Business Case and Intervention Summary
Intervention Summary
Title: Zimbabwe Artisanal Mining Programme
What support will the UK provide?
UK will provide £1,250,000 to support work of PACT and World Bank to increase cooperation between
artisanal and small scale miners and industrial miners in Zimbabwe and to work with industry, Chamber
of Mines and Government to formalise and legalise the production and trade of gold by artisanal and
small scale miners.
Why is UK support required?
There are approximately half a million artisanal and small scale miners in Zimbabwe of which 150,000
are women and children. The informality and illegality of their activities has a negative impact on the
miners themselves, local communities, the mining sector and the wider economy through lost tax
revenue. There is strong political momentum behind efforts to positively engage with artisanal and
small scale miners. UK is galvanising and facilitating support from other donors towards this issue.
What are the expected results?
It is anticipated that both the private sector and Zimbabwean Government will adopt key measures to
formalise and legalise the activities of artisanal and small scale miners leading to reduced smuggling of
gold and improving the livelihoods of 500,000 artisanal miners and increasing tax revenues for the
Government.
Strategic Case
A. Context and need for a DFID intervention
Zimbabwe is richly endowed with mineral wealth. Home to over 40 different minerals, Zimbabwe has
the world’s second largest reserves of platinum group metals and chrome and an as yet unproven,
but potentially large, reserve of diamonds. Clustered along the Great Dyke which runs from NorthEast to South-West, many of the country’s minerals which include gold, platinum, nickel, cobalt are in
high demand on international markets. By value of output the three largest minerals since 2009 have
consistently been platinum group metals, diamonds and gold collectively accounting for
approximately 80% of output over the last 4 years.
Zimbabwe’s mineral wealth represents the country’s best opportunity to graduate from aid
dependency to a vibrant economy which meets the needs of ordinary Zimbabweans in this and future
generations. Experience in a number of countries shows a rich endowment of natural resources can
be both an opportunity if managed well and a curse if managed poorly. If effectively utilised, benefits
from the minerals sector can include a source of foreign currency, direct and indirect employment
and increased government revenue which in turn can be invested in basic services and more diverse
employment opportunities for Zimbabweans.
In addition to registered mining companies operating in Zimbabwe there are approximately 500,000
artisanal miners of which about 400,000 operate in gold and 150,000 are women and children1 2.
Utilising this figure, recent research suggests that Zimbabwe has the fifth highest number of artisanal
miners in the world behind China, India, DRC and Tanzania3. Although only estimates some
stakeholders suggest that the total number of artisanal miners is in fact closer to 1 million4.
Given the illegality and informality of the activities of artisanal miners, there are no completely
accurate estimates of their size, however with the bulk of the artisanal miners operating in gold it is
clear that in the areas that they operate along the Great Dyke they are a major if not the major source
of employment, especially for young men. In addition to gold artisanals also mine diamonds, chrome,
copper and tantalite in Zimbabwe. The presence of such a large number of artisanal miners in a
country of only 13 million people produces a huge number of issues including:

The illegality and informality of their activities has an impact on both the miners themselves
and on the economy as almost all of the gold they mine is smuggled to South Africa. At the
moment the artisanal miners face limited incentives to formalise their activities due to the high
charges that they face. Fidelity Printers and Refiners, the country’s sole legal gold purchaser
has a tax rate of 11.2% comprised of a 3% royalty, 2% duty resumption and a fixed charge of
6.2%. In addition to this gold producers’ are required to have a permit fee of $2,500 and an
environmental permit of $3,500. Selling through formal channels requires the miners to travel
to either Harare or Bulawayo incurring significant travel costs and a high opportunity cost of
their time. Combining these factors together the artisanal miners make approximately a 10%
higher return if the sell their gold to local traders who subsequently smuggle their gold to
South Africa as opposed to formally selling their gold in Zimbabwe.

Artisanal mining is dangerous both because it is illegal5 and due to the lack of equipment
people can die engaging in artisanal mining. The miners are also vulnerable to coercion by
those who can enforce regulations.
