Mozambique - Health Service Delivery Project

Documentof The World Bank FOR OFFICIAL USEONLY ReportNo: 46676-MZ PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHEAMOUNT OFSDR29.9MILLION (US$44.6 MILLION EQUIVALENT) TO THE REPUBLIC OF MOZAMBIQUE FORA HEALTHSERVICEDELIVERY PROJECT(HSDP) March 20,2009 HumanDevelopment1 SouthernAfrica CountryCluster2 Africa Region This document has a restricted distribution and may be used by recipients only inthe performance o f their official duties. Its contents may not otherwise be disclosedwithout World Bankauthorization.  CURRENCY EQUIVALENTS ExchangeRateEffective November 30,2008 Currency Unit = Metical Metical 24.40 = US$1 US$1.49 = SDR 1 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS ACA Avaliaqtio Conjunta Annual (Joint Annual Evaluation) ACT Artemisin-based Combination Therapy ANC Antenatal clinic APE Agente Polivalente Elementar,atype of community healthworker ARI Acute Respiratory Infection BES Boletim Epidemiol6gico Semanal (WeeklyEpidemiological Bulletin) BOM BankofMozambique BMI Body Mass Index ccs Comitk de Coordenaqtio Sectorial (Sector Coordination Committee) CF Common Fund CGF ComitC de Gesttio Financeira (FinancialManagement Committee) CHW Community HealthWorker CIDA CanadianInternational Development Agency CMAM Central de Medicamentos e Artigos Medicos (CentralAgencyfor Drugs and Medical Supplies) CP Cooperation Partner CPS Country Partnership Strategy CQ Consultants Qualifications DAF Direcqtio de Administraqtio e Finanqas(Directorateof Administration and Finance) DFID Departmentfor International Development DHS Demographic andHealthSurvey DI Department of Infiastructure DNSP Direcqtio Nacionalda Saude Publica (NationalDirectorate of Public Health) DPPF ProvincialDirectorate of Plan andFinance DPS Direcqtio Provincialde Saude (Provincial Department of Health) DPT Diphtheria, Pertussis, and Tetanus DRH Direcqtio de Recursos Humanos (Human ResourcesDirectorate) EA Environmental Assessment EO1 Expression of Interest ESW Economic and Sector Work EPI ExpandedProgram o f Immunization ETSDS Expenditure Tracking and Service Delivery Survey FA Financing Agreement FCG Fundo Comum Geral (General CommonFund)  FOROFFICIAL USE ONLY FCM Fundo Comum para Medicamentos (Common Fundfor Drugs and Medical table 1OSupplies) FM Financial Management FMR Financial MonitoringReport GIS Geographic InformationSystems GOM Government ofMozambique GPN General ProcurementNotice GT-CGF Technical Group of the Financial Management Committee HIS HealthInformationSystem HRDP HumanResourcesDevelopment Plan HSDP Health Service Delivery Project H S P Health Sector Investment Plan HSDPO HealthService DeliveryProject Observatory ICB International Competitive Bidding ICR ImplementationCompletion Report IDA InternationalDevelopment Agency IEC Information, Education, and Communication IMCI IntegratedManagement of Childhood Illness IMF International Monetary Fund IPT Intermittent Preventive Treatment IRS Internal Residual Spraying I T N Insecticide TreatedNet LCS Least-Cost Selection LLIN Long-lasting Insecticide-Treated Net LQAS Lot Quality Assurance Sampling LSDI Lubombo Spatial Development Initiative M&E Monitoring andEvaluation MBB MarginalBudgeting for Bottlenecks MDG MillenniumDevelopment Goal MEDIM Medicamentos de Moqambique, Company Doing Import-Export ofDrugs and oc Medical Supplies MICOA Ministry for Coordination of Environmental Affairs MOF MinistryofFinance M O H MinistryofHealth M O U Memorandum ofUnderstanding MPD MinistryofPlanning andDevelopment MTEF Medium-TermExpenditure Framework NCB National Competitive Bidding NGO Non-Government Orgariization NMCP NationalMalaria Control Program . ORS OralRehydration Solution ORT Oral Rehydration Treatment PAF Performance Assessment Framework PARPA Absolute Poverty Reduction Plan o fAction PEFA Public Expenditure andFinancial Accountability PES Economic and Social Plan This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may notbe otherwise disclosedwithout World Bank authorization.  PESS Health Sector Strategic Plan PFM Public FinancialManagement PIS Plan0 de Investimentos da Saude (Health Investment Plan) PMI (US) President's Malaria Initiative POA Plan Operacional Annual (Operational Annual Plan) PRSC Poverty Reduction Strategy Credit PRSP Poverty Reduction Strategy Paper QCBS Quality and Cost-Based Selection SBD Standard BiddingDocument SDC Swiss Development Cooperation SIL Sector InvestmentLoan SIS Sistema de Informaqiio de S a ~ d e(Health Information System) SISTAFE Sistema de Administraqiio do Estado (State Financial Administration System) SOE Statement o f Expenditures SP Sulfadoxime-Pyrimethamine SPN Specific Procurement Notice SWAp Sector-wide Approach TB Tuberculosis TBA Traditional BirthAttendant TH Traditional Healer TPIP Triennial Public Investment Plan UFSA Unidade Funcional de Supervisiio das Aquisiqees (Functional Supervision Unitfor Procurement) UGEA Unidad Gestora Executora das Aquisiqees (Procurement Management Unit) UNDB United Nations Development Business UNFPA UnitedNations Fundfor Population Activities UNICEF UnitedNations Children's Fund USAID United States Agency for International Development VMP Vector Management Plan WHO World HealthOrganization Vice President: Obiageli K.Ezekwesili Country Director: Michael Baxter Sector Manager: Christopher J. Thomas Task Team Leader: Jean J. De St Antoine  MOZAMBIQUE Health Service Delivery Project CONTENTS Page I STRATEGICCONTEXTANDRATIONALE . ....................................................................... 1 A. Country and Sector Issues................................................................................................... 1 B. Rationale for Bank involvement ......................................................................................... 