case by case whether corrective measures will have
to be taken and if so, what they should be.

The need to improve the sustainability and maintenance of
microprojects has been taken into account in the revised Memo-
randum of Understanding between the District Assemblies, the
MPMU, the NAO and the Delegation, which will become effec-
tive as of the third cycle physical implementation.

5.
Zimbabwe: The economic problems facing Zimbabwe
have led to some activities being cut. However, with the new
exchange rate the MPP is reviewing all recent projects to pro-
vide supplementary funding for projects which had to reduce
or cut out certain initiatives and ensure that they are completed.

CONCLUSION AND RECOMMENDATIONS

59.
The Commission is taking various steps to improve its
management of microprojects, as set out in the following para-
graphs.

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While in the past central services have faced difficulties
60.
in monitoring MPPs more closely, in the context of devolution
EuropeAid plays now an increasingly important role as a thematic
resource, providing guidance to current MPPs (lessons to be
learned), and basic information as to what activities have been
funded and implementation models used in different scenarios.
EuropeAid has now completed a register of ongoing MPPs and
those closed since January 2003. The register provides a useful
database for the monitoring and evaluation of microprojects. The
results of MPP monitoring missions and lessons learned have
already been circulated to all Delegations, as will be other back-
ground documentation on MPPs. An overall guide for MPPs is in
preparation, which will present basic ground rules and acceptable
practice, while stressing flexibility as regards implementation
arrangements.

It is clear from evaluations, mid-term reviews and monitoring
missions that (as is the case with all development projects) the
most successful programmes are those that are well planned and
designed in consultation with potential beneficiaries and with
other interlocutors such as donors, NGOs and the national admin-
istration. A coordinated approach is beneficial to any activity and
this should improve as Delegations acquire greater decision-
making autonomy in the context of devolution.

61.
As EuropeAid takes on more of a support role, Delega-
tions feed back progress on MPPs in a more systematic fashion;
this is being translated into a guide on best practice and advice on
accepted intervention arrangements.

Dissemination of lessons learned could improve design. Any
guide, however, must respect the right of the NAO to choose
implementation arrangements and be sufficiently flexible to take
into account local conditions and priorities. An overall guide for
MPPs (in preparation) will provide basic ground rules and accept-
able practice.

The Commission will look with its partner countries at ways of
settling the legal status of certain management units but would
point out that memoranda of understanding and contracts are
drawn up which regulate the NAO’s relations with these bodies
and set out their mandate from the NAO, along with the project
management and implementation arrangements. The mandate
lays down the responsibilities of the management unit, its links
with the ACP State, and the level of powers delegated by the NAO
to conclude and award contracts, which gives project manage-
ment units considerable legal autonomy.

The divergence of projects from the terms set out for MPPs under
the Lomé Convention is an aspect that should be improved under
Cotonou with closer attention to design.

Projects that invest a lot of time in preparation, although slow to
start up and disburse funds, have the advantage that communi-
ties understand the projects better and enter into the spirit of the
project. Rules and procedures give management the means to
control their projects and allow communities to understand the
nature of the agreement which they have entered into.

62.
Under the ninth EDF, for externalised direct labour opera-
tions a service contract will specify the tasks delegated to the pub-
lic or private sector body responsible for project execution. Such
contracts must make suitable provision for controlling the use of
EDF resources, which should make the management of pro-
gramme estimates more reliable and efficient.

63.
The Commission attaches great importance to evaluation
activities and has evaluated each microproject programme indi-
vidually. It is clear, however, that the sustainability of programmes
can only be properly judged some time after their completion. A
systematic evaluation of MPPs on a cross-cutting basis will be
launched in 2004.

65. (a) EuropeAid intends to take on more of a thematic resource
role, providing a guide to current MPPs (lessons to be
learned), and basic information as to activities funded and
implementation models used in different scenarios. This
is an achievable goal in the short term; in the medium to
long term, a more detailed framework document could be
provided.

EuropeAid has put in place a register of MPPs, and infor-
mation on mid–term reviews (timings, feedback etc) will
be collected systematically. EuropeAid is putting in place
a system to monitor MPPs more closely.

(b) As EuropeAid takes on more of a support role, Delega-
tions will feed back progress on MPPs in a more system-
atic fashion: this can then be translated into a detailed
guide on best practice and advice on accepted interven-
tion arrangements.

An overall guide for MPPs is in preparation, which will
stress flexibility but will provide basic ground rules and
acceptable practice.

(c) The Commission will look with its partner countries at
ways of settling the legal capacity of certain management
units.

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(d) The Commission is already taking a more structured
approach and hopes in this way to observe time limits for
implementation of microproject programmes; it is well
aware of the expectations these programmes raise for the
beneficiary communities.

(e) Involvement of local administrations and municipalities
(where possible) can support success and sustainability.
Without ownership, there is a danger that projects become

purely construction projects rather than community-
building projects. The provisions set out under Cotonou
allow a greater role for decentralised actors, and involve
non-state actors more closely in preparation than before.

(f) The Commission attaches great importance to evaluation
activities and has evaluated each microproject programme
individually. A more systematic evaluation on a cross-
cutting basis will be launched in 2004.