1
http://www.landscapes.org/formalizing-poverty-alleviation-zimbabwes-landscape-better-future-artisanal-miners/
http://www.thezimbabwean.co/news/zimbabwe/69560/small-scale-miners-want-dialogue.html
3
pubs.iied.org/pdfs/16532IIED.pdf
4
http://www.unep.org/chemicalsandwaste/Portals/9/Mercury/Documents/ASGM/Presentations_Forum/Day%202/polic
y_and_regulation.pdf
5
http://www.tandfonline.com/doi/abs/10.1080/03057070.2013.858540
2

Significant environmental impact due to the use of mercury and cyanide to extract gold.
Recognising that significant revenues are lost through the smuggling of gold the issue of formalising
the activities of artisanal and small scale miners has risen up the political agenda since elections took
place on 31st July 2013. This issue featured relatively prominently in the 2014 budget statement
reflecting the governments’ desire to positively engage with artisanal miners. With this political focus
on artisanal miners now is the right time for DFID to engage in an area which has been largely
neglected this century. Efforts to engage with artisanal and small scale miners to seek to link them up
with mining companies and formalise and legalise their activities would be transformational for the
individuals themselves, their wider communities and the Treasury through an increased flow of
revenues from the mining sector. Given its long value chain much of the benefits associated with
mining accrue in the form of revenue to fund the provision of basic services and key infrastructure
investments which increase the long term productive capacity of the economy.
The proposed intervention will however do more than attempt to increase revenue collection from
artisanal miners. The intervention will aim to increase understanding of the sector, and how this can
be used to create sustainable livelihoods for at least half a million people and their dependents. A
recent publication on the global artisanal mining sector highlights the complexity of the sector and
suggests that a clear understanding of the local and social dynamics is required before direct
interventions can be designed6.
Gender
Women are marginalised in the mining sector. They tend to occupy low profit, fragile roles and when
they do work in mining, they face structural barriers to participation (such as access to finance) and
due to their low status in society, and relative lack of education in comparison to their male
counterparts, they are in a weaker negotiating position when making business transactions and
therefore struggle to maximise profits from their activities. Security and health concerns are also
higher for women as a group; they are more vulnerable to bullying, harassment and abuse. These
and other challenges will be proactively addressed and gender equity will be built into the program
goals and approach. Empowering women to have increased participation and for activities to be
better regulated should lead to fairer working conditions and greater profits. Better regulation of the
sector will help to safeguard workers’ wellbeing (health & safety, security, fairer working practices
reducing bullying and intimidation) more effectively, benefitting all vulnerable groups (including but
not restricted to women). Improved regulation should also lead to reduced need to utilise child labour
owing to the increased profits that can be expected to be realised.
6
pubs.iied.org/pdfs/16532IIED.pdf
B. Impact and Outcome that we expect to achieve
The impact of the intervention is the formalisation and legalisation of the activities of artisanal miners
leading to the provision of a secure and sustainable livelihood for the majority of artisanal miners.
At the outcome level it is anticipated that the intervention will lower the scale of gold smuggling out of
Zimbabwe currently estimated at $600m a year by 5% per year for 5 years after the programme has
ended.
Appraisal Case
A. What are the feasible options that address the need set out in the Strategic case?
There are 2 feasible options and a counterfactual:
Option 1: Work with PACT and Chamber of Mines/Gold Companies to gain a comprehensive
assessment of the situation facing artisanal miners taking forward recommendations as appropriate,
and support World Bank working with Ministry of Mines to develop an artisanal mining road map. This
option would involve the following activities:

After the provision of a satisfactory concept note, PACT would undertake a situation analysis
of artisanal mining in Midlands Province. This location was suggested by the Chamber of
Mines as a pilot site based on its concentration of artisanal miners, the presence of member
companies and easy access from Harare.
The goals of this first phase are:
Research:
 Understand and map the actors, production levels, mineral flows, economics, constraints, and
political economy of gold;
 Identify opportunities for intervention(s) to formalize production and trade of artisanal and
small scale mining produced gold;
 Assess prospects for policy reforms to support formalization of artisanal and small scale
miners;
 Fully understand the challenges to, and opportunities for, any pilot program, what will be the
key roadblocks, what will need to be in place for this to be successful initially and over time,
and how to manage and interact with influential stakeholder groups.
Design:
 Develop a framework for the mining sector that facilitates and fosters cooperation between
different scales of mining and a positive policy and economic context that promotes and
incentivizes legal mining, processing and mineral trading;
 Develop plans to integrate small scale and industrial mining in productive relationships.
