Tanzania - Health Sector Development Project (APL)

Report No. PID8504 Project Name Tanzania-Health Sector Development(*) Project Region Africa Regional Office Sector Basic Health Project ID TZPE58627 Borrower(s) Government Implementing Agency Ministry of Health Environment Category C Date PID Prepared November 5, 1999 Projected Appraisal Date August 23, 1999 Projected Board Date February/March, 2000 1. Country and Sector Background With an estimated GNP per capita of about US$ 210 in 1998 (World Development Report 1999/2000, World Bank), Tanzania is one of the poorest countries in the world. It has a population of about 32 million with a high annual growth rate at 2.8 percent. Despite the progress achieved since Independence and the recent favorable growth experience, Tanzania's social indicators still present a dismal picture. The infant mortality rate of 85 per 1,000 live births is near the average for Sub-Saharan Africa (91/1,000). Average life expectancy for male and female is estimated at 47 and 49 years and the total fertility rate is 5.6. HIV prevalence levels ranging 10-14w among adults. Since Independence, the government has recognized the importance of health and given it a high priority. Universal and free access to public health facilities had been maintained until early 1990s when financial pressures, expanded demand for services, and declining service quality forced policy change. The government has been a major provider and financier of health services, while voluntary organizations or NGOs (mostly religious) have been an important partner, especially in rural areas. The role of for-profit private providers is still limited, but has been growing rapidly, mostly in the urban areas, since re-legalization of private practice in 1991. Issue 1 - Lowering high rates of fertility, HIV, malaria and diarrhea episodes and perinatal/maternal conditions. Well over 70 percent of life years lost in Tanzania are due to ten major preventable diseases and infections, with malaria and perinatal/maternal conditions alone claiming more than 40 percent (World Bank, Health Policy in Eastern Africa: A Structured Approach to Resource Allocation, 1995). Changes in sexual and reproductive health behavior required to lower the 5.6 fertility and 10t HIV prevalence rates have yet to occur. Concomitantly, the public and personal health interventions (including vector control, immunization, and environmental health) required to control malaria and diarrhea, and to manage perinatal/maternal conditions have yet to reach reasonable levels of effectiveness. Excellent national plans on what to do and existence of several successful pilots in community-based programs and immunization coverage suggest that problems lie in the capacity to finance, manage and  deliver the resources and services to the priority beneficiaries nationwide. Issue 2 - Building capacity to manage resources. a) Limitations of the Public Sector: Although Tanzania created an extensive network of health facilities, shortage of funds and weak management have plagued many public facilities with lack of essential drugs and supplies as well as deteriorating infrastructure. There is a need to re-prioritize the use of its finite resources, and search for options such as rationalization or "right-sizing" of the public systems, and shifting its role from a direct provider to a financier, to create greater NGO/private sector participation. b) Minimal Government Investment in Prevention Services and Primary Care: While Tanzania allocates a relatively high proportion of its budget to the health sector compared to neighboring countries (12.5% of total expenditures or 1.2% of GDP in 1996/97), half of its recurrent budget is allocated to hospitals despite the government's emphasis on primary health care (PHC). Donors have mostly concentrated their resources on PHC. Salaries consume most of the government resources, leaving only 30% of the recurrent budget for non-salary items. The situation is further worsened by the weak execution of the non-salary recurrent budget. c) Fragmentation Through Management Systems and Balkanized Projects: Parallel implementation arrangements (e.g., systems of disbursement and reporting) and duplication of generic functions (e.g., drugs/supplies distribution, information systems) exist to support the public health interventions. They are delivered and coordinated by the Ministry of Health (MOH) through separate programs for specific diseases or interventions, and are usually funded by donors. Furthermore, a number of projects have opted for district-based support, which achieves integrated support but balkanizes regions. Inadequate information sharing and coordination among such complex arrangements have led to inefficiency, duplications, and inequality between geographic areas. d) Unclear Accountability and Inadequate Delegation of Authority: Due to the complex system of administering different levels of health services, the system has unclear lines of authority and accountability for outputs. Administrative and budgetary responsibilities are sub-divided between MOH, the Ministry of Regional Administration and Local Government (MRALG), and 114 local authorities (i.e., district councils, municipalities). Although the MOH budget includes less than half of the government resources for health, it is still the MOH that has the overall technical responsibility on health matters. This system has resulted in dual responsibilities at the district- level. Moreover, the