7 C. Higher level objectives to which the Project contributes .................................................... 7 I1 PROJECT DESCFWTION . ....................................................................................................... 8 A. . . Lendinginstrument ............................................................................................................. 8 B Project development objective andkeyindicators . .............................................................. 8 C. Project components. ............................................................................................................ 8 D Lessons learned andreflectedinthe project design.......................................................... . 10 E . Alternatives considered and reasons for rejection ............................................................ 11 I11.IMPLEMENTATION ............................................................................................................. 12 A. Partnership arrangements .................................................................................................. 12 B . Institutional and implementation arrangements ................................................................ 12 C . Monitoring and evaluation o f outcomes andresults ......................................................... 16 D Sustainability..................................................................................................................... . . . . 18 E. Critical risks andpossible controversial aspects ............................................................... 19 F . Credit conditions andcovenants ....................................................................................... 20 IV APPRAISAL SUMMARY . ..................................................................................................... 21 A . Economic and financial analyses ...................................................................................... 21 B Technical........................................................................................................................... . 23 C . Fiduciary ........................................................................................................................... 23 D Social................................................................................................................................. . 24 E . Environment...................................................................................................................... 26 F . Safeguard policies ............................................................................................................. 27 G Policy Exceptions andReadiness...................................................................................... . 28  Annex 1: Country and Sector or Project Background .................................................................. 29 Annex 2: Major RelatedProjectsFinancedby the Bank and other Agencies.............................. 34 Annex 3: Results Framework andMonitoring .............................................................................. 35 Annex 4: Detailed Project Description......................................................................................... 39 Annex 5: Project Costs .................................................................................................................. 47 Annex 6: Implementation Arrangements ...................................................................................... 50 Annex 7: Financial Management andDisbursementArrangements ............................................ 54 Annex 8: Procurement Arrangements ........................................................................................... 66 Annex 9: Economic andFinancial Analysis ................................................................................. 75 Annex 10: SafeguardPolicy Issues ............................................................................................... 83 Annex 11: Project Preparation and Supervision ........................................................................... 85 Annex 12: Documents inthe Project File ..................................................................................... 87 Annex 13: Statemento f Loans andCredits .................................................................................. 88 Annex 14: Country at a Glance ..................................................................................................... 90 Annex 15: Terms o fReferencefor the Development of a Sector Investment Plan ...................... 92 Annex 16: Key High-Impact Health Interventionsby Service DeliveryLevel............................ 97 Annex 17: Donors andNGOs Operating inthe Three Northern Provinces ................................. 98 Annex 18: Gender Equality Analysis ......................................................................................... 104 Annex 19: Map ............................................................................................................................ 109  FIGURES Figure 1: Trends inUnder-Five Mortality Rateand inMaternal Mortality Ratio ........................ 1 Figure2: Northern Provinces Tendto Have the Worst HealthOutcomes .................................... 2 Figure3: Organization Chart of theMinistry ofHealth .............................................................. -13 Figure4: Oversight ofHSDPbyDNPSCD .................................................................................. 14 Figure 5: Organization Chart of the Ministry of Health .............................................................. -51 Figure6: Oversight ofHSDPbyDNPSC ..................................................................................... 52 Figure7: IllustrationofProject FundsFlowingthrough the CUT ............................................... 