PACT would interview and engage with all key stakeholders including local government and
undertake desk reviews. At this scoping phase PACT would undertake a cost benefit analysis of
artisanal miners operating legally and illegally, taking account of the different services they are
currently provided with. This would inform thinking of what services should be provided by a range of
key players to encourage artisanal miners to sell through formal channels. They would also
undertake a political economy analysis to understand the explicit and implicit incentives which explain
the behaviour of key actors connected to artisanal mining, including miners, traders, and government
agents. A key outcome of the political economy analysis will be to map the overlapping interests of
key actors and identify the champions and potential spoilers of efforts to formalise artisanal gold
mining in Zimbabwe. The situation analysis would involve the development of specific
recommendations on both the business side (how to link up artisanal miners with large scale firms)
and also on the government side, legislation, capacity etc. Social analysis highlighting the needs and
circumstances of vulnerable groups will also be identified. Depending on DFID’s assessment of the
recommendations and the general quality of the work to date PACT may be commissioned to lead on
implementing the recommendations. The ultimate vision for this work would be to link the artisanal
and small scale miners up with the gold mining companies, provide them with training, services,
equipment etc.
Having worked on artisanal mining in Burundi, Democratic Republic of Congo (DRC), Ethiopia,
Ghana, Guinea, Madagascar, Rwanda, Tanzania, and Uganda, as well as in Latin America and Asia
PACT have substantial relevant experience and appear to be the most appropriate organisation to
undertake both the situation analysis and provide follow to subsequent recommendations as
appropriate.
The World Bank has been engaging in productive discussions with the Ministry of Mines regarding
the establishment of an artisanal and small scale miners’ road map. While the details still need to be
finalised it is likely that this work would include the following:

Provide a set of baseline information about the artisanal and small scale gold mining sector
for stakeholders and from which to base policy formulation;

Detail a set of recommendations and future activities that can be executed in the immediate,
medium and long run to ensure the sustainability of the sector. The activities would cover
policy reform, institutional reform and capacity building both within government and with the
artisanal and small scale miners.

Provide preliminary estimates of costs for these activities, to catalyse donor support on an
activity by activity basis or as part of a larger Bank supported programme.
Option 2: Work with PACT and Chamber of Mines/Gold Companies to gain a comprehensive
assessment of the situation facing artisanal miners taking forward recommendations as appropriate.
This is the same as option 1 although it does not include support to the World Bank’s work with
Ministry of Mines on developing an artisanal mining roadmap.
Option 3: Counterfactual. Provide no funding in this area
B. Assessing the strength of the evidence base for each feasible option including delivery
routes
There is emerging evidence from Ethiopia of very positive gains that can be made from working with
artisanal miners. Conversely it has become clear in Zimbabwe and other countries that ignoring
artisanal miners and making their activities illegal has worsened their plight to both the detriment of
the miners and the economy.
Option Evidence rating
1
Medium
2
Medium
3
N/A
C. For each feasible option, what is the assessment of local capacity? Is the intervention
likely to strengthen capacity in a durable manner?
The issues facing and consequences of artisanal miners have been neglected in Zimbabwe for the
last 15 years. As such, although there are 2 or 3 local organisations that have the capacity to do
effective work in the mining sector, capacity to engage with the specific issues facing artisanals is
more limited. PACT have experience of working in mining in Zimbabwe and substantial experience of
artisanal mining internationally. PACT is a locally registered organisation and this would provide them
with significant scope to enhance their understanding of this issue. Support to the World Bank to
developing an artisanal and small scale miners’ road map would entail the provision of technical
assistance and support to the Ministry of Mines thereby strengthening their capacity to engage in this
area.
D. What is the likely impact (positive and negative) on climate change and environment for
each feasible option?
From a climate change mitigation perspective agricultural incursion, firewood collection, and charcoal
are typically the biggest drivers of deforestation in developing countries. These are followed distantly
by mining, infrastructure development, and urban expansion7. Alluvial artisanal and small scale
mining, when practiced in large concentrations, can degrade environments and clear several
kilometres of forests and brush over time. Rapid ‘pitting’ (clearing brush and digging large pits) is
often haphazard and based on a hunch as opposed to geological science. Technological
interventions, such as basic prospecting techniques will save miners’ time, effort, and potentially
reduce deforestation by reducing their land clearance activities. The introduction of more efficient
mining methods would increase their yields and lead to the miners spending more time lucrative
locations.