past "decentralization" efforts did not provide real decision-making authority over resource allocation to the districts, which limits the districts' ability to manage their day-to-day affairs and be accountable for their outputs. To tackle these issues, the government proposed ambitious reforms in the sector to focus on implementing the essential and most cost-effective interventions (essential health package) and drastically transform financing, management and delivery roles by emphasizing quality, empowerment of local authorities and beneficiaries, and greater use of non-government agents (See The Social Sector Strategy, October 1994, and Proposals for Health Sector Reform, December 1994 for additional information). The efforts required to achieve the sector vision are set out in the Health Sector Reform Programme of Work (POW): July 1999-June 2002. 2. Objectives -2-  The development objective of the Project (Phase I of the Program) is to improve resource management and quality of health services through sector reforms and institutional capacity building. 3. Rationale for Bank's Involvement The Bank's sector-wide orientation, focusing on policy reform, provides synergy with the activities of bilateral donors who have traditionally focused on service delivery. Being a multilateral organization, the Bank has a comparative advantage in facilitating the process of sector programs and systems development, and also can act as a financier of last resort to fill any financing gap. The Bank has built experience in sector programs in other countries and will bring lessons learned and technical support in carrying out policy dialogue and operationalization of the sector program. 4. Description This Adjustable Program Loan (APL) supports the first phase of the Health Sector Reform (HSR) Program of the Government of Tanzania (GOT). The overall purpose of the HSR Program is to improve access, utilization, quality, and financing of health services through increased efficiency and effectiveness in use and allocation of resources, to maximize impacts on health outcomes, especially among the poor, women, and children (Ministry of Health, The Health Sector Reform Plan of Action, July 1999-June 2000). Using an APL as a lending instrument, the Bank will support this process over a period of about 10-12 years in a phased and flexible manner in order to respond to the dynamic, evolving process of the sector reforms. Phase I of the Program (2000-2003) will initiate the reforms and emphasize institutional capacity development. It will focus on: (i) strengthening capacity (particularly at local levels) to manage and adapt to changing roles and responsibilities; (ii) developing and piloting systems to improve quality and delivery of services to improve health status; and (iii) improving resource mobilization and management through increased coordination and strengthening of support systems. Based on the experience and lessons learnt in Phase I, Phase II (2003-2007) will expand the reforms and systems/capacity development for better management of resources and quality improvements, with a view to institutionalizing decentralized management of health services and shifting from the input-oriented culture towards output/outcome-based planning and performance management. Phase III (2007-2011) will institutionalize output- based management, and institute improved systems that will ensure high quality health care to the Tanzanians and raise their health status. Depending on the lessons learnt from preceding phases, the strategies, approaches and the pace of reforms and sector development in Phase II and III will be adjusted, refined and/or redesigned. The main components are as follows: (1) Strengthening Service Delivery (a) District Health Services (b) Level 2 and 3 Hospitals (c) Public/Private Mix (2) Strengthening the MOH & Central Support Systems (a) Role of Central MOH & Sector-wide Management -3 -  (b) Central Support Systems (3) Human Resource Development & Management (4) Health Financing 5. Financing Total (US$m) Government 295 IDA 20 Other donors 100 Total Project Cost 415 6. Implementation To facilitate sustainable institutional development, existing structures will be developed and strengthened, and there will be no separate project unit. The Permanent Secretary (PS) of the MOH, in close collaboration with the PS of the MRALG, will be responsible for oversight and coordination of implementation. The Program will be implemented by directorates, units, and health management teams in districts and regions. The Chief Medical Officer will hold monthly management meetings with all directors to monitor progress of implementation. The Directorate of Health Policy and Planning will be responsible for day-to-day coordination, and in particular, the reconstituted PHC Secretariat will play the role of a secretariat. The Chief Accountant of the MOH will be in charge of overseeing all disbursements under the program, and the Director for Administration for handling procurement. Donor funds will be channeled, to the extent possible, through the existing but enhanced government mechanism. Several donors agreed to "pool" funds to finance the government program using the government mechanism. A "basket financing committee", chaired by the PS/MOH and including donors who provide pooled funds, will meet quarterly to monitor the implementation progress and achievements against performance indicators, and advise on disbursements for the next quarter. A "sector-wide approach committee", chaired by the Director of Policy and Planning, will provide forum for coordination of all the donor-assisted activities/programs in the health sector. A joint annual review, preceded by a technical review, will assess actual expenditures and achievements over the year against those previously planned, and review and agree on a revised medium-term strategy and plan of action for the coming year, including a financing plan. A set of performance indicators have been developed for strategies, activities, and outputs for medium-term objectives, and impact/outcomes for the long term. While performance will be monitored at all levels, the initial period will emphasize input or process indicators. 