Eritrea - Strengthening Tax Administration Project ESTAP - IPR June 2024

Implementation progress and results report ipr a. report summary and proposed actions report data project name: strengthening tax administration project estap project code: p-er-k00-002 country eritrea sector: multi -sector environmental categorization 3-category 3 report type: date of report: 27.06.2024 mission: field mission 5 from: 10.06.2024 to: 14.06.2024 prepared by task manager: mosllem ahmed alamir ahmed alternate task manager : division manager : gebre -selassie kalayu ecgf2 project data project financing in uac financing sourceinstrument foreign currency local currency totalfragile states facility tsf - pillar 3 1.980.911,00 79.250,00 2.060.161,00t o t a l 1.980.911,00 79.250,00 2.060.161,00processing milestones bank approved financing only loan number date approved date signed date of entry into force date effective for first disbursement disbursement deadline 5900155015701 19.06.2019 20.08.2019 20.08.2019 20.08.2019 31.12.2025 loan amount in uac loan number net loan approved uac signed uac cancelled uac net loan uac 5900155015701 2..,00 2..,00 2..,00 0,00 2..,00 t o t a l 2..,00 2..,00 0,00 2..,00 disbursment status at supervision date in uac loan number disbursed to date disbursed to date uac disbursed to date undisbursed to date in uac undisbursed to date 5900155015701 123.561,66 123.561,66 6,18 1.876.438,34 93,82 t o t a l 123.561,66 6,18 1.876.438,34 93,82 executing and implementation agencies borrower government of eritreaguarantor government of eritreaexecuting agency ministry of financeperformance status progress towards development objective rating on development objective do performance rating summary of key findings current previous the project is rated unsatisfactory. yet, the project is likely to achieve its development objective promote economic growth and effective implementation of the national development plan through increased domestic ax revenue collection. unsatisfactory unsatisfactory implementation progress rating on implementation progress ip performance rating summary of key findings current previous the project's implementation progress is rated as unsatisfactory. although the entire project allocation is ua 2 million approved in 2019, the project has not progressed. the project remains red flagged for slow procurement and disbursement after over 5 years of implementation. the current disbursement rate of ua 123,561.66 6.18 of the tsf grant financing since approval in june 2019 and has no commitments in the system. over 80 of the grant resources allocated for financing acquisition of a new tax administration software are locked up under the goods category of expenditure, pending the commencement of the procurement processes. the slow project progress is caused by slow initiation of procurement activities, government imposed covid -19 travel restric tions, security and personal reasons that affected arrival of the required ta in the country, and eritrea's experiences of very limited responses to the open competitive international ocbi tenders. despite the delay, a long -term it expert has been recru ited to procure hardware and software and the contract was signed on the 24th of september 2022, after the three evaluated consultants turned down the offer for security and personal reasons. the implementation of the project's other activities is pending technical guidance by the it expert. the it expert is expected to provide implementation support and technical guidance to fast track delivery including: i acquisition of the cots software, hardware installation, and development of user manuals and train ing, ii develop tax procedures for the new system, mapping and migration of revenue data, and iv conduct training on tax audit and investigation to enhance compliance. however, since selection of an international individual consultant needed for this procurement process took too much time, for the same reason that getting interested candidates was a challenge. moreover, the delayed action in finalizing this procurement process, did not enable the individual consultant to be effectively used to fa cilitate the design, procurement, supply, installation, and implementation of the system. to date, the consultant has been able to conduct several field missions to asmara to support equipment specification and tender document preparation by the end of q2 of 2023. the bank's no -objection was granted june 28, 2023 to the draft biding document and specific procurement notice invitations for bids for design, supply, installation, configuration and training for eritrea integrated tax administration system e ritas software, hardware, and related it equipment. submission of bids for supply of it equipment was closed by 23 november 2023. eleven 11 international as well as local bidders show their interest and bought the bid document but only 3 bidders submitt ed their documents before the deadline fulfilling the required criteria's. the bid opening process was done on the same date and time of the closing date. the evaluation report was submitted to the bank consideration on 22 march 2024. considering many com pelling challenges and difficulties surrounding the project, the contract under consideration and the market in eritrea, the bank grants a no -objection to award the contract i.e., design, supply, installation, configuration and training for eritrea integr ated tax