Mercury and cyanide are known to be used by artisanal miners in Zimbabwe and the intervention will
provide recommendations on next steps for Government and interested donors on this important
issue. Direct engagement with artisanal miners promoting more sustainable practices will help to
make them more environmentally and socially responsible and comply with national environmental
laws. In response to crop failures and unpredictable seasons artisanal mining often becomes a haven
for rural communities and can thereby help communities to withstand environmental shocks.
Categorise as A, high potential risk / opportunity; B, medium / manageable potential risk /
opportunity; C, low / no risk / opportunity; or D, core contribution to a multilateral organisation.
Option
Climate change and environment risks Climate
change
and
environment
and impacts, Category (A, B, C, D)
opportunities, Category (A, B, C, D)
1
C
B
2
C
B
3
NA
NA
E. If any, what are the likely major impacts on social development?
Despite their significant role in artisanal mining around the world as miners, transporters, processors,
suppliers, and business owners, women are frequently underserved in mining development
programs. In both research and in implementation, the project will use approaches that proactively
reach and consult women in the needs-assessment, design, roll-out, and course-correction phases.
The involvement of women in mining decreases as mechanisation increases and women tend to
have practical, logistical challenges in securing land rights, mining titles, and formal loans to
professionalize their operations. These and other challenges will be proactively addressed and
gender equity will be built into the program goals and approach.
The presence of artisanal miners is a wider reflection of a lack of alternative employment
opportunities. As such the proposed intervention would be likely to have a strong positive impact on
social development as the half a million artisanal miners in Zimbabwe are likely to come from poor
7
Kissinger, G., M. Herold, V. De Sy. Drivers of Deforestation and Forest Degradation: A Synthesis Report for REDD+
Policymakers. Lexeme Consulting, Vancouver Canada, August
2012.https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/66151/Drivers_of_deforestation_and_forest
_degradation.pdf
households. Moreover the impact on women and children will be considerable as c. 150,000 artisanal
miners are women and children. Efforts to engage with artisanal miners in a positive and
comprehensive fashion would therefore improve the livelihoods of significant numbers of women and
children in Zimbabwe.
G. What are the costs and benefits of each feasible option? Identify the preferred option.
Option 1: Work with PACT/Chamber of Mines and World Bank
Costs
The cost of option 1 is £1.25 million; £500,000 in the first year and £750,000 in year two. Depending
on the success of the work it may be worthwhile to extend the support into additional years with
further funding however for the purposes of this business case it has been kept as 2 years.
Benefits
The benefits of option 1 can be quantified in terms of the value of gold that will be sold through formal
channels due to the implementation of the project. Estimates from both government and civil society
are that $600m worth of gold is smuggled out of Zimbabwe every year89. This is almost exactly equal
to the total value of official gold production of $622 million in 2013. This suggests that for every $1 of
gold formally sold $1 is smuggled out of the country.
Assuming that this figure is correct and that all the $600m smuggled is produced by artisanal and
small scale miners then the government is losing $18m a year through the 3% royalty it imposes on
artisanal and small scale gold producers. Quantifying the benefit in such a way is legitimate as it
represents a transfer of resources from illegal to legal traders and from South Africa to Zimbabwe
which is a poorer country.
Utilising a 10% discount rate and assuming that the project lowers the rate of smuggling by 5% a
year over 5 years after the project finishes, figure 1 depicts the benefits of the programme. With
every $1 invested achieving a return of $1.6 it is clear that this project represents strong Value for
Money. This is confirmed by the positive Net Present Value and the observation that the opportunity
cost of capital would need to be nearly trebled for the Net Present Value to become negative. This
strong result is despite some key benefits of the project being omitted from the analysis, including:


The benefits only consider the impact on government royalties, not other forms of taxation,
and not the wider impact of improving the livelihoods of 500,000 artisanal miners or 2.1
million people assuming an average family size of 4.2.
Increased capacity of both government and local civil society to productively engage in this
area.