61 TABLES Table 1: Project Cost andFinancing Plan ..................................................................................... 10 Table 2: Critical Risks andPossible Controversial Aspects ......................................................... 19 Table 3: Mortality Rate ................................................................................................................. 22 Table 4: Morality and Cost Per Capita ......................................................................................... 23 Table 5: Projects Financedby the Bank ....................................................................................... 34 Table 6: Projects Financedbyother agencies. .............................................................................. 34 Table 7: Survey-BasedHousehold Indicators............................................................................... 36 Table 8: PerformanceMonitoring Indicators ................................................................................ 36 Table 9: ResultsFramework ......................................................................................................... 37 Table 10: ResultsMonitoring ........................................................................................................ 38 Table 11:Project Cost by Component ........................................................................................... 47 Table 12: Detailed Project Cost ..................................................................................................... 47 Table 13: ComponentsFinancing ................................................................................................. -49 Table 14: Risk RatingandMitigatingMeasures ........................................................................... 58 Table 15:Remedial Actions. .......................................................................................................... 60 Table 16: Allocation o f Financing ................................................................................................. 65 Table 17: List o f StandardBidding Documents issuedby Government ....................................... 68 Table 18: Risks andWeaknesses -Assessment andMeasures ..................................................... 71 Table 19: Risks and Weaknesses -Procurement.. ........................................................................ -72 Table 20: Risks - Procurement Staffof C MAM ............................................................................ 72 Table 21: Trends inInfant Mortality Rate, Under-Five Mortality & Maternal Mortality .............75 Table 22: Indicators o fDiseaseRisk Factors and Health Service Coverage ................................. 76 Table 23: Differences inService Coverage, RiskFactors, andHealth Status ............................... 76 Table 24: HealthCare Expenditures onMozambique ................................................................... 77 Table 25: Numbero f Cases ofthe Five Most Common Diseases ................................................. 78 Table 26: Impacts on Under-Five & Maternal Mortality Reduction ............................................. 79 Table 27: Demographic andHealth Indicators o fthe Three Focus Provinces, 2002-03 ...............80 Table 28: List o fPartnersIncludingFaith-Based Organizations (FBOs) and .............................. 97 Non-Government Organizations (NGOs) Table 29: Interventions ................................................................................................................ 100  MOZAMBIQUE HEALTHSERVICE DELIVERYPROJECT (HSDP) PROJECT APPRAISAL DOCUMENT AFRICA REGIONAL OFFICE AFTH1 Date: March 20,2009 Team Leader: Jean-Jacques De St. Antoine Country Director: MichaelBaxter Sectors: Health (JA) Sector Manager: Christopher J. Thomas Themes: Health SystemPerformance (67), Project ID: PO99930 ChildHealth (63), Other Communicable LendingInstrument: Sector Investment Credit Diseases(64), Population andReproductive Health(69) Environmental ScreeningCategory: B ProjectFinancingData [ILoan [XI Credit [ ] Grant [ ] Guarantee [ 3Other: For Loandcreditdothers: Total Project Cost (uS$m.): 72.4 Cofinancing: 27.8 Total Bank Financing (US$m.): 44.6 Proposedterms: Standard, with 40 years maturity includinga graceperiod of 10years Borrower:Republic ofMozambique ResponsibleAgency: MinistryofHealth 1008, Av. Eduardo Mondlane Contact Person: Prof. Dr.Paul0 Ivo Garrido, Minister o fHealth ProjectImplementationPeriod:2009-2014 (calendar years) 1  FY 2010 2011 2012 2013 2014 Annual 6.5 8.5 9.0 11.0 11.1 Cumulative 6.5 15.0 24.0 35.0 44.6 Does the project depart from the CAS incontext or other significant [ ] Yes [X ] No respects Ref.PADI,B., p. 7 Does the project require any exception from Bank policies [ ]Yes[X]No Ref.PADIV.G, p.28 Have these been approved by Bank management? [ ]Yes[ IN0 I s approval for any policy exception sought for the Board? [ 3 Yes [XINo Does the project include any critical risks rated"substantial" or "high" [XI Yes [ ] N o Ref.PAD111.E,p. 19 Does the project meet the Regional criteria for readiness for [X]Yes[ ] No implementation? Ref. PAD1V.Gp. 28 Projectdevelopmentobjective: Ref.PAD1I.B.; Annex3, p. 8 and35 respectively The project's development objectives are to: (a) reduce child mortality; (b) reduce maternal mortality; (c) reduce the burden o f malaria; (d) reduce the prevalence of tuberculosis; and (e) reduce inequity inthe access to health services inMozambique. Projectdescription: Ref. PAD1I.C.; Annex 4, p. 8 and39 respectively Theprojectwill have four components: 1. Improving service delivery inthe three Northernprovinces. 2. Boosting o fnational malaria control. 3. Preparingo fnational health sector investmentplan. 