Client: World Bank
Description of Project:
Kabul Municipality has been suffering from lower own source revenue. Annual revenue of KM was approximately US$50.5 million (2011/2012); once recurrent expenditures of roughly 63 percent are accounted for, only US$19 million remains for the city’s development budget, translating into a per capita equivalent of about US$4.87, extremely low by international standards and also lower than other large cities in Afghanistan. Progress towards greater financial self-reliance will require KM to overcome multiple and interrelated constraints for improving revenue management functions, financial planning, and investment management.
This project had the following objectives to accomplish:
(a) Undertaking a comprehensive diagnostic of KM’s current financial situation and of KM’s systems and capacities for Revenue Management and Financial Management, to identify what is needed to strengthen municipal financial autonomy, improve direct and indirect cost recovery, and contribute to more balanced budgeting; and (b) developing a time-bound realistic action plan for implementation of feasible recommendations (immediate, over 2 years, and over 4 years) delivered in the form of a report, as well as one of more bidding documents for implementation of the recommendations.
Description of actual services provided by your staff within the assignment:
- i) Gen has managing its team of consultants to carry out the following tasks:
Task-1: Financial Analysis of KM
- Examined of the revenues and expenditures, assets and liabilities of KM
- Assessed the existing financial condition of Kabul city and make projections of the immediate future.
- Identified significant trends of the various sources of revenues and expenditures as well as compute the standard financial ratios.
Task-2: Assessment of KM’s Revenue Management Systems
- Described the various sources of OSRs and the methods for their assessment and collection.
- Described the policy framework for local revenues and assess the extent to which they influence local revenue collection performance.
- Assessed the existing system of transfers from the Central Government
- Assess the areas for possible improvement in revenue collection and make recommendations.
- Recommended possible new areas for local revenue mobilization
Task-3: Assessment of KM’s Financial Management Systems and Processes (FM Assessment)
- Current systems of financial planning for the short and medium terms, systems for capital investment planning and budgeting, planning for Operations & Maintenance, Budget formulation, relation between planning and budgeting, budget execution and monitoring and control.
- Current Accounting practices, reliability and comprehensiveness of accounting records, basis of accounting and accounting standards followed; cost accounting practices (if any)
- Internal Controls: existing systems and practices; working of controls in practice
- Procurement Systems and Practices, contract management practices
- Systems and practices of financial reporting (internal and external)
- Auditing and Oversight.
- Asset Management: Existing practices for Asset valuation and management: regularity of record keeping (e.g. :Fixed Assets Register maintenance)
- Use of IT in municipal financial management: status of use of IT systems used for FM at present; potential areas of computerization; assessment of benefits and costs in increasing use of IT in FM.
- Financial Management practices: cash management, use of debt if any.
Task-4: Assessment of existing IT systems in KM and their use for improving Municipal financial management (IT Assessment)
- Assessed the existing status of IT systems being used by KM for municipal financial management and their adequacy for meeting the growing municipal management requirements of KM.
- Drew from the findings of the Revenue and FM assessments, specific areas for the increasing the use of IT and/or for upgrading the current IT systems that can result in improving the efficiency and transparency of municipal financial management will be identified.
- Provided recommendations on the IT systems to be introduced/upgraded and based on the recommendations provide technical specifications for hardware and software (both off-the-shelf and customized) along with cost estimates – these will be packaged into one or more bidding documents as appropriate.
Task-5: Submitted consolidated recommendation report