Figure 1: Project Benefits
Net Present Value
Internal Rate of Return
Cost: Benefit Ratio
$1,127,916
27.0%
1.6
A sensitivity analysis was undertaken in order to determine the importance of the assumptions to the
overall results depicted in figure 1. Lowering the impact of the project on smuggling to 4% a year still
elicits a positive Net Present Value. From figure 2, it is clear that the project would no longer
represent Value for Money if the project only lowered smuggling by 3%/year or if the number of years
8
9
http://www.swradioafrica.com/2014/02/27/50m-gold-smuggled-out-of-zim-every-month/
http://www.thestandard.co.zw/2013/05/26/zimbabwe-losing-millions-to-gold-smuggling-mmcz/
over which the benefits are realised was cut to 2. Given that the project could have long term
transformational benefits these 2 eventualities are unlikely.
Figure 2: Sensitivity Analysis
Net Present
Value
Internal Rate
of Return
Cost: Benefit
Ratio
Lower impact on
smuggling to 4%
a year
Lower impact on
smuggling to 3%
a year
-$112,705
Lower number of
years over which
benefits are
realised to 4
$619,890
Lower number
of years over
which benefits
are realised to 2
-$553,651
$507,606
18%
8%
21%
-8%
1.3
0.9
1.3
0.7
Option 2: The costs of option 2 are assumed to be the same as option 1. Although it is difficult to
quantify it is anticipated that the benefits would be less than option 1 as the second option entails
less flexibility and prevents the ability to fund the World Bank’s planned work on artisanal mining.
Option 3: No Funding to Mining
The counterfactual of no funding would entail the key benefits outlined above failing to be realised.
Given the critical importance of the mining sector to Zimbabwe this option would represent a missed
opportunity for DFID to contribute to Zimbabwe’s development and poverty alleviation efforts.
H. Theory of Change of Preferred Option
Option1 is the preferred option as it enables a flexible approach to supporting artisanal miners in
Zimbabwe. It is currently envisaged that the majority of support will be for PACT’s work although the
precise level of funding will depend on the success of the ventures and the extent to which other
donor funding is forthcoming. Option 1 would enable PACT and the World Bank’s work to learn
lessons from one another and ensure strong complementarities and synergies between the two work
streams. Theory of change of option 1 can be seen on the following page.
A secure and sustainable livelihood for the majority of artisanal miners
Impact
Sufficient political will
to have a long term
vision of the mining
sector
Outcome
Implementation of key policies and reforms which lead to more artisanal and
small scale miners selling through formal channels
Key political
economy issues
effectively
integrated into
proposals
Private sector buy in
and willingness to
engage
Outputs
Key policy and
institutional reforms
in ASM sector
identified
Capacity building for
government and
ASM miners
Activities of
implementing
partners not
hampered
Inputs
Problem
Statement
ues
Provide support to civil society to work in collaboration with Chamber of Mines and
Gold Companies, and World Bank to work with Ministry of Mines to work in areas
related to artisanal and small scale miners
Artisanal and small scale miners are largely ignored
and neglected members of society. Current structure
of selling gold formally incentivises people to engage
in illegal activities leading to gold being smuggled out
of the country. Artisanal and small scale mining can
be a source of corruption and instability.
Artisanal and small scale
miners damage the
environment through the
use of mercury and
cyanide to acquire gold
Programme
effectively
managed
I. What measures can be used to monitor Value for Money for the intervention?
Economy: Unit cost of consultants
Efficiency: Cost per reform in artisanal and small scale mining implemented by private sector and
Government
Effectiveness: Unit cost of each additional $1 of artisanal and small scale mining gold sold through
formal channels
Annual Reviews will provide an opportunity to revisit assumptions made at the project design phase.
The VFM sections of the Annual Reviews will consider the following issues





Do the key assumptions regarding VFM still hold?
Monitor progress against VFM metrics to assess whether the programme resembles VFM
Does performance to date imply that the project justifies itself in terms of VFM?
Have key risks changed; does the logframe need to be revised?
Specific recommendations for improving VFM
J. Summary Value for Money Statement for the preferred option
Option 1 is the preferred option as it provides strong Value for Money and provides flexibility to fund 2
initiatives which both have the scope to make substantive progress in this area. The opportunity cost
of capital for option 1 would need to be nearly tripled for it to no longer represent Value for Money.