administration system eritas software, hardware, and related it equipment to iunetworks republic of armenia and negotiate the activities to meet the available budget in the project estimated not to exceed ua 1,786,643 usd 2,365,604, which i s still much lower than the firm's price quotation of usd 2,,825.32 approximately ua 2.26 m. an official request to the bank is expected to be submitted to award the contract to iunetworks republic of armenia through direct contracting after negoti ations for the i.e., design, supply, installation, configuration and training for eritrea integrated tax administration system eritas software, hardware, and related it equipment. the supply of the equipment and payment for the same possibly by end of q2 of 2024 will enhance the project's disbursement rate. the equipment satisfactory satisfactory constitutes 80 of the total grant and its successful acquisition will improve the disbursement rate and thus remove the project from the red flagged list by the 1q of 2024. there is an urgent need to accelerate the processes for the procurement of the so ftware which would lead to commitment of resources under the project. the project implementation is expected to pick up upon engaging the tait advisor whose contract negotiation is currently being concluded. the ta advisor is to support fast track impleme ntation activities by preparing for: * procurement of hardware and software. under the support to tax administration reforms, there is a plan to procure software and har dware, the list of which will be identified and prepared by upcoming it technical assistance. the procurement process shall start after details of the needs are guided by the it expert technical assistance. * other consultancy service assignments. the ta advisor will guide on selection of other consultants for service assignments. overall project performance classification overall project performance pp, or n performance rating summary of key findings current previous the project's do and ip are rated unsatisfactory therefore, the project is classified as a pp. the project is flagged in the bank systems for low disbursements. the senior vice president waived the grant cancellation for no disbursement made for more than 2 years, in accordance with pd022015. problematic project problematic project issues, risks and actions for management consideration issues affecting project implementation key issues corrective actions responsible deadline status difficulty in attracting quality tas to work in eritrea. identification of suitable, affordable, and committed personnel to work in eritrea is continuing to be a challenge, largely due to covid, security and personal reasons. continue conducting an aggressive image building campaign for eritrea especially in the foreign press executing agency mof 31.12.2024ongoing in progressmain risks and mitigation risks mitigation measures applied or proposed responsible deadline delay and slow implementation delay and slow implementation of project activities partly due to slow initiation of procurement activities, covid -19, weak project piu experience, and badslow connection internet service. expedite execution of procurement activities to ensure timely submission of quality of bidding request for proposal documents, evaluation reports and contracts. build contingency plan to provide intensive training for the project's piu staff including fid uciary clinic. executing agency mof and afdb 31.12.2024 ongoing low disbursement status low disbursement status - the disbursement rate has remained unsatisfactory given that the project has disbursed only ua 91,692.58 4.58 of the tsf grant financing since approval in june 2019 and has no commitments in the system. a number of actions are agreed to improve the disbursement rate, to 100 at end of the project in december 2025. the project plans to absorb these funds as follows: * cots technology solution acquisition, installation and user training, which will absor b ua 1,371, and improve the disbursement by 68.6. * it equipment for cots, which will absorb ua 214, and improve the disbursement by 10.7. * training of it staff on the new technology solution, which will absorb ua 50, and improve the disburse ment by 2.5. * training and awareness workshops on new business processes, which will absorb 29, ua and improve the disbursement by 1.5. executing agency mof and afdb 31.12.2024 ongoing * ta for mapping and revenue data migration, which will absorb ua 14, and improve the disbursement by 0.7. * ta to develop tax procedures for the new system, which will absorb ua 14, and improve the disbursement by 0.7. * visits and benchmarking tours in the region, which will absorb 29, ua and improve the disbursement by 1.5. b. results reporting and assessment progress towards development objective project purpose state the project development objective usually the project purpose as set out in the results -based logframe and assess progress the project's overarching objective is of the eritrea strengthening tax administration project estap is to promote economic growth and effective implementation of the national development plan through increased domestic tax revenue collections and creati ng additional fiscal space for enhanced macroeconomic management. the thrust of the project is to provide a strategic platform for strengthening domestic resource mobilization and supporting government plan to accelerate implementation of revenue