4. Capacitybuildingandoperating costs. Which safeguardpoliciesare triggered,if any?Ref.PAD1V.F. p. 27 (1) EnvironmentalAssessment (OP/BP 4.01) (2) Pest Management (OP 4.09) Significant, non-standardconditions,ifany, for: Credit effectiveness: (a) The CIDA Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right o fthe Borrower to make withdrawals under it (other than the effectiveness o f this Agreement) have been fulfilled. (b) The Russia Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right o f the Borrower to make withdrawals under it (other than the effectiveness o f this Agreement) have been fulfilled. (c) The SDC Co-financing Agreement has been executed anddeliveredand  all conditions precedent to its effectiveness or to the right o fthe Borrower to makewithdrawals under it (other thanthe effectiveness o fthis Agreement) havebeenfulfilled. (d) The Operational Manual, including financial management, accounting and procurement annexes, has been issued and adopted by the Borrower, and approvedby the Association. (e) The Borrower has hired within MOH a program manager and three (3) operations assistants, with qualifications and experience, and pursuantto terms ofreference, satisfactory to the Association, inaccordance with the provisions o f Section I11o f Schedule 2 to this Agreement. (0 The Borrower has hiredat least one (1) procurement specialist to work in MOH's procurement management unit. Dated covenant: The Borrower shall ensure that not later thantwo (2) years after the Effective Date, MOH has recruited, pursuant to the provisions o f Section I11o f this Schedule, and under terms of reference acceptable to the Association, for the provinces o f CaboDelgado, Nampula andNiassa, thirty-one (3 1) professionals, one third o fwhom beingnurses andthe rest medical technicians or medical agents. ... 111  I. STRATEGICCONTEXTANDRATIONALE A. Country and Sector Issues. 1. Mozambique faces significant health challenges.'. Historically, the infant and under-five mortality rates and the maternal mortality ratio have been higher than in the neighboring countries as well as the Sub-Saharan average. As shown inFigure 1below, recent improvements in outcomes put Mozambique on track towards reaching the Millennium Development Goals (MDGs), but the country needs to scale up health service delivery (together with contributions from other sectors such as water and sanitation) to ensure that this happens. The under-five mortality rate dropped by 26 percent between 1997 and 2003, probably one o f the fastest reductions in Sub-Saharan Africa. The maternal mortality ratio (MMR) also shows a dramatic drop, but one should be careful about using this method for measuring progress towards safe motherhood inthe short term.2 Figure1:Trendsin under-fivemortalityrateandin maternalmortalityratio I USMR MMR 2. Mozambique has also reduced the inequalities in geographic service coverage that have existed for decades. Despite these efforts, much work remains to be done as the regional differences in health outcomes remains important. The Northern provinces (Cab0 Delgado, Niassa and Nampula) suffer higher rates o f infant mortality, under-five mortality, fertility rates, as well as a higher percentage o f women with a low body mass index3 than the rest o f the country, as broadly shown in Figure 2. An important area where the government has started to increase its involvement i s the control o f malaria which i s a major public health problem in Mozambique. It affects the well-being and productivity o f tens o f thousands o f persons. It accounts for a large proportion o f deaths among children under five years o f age, and i s a contributing factor to at least 30 percent o fmaternal deaths. 'Country data (population, GNP etc.) are presented inAnnex 14. A more detailed analysis of Mozambique's health *system where and its financing i s presentedinAnnexes 1and 9. Even levels of maternal mortality are high, the actual number o f maternal deaths is likely to be relatively small. To get accurate results, household surveys with large samples would be required, but these would be costly. Demographic and Health Surveys use the sisterhood method to calculate maternal mortality ratios. The sisterhood method asks respondents questions about how many of their sisters have died and whether those who died were pregnant. The method has the advantage of being less costly than household surveys because it uses a smaller sample size, but it has wide confidence intervals, often o f plus or minus 200-300points. Body mass index (BMI) i s a statistical measure of the weight of a person scaled according to height. BMI i s defined as the individual's body weight divided by the square of the height. 1  Figure 2: Northern provinces tend to have the worst health outcomes MaputoCity MaputoProvince Gaza I lnhambane Sofala Manica Tete I Zambezla Nampula CaboDelgado 3. Given the recent economic successes and remaining challenges facing the country, it is a critical time for Mozambique to scale up health services to achieve better results. To help the country formulate its strategy to reach the MDGs, inparticular the child and maternal mortality targets, the Bank4conducted analytical work and simulated several options for scaling up health services, presented in the report: "Better Health Spending to Reach the MDGs (May 2006)". The report concluded that while it i s important for the government to expand the provision o f services through fixed facilities, this would take time, and it would be cost-effective for the government to adopt a strategy integrating three modes o f service delivery: facility-based, outreach, and community services. The M O H agreed with the conclusions o f the report and the government asked the Bank to provide financing to start implementing an integrated service delivery strategy inthe three Northern provinces. 4. Government Policy and Strategy. The