Commercial Case
Direct procurement through a contracted supplier
A. Clearly state the procurement/commercial requirements for intervention
Procurement will be indirect through third party delivery channels. The first component will entail a
comprehensive assessment of the artisanal mining situation in Zimbabwe and DFID will sign an
Accountable Grant with PACT. Procurement of technical services will be through a Framework
Agreement and DFID will sign an MOU with the World Bank Group.
Other commercial options considered included the FCAS Framework. This option was deemed
unsuitable for this type of programme as most of the FCAS Framework suppliers are not established
in Zimbabwe leading to significant time and cost delays to establish operations in Zimbabwe.
B. How do we expect the market place will respond to this opportunity?
The market for this requirement is highly specialised and the provider requires experience of artisanal
mining. The specialised nature of the inputs required limits the market; therefore, the programme will
be procured through a ‘third party’ indirect procurement route through PACT and the Word Bank as
they have specialist and unique experience in artisanal mining. A competitive contracting process
would not achieve better value for money.
C. How does the intervention design use competition to drive commercial advantage for
DFID?
Not applicable –programme will be delivered by third party (NGO) and through a multilateral.
Indirect procurement
DFID will invite a fully costed proposal from PACT and will compare costs with other DFID
programmes and against a central cost database to ensure that costs are reasonable and that the
scope is realistic. DFID’s commercial team will help negotiate fees and expenses.
The Technical Assistance Component will be delivered through the World Bank, and will follow the
Bank’s approach on driving commercial advantage. The use of the World Bank’s global procurement
systems which are robust, highly competitive and transparent will result in contracting of the best
possible suppliers on the market. The World Bank will use competition at various stages of
procurement to drive costs down, minimise fiduciary risk and deliver value for money. The World
Bank’s annual fiduciary review process is comprehensive and includes both periodic postprocurement review of transactions and prior review of larger procurement activities along with an
assessment of the effectiveness of the procurement processes.
Narrative reports detailing progress along with details of actual and forecasted expenditure will be
produced regularly by PACT and the World Bank. This will enable DFID Zimbabwe to have sufficient
management oversight including early sight of risks and other issues. This will set out some key
general principles regarding programme effectiveness and the extent to which it is delivering value
for money.
D. What are the key cost elements that affect overall price? How is value added and how will
we measure and improve this?
The key costs drivers for the programme will include:





Consultancy fees
Programme cost including training, travel, and advocacy.
Overheads including salaries and office running costs.
World Bank admin charge for Technical Assistance
World Bank Technical Assistance staff costs, which are a function of the quantity and unit
cost of staff time deployed by the World Bank.
As set out above, costs will be carefully scrutinised and challenged. These costs will be regularly
monitored and compared with implementation rates as well as to those of comparable programmes
within DFID.
E. How will the contract be structured and how will contract & supplier performance be
managed through the life of the intervention?
Third Party performance management - PACT
The Accountable Grant with PACT will embed results-based deliverables and outputs in an effort to
get better value for money. PACT’s proposal will establish an implementation plan against which
DFID will expect regular reporting. DFID will reserve the right to scale the programme up or down
based on performance, and to terminate the Accountable Grant if performance is unsatisfactory.
Contract and supplier performance management - World Bank
The Technical Assistance Component of the programme implemented by World Bank will be through
an MOU and will be designed to include payments based on achievement of outcome-level
milestones, and will be calibrated to attain the results on policy reform within the artisanal and small
scale mining sector .
Delivery through a third party entity (multilateral organisation; civil society
organisation or support to government)
A. Why is the proposed funding mechanism/form of arrangement the right one for this
intervention, with this development partner?
The preferred option has two components the first of which will be through an Accountable Grant with
PACT. PACT is a Not for Profit Organisation with a 42-year history of helping millions of people who
are poor and marginalised to discover and build their own solutions and take ownership over their
future. PACT has substantial experience of working with artisanal miners across Africa and has an
established office in Zimbabwe. Delivery through a third party will allow specialist staff to be
dedicated to tasks providing flexibility to quickly respond to emerging issues and changing priorities.
It will also allow DFID to allocate its resources more effectively to provide greater strategic vision and
direction ensuring the programme responds to DFID’s objectives and priorities.
The second component through the World Bank will finance analytical work for technical assistance
services to cover the following: to set baseline information on artisanal and small scale mining to
base policy formulation; policy reform; institutional reform; and capacity building for artisanal and
small scale miners.