mobilizat ion strategy 2015 -2019. the specific objective is to strengthen tax administration capacity by expanding the tax base, modernizing collection and compliance procedures through automation of inland revenue department ird business process and procedures. the specific objectives will be achieved through a full automation of revenue administration system processes and procedures, and b enhancing critical skills and competencies of revenue administration staff to strengthen ta x compliance and increase re venue collection. outcome reporting outcome indicators as per rlf baseline value most recent value end target progress toward endtarget assesment tax compliance enhanced share of revenue collected by inland revenue departmentird to total revenues 40, 41, 45, 20,00 likely to be achieved with correctives actions on track. share of revenue collected by inland revenue department ird to total revenues increased to 41 in 2023 up from 40 in 2017.outcome rating rating on project outcomes performance rating summary of key findings current previous the overall project outcome rating is unsatisfactory, though the project is experiencing slow implementation at the beginning. the project implementation is expected to pick at an acceptable pace if the agreed procurement activities are concluded once the international consultant arrives in the country. the ongoing procurement process in the project is selection of service provider for the design, supply, installation, configuration and training for eritrea integrated tax administration system eritas s oftware, hardware, and related it equipment. the bank granted no -objection for the recruitment of iunetworks republic of armenia. the executing agency is advised to finalize internal reviews and discussion with the service provider and submit the final proposal for the bank's review and consideration by the end of june 2024. the piu is encouraged to undertake certain key actions in order to ensure that the project accelerates implementation of its activities ahead of planned project closure on 31 dece mber 2025. 3 4 output reporting output indicators most recent value annual target end target progress towards annual target progress towards end of project target assessment ird business process and procedures automated cots technology solution acquisition, installation and implementation 20, 100,00 100, 20,00 20,00 on track likely to be achieved. since, the project is so delayed in implementation now it's on a very early stage. despite several challenges, the project has recruited a long -term ta advisor. the ta advisor is to support the acquisition of the commercial -off-the-shelf cots tax system, installation and implementation, review of business processes and support the entire computerization process, including development of user manuals and personnel training. the ongoing procurement process in the project is selectio n of service provider for the design, supply, installation, configuration and training for eritrea integrated tax administration system eritas software, hardware, and related it equipment. the bank granted no -objection for the recruitment of iunetworks republic of armenia. tax procedures for the new system developed ta provided to review current tax code and tax procedures 20, 100,00 100, 20,00 20,00 not on track likely to be achieved. since, the project is so delayed in implementation now it's on a very early stage. despite several challenges, the project has recruited a long -term ta advisor. the ta advisor is to support the acquisition of the commercial -off-the-shelf cots tax system, installation and implementation, review of business processes and support the entire computerization process, including development of user manuals and personnel training. the ongoing procurement process in the project is selectio n of service provider for the design, supply, installation, configuration and training for eritrea integrated tax administration system eritas software, hardware, and related it equipment. the bank granted no -objection for the recruitment of iunetworks republic of armenia. output rating rating on project outputs performance rating summary of key findings current previous the overall project output rating is unsatisfactory. engaging the ta advisor has been finalized and implementation of remaining project activities will be accelerated and be completed ahead of project closure in december 2025. the ongoing procurement process in the project is selection of service provider for the design, supply, installation, configuration and training for eritrea integra ted tax administration system eritas software, hardware, and related it equipment. the bank granted no -objection for the recruitment of iunetworks republic of armenia. 2 2 development objective do rating progress towards development objective rating on development objective do performance rating summary of key findings current previous the project is rated unsatisfactory. yet, the project is likely to achieve its development objective promote economic growth and effective implementation of the national development plan through increased domestic ax revenue collection. unsatisfactory unsatisfactory additional andor unanticipated outcomesoutputs optional indicator baseline end target most recent value

Project document

EU Calls: Credit © European Union, 1998-2024 under <a href="http://creativecommons.org/licenses/by/4.0/">CC BY 4.0 licence</a>