7. Sustainability There are three critical areas that affect the sustainability of the Project: First, by promoting a sector-wide approach in the planning and financing of the sector, the Project signals both the government and donors to do away with the fragmented approach prevalent under the traditional verticalized or balkanized projects, which have been shown to be unsustainable in the long - 4 -  run and to distort sector allocation priorities. As more donors contribute to the pooled funding or at least participate in sector-wide planning, the distortionary effects of multiple and poorly coordinated vertical projects are expected to be reduced and sustainability enhanced. Second, the project will also support the budgetary reform initiatives under the Medium-Term Expenditure Framework (MTEF) and will use the allocation ceilings and ratios under the MTEF as performance benchmarks that will be reviewed during a joint annual review. External resources for the health sector, most of which are currently extra-budgetary, will gradually be incorporated in the MTEF; this will help clarify the real resource envelope for the sector. Such budgetary reform and technical/analytical work to be supported by the Project will facilitate the planning and prioritization process as well as fiscal predictability and sustainability. Third, the Project intends to contribute to changing the current input-based planning and monitoring into an output-based performance management systems. This coincides with the Ministry of Finance's intention to introduce performace-based budgeting, as well as the shift towards the performance- based management envisaged under the Civil Service Reform. However, this would entail not only the change in the entire incentive and reward systems, but also the culture of the institution and civil servants including work ethics. Such changes will require time and continuous effort, which will be dealt with throughout the three phases of the Program. 8. Lessons learned from past operations in the country/sector Need for a comprehensive approach - Governments and donors have recognized the limitations of conventional projects to make a sustainable impact. Fungibility of resources also implies that because donors usually focus on primary care, government resources are then redirected to less cost-effective interventions. In lieu of piecemeal projects, a more comprehensive approach is called for, relying on a sector strategy and program, and an agreed upon financing framework. Importance of demand - Tanzania has learned that households and communities do have an important role to play in funding services, signaling their preferences, and thereby improving access and quality of care. The Project's design has taken account of the lessons learned from health financing pre- tests supported by the previous IDA Credit 2098-TA (e.g., a cost sharing program, community health funds, and drug revolving funds in hospitals). These interventions will be further replicated or strengthened during this Project. Focusing on the core functions of government - Worldwide experience has shown that no country can commit to providing universal access to all health services to its people. WDR 1993 introduced cost-effectiveness and burden of disease analyses as tools to reconfigure the financing and delivery of health services, especially in countries with limited resources. This Project will support the HSR Program's investment in those health interventions which are demonstrably cost-effective and address the highest disease burden. 9. Program of Targeted Intervention (PTI) N 10. Environment Aspects (including any public consultation) - 5 -  Issues The program will mostly involve activities such as: policy and institutional reforms; financing reforms; strengthening human and institutional capacity; support to priority health programs to control major diseases or to address health issues; and community involvement in local health service management and support to community-based health activities. Civil works involved will be mostly rehabilitation of existing health facilities. No negative environmental impact is envisaged in the proposed program. A family planning component is expected to contribute to the reduction of the population growth rate, which will in turn mitigate pressures on environment. Present practices in medical waste management will be assessed. 11. Contact Points: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Task Manager Philip R. Gowers The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: (202) 458-0376 Fax: (202) 473-8299 Note: This is information on an envolving project. Certain components may not be necessarily included in the final project. Processed by the InfoShop week ending December 17, 1999. - 6 -