PACT and World Bank are the right partners in Zimbabwe that can deliver support to artisanal and
small scale miners, having substantial relevant experience and developed a good working
relationship with the Ministry of Mines.
B. What assurance has been obtained on capability and capacity to deliver?
DFID will conduct a Due Diligence Assessment on PACT before signing the Accountable Grant
Agreement. This process will give sufficient assurance that PACT is not a significant financial or
management risk and has the capability and capacity to deliver.
C. Is there an opportunity to negotiate on anticipated costs?
Yes: DFID will engage PACT to explore ways of reducing the in-country programme overhead costs
considering that there will be no set up and roll out costs.
Overall value for money through a commercial lens:
Economy
o PACT is an international organisation with robust procurement systems that offers the lowest unit
costs of delivery, as elaborated in the appraisal case.
o Unit costs will be benchmarked against other DFID programmes.
Efficiency
o The presence of specific output based indicators will ensure delivery efficiency.
Effectiveness
o Technical assistance effectiveness is primarily driven by targeting. The appraisal section
highlights why option 1 is effective in this context.
To manage the programme effectively, DFID will allocate internal staff resources which include:
o
o
Economic advisor as lead adviser for the programme
Programme Manager who will provide day to day programme management
Financial Case
A. Who are the recipients of all proposed payments?
PACT Zimbabwe and the World Bank Zimbabwe will be the sole recipients of all the payments.
B. What are the costs to be incurred directly by DFID?
The total costs incurred by DFID are £1.25 million
C. What are the costs to be incurred by third party organisations?
The £1.25 million will be distributed to PACT Zimbabwe and World Bank Zimbabwe. These
organisations will not incur any costs themselves beyond use of staff time.
D. Does the project involve financial aid to governments? If so, please define the arrangements
in detail.
No money will flow to Government of Zimbabwe.
E. Is the required funding available through current resource allocation or via a bid from
contingency? Will it be funded through capital/programme/admin?
Funding is budgeted for in the current resource allocation for 2014/15 and 2015/16 and will be funded
by programme.
F. What is the profile of estimated costs? How will you work to ensure accurate forecasting?
The following spending profile is expected.





August 2014 £200,000
December 2014 £300,000
April 2015 £400,000
November 2015 £200,000
February 2016 £150,000
Accurate forecasting will be achieved by having regular conversations with implementing partners to
understand the needs and progress of the project. The Programme Manager will conduct regular
meetings with PACT and World Bank to review project progress, monitor expenditure trends against
forecasts and assess overall compliance.
G. What is the assessment of financial risk and fraud?
The financial risks are considered to be small, with the funds only being channeled through trusted
partners, PACT and World Bank (see for example DFID’s assessment of World Bank during the 2011
Multilateral Aid Review) which has approved financial management and audit systems. Expenditure will
be carefully monitored to ensure it is being used for the defined purposes, in line with acceptable
accounting procedures, representing Value for Money.
H. How will expenditure be monitored, reported and accounted for?
World Bank and PACT will be the Managing Agents for their respective components of the programme.
World Bank/PACT will perform the following duties
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Sign an Accountable Grant (AG) or Memorandum of Understanding (MOU) with DFID setting
out the terms and conditions governing the receipt and administration of contributions, and
report on the use of funds pursuant to parameters established within the AG or MOU signed
with each funding partner.
Ensure overall financial management of all resources received and attainment of the
programmes’s results. This role entails legal responsibility for ensuring accountability for
programme resources and results using financial and programme rules and regulations.
As part of a consolidated report and as an annex to the narrative report, submit to DFID an
annual narrative and funds utilisation report.
Arrange for their financial records to be audited in accordance with the established procedures
I. Are there any accounting considerations arising from the project?
No
Management Case
A. What are the Management Arrangements for implementing the intervention?
It is likely that other bilateral donors will provide funding towards these initiatives. The programme will
be managed through structured dialogue with PACT and World Bank.
D. How will progress and results be monitored, measured and evaluated?
Progress will be closely monitored through regular interactions with PACT and World Bank. Annual
Reviews will assess progress against the logframe and will recommend whether the project should
continue beyond its two year duration. Largely due to the low level of funding there are no plans to
evaluate this project.
Lograme
Quest No of logframe for this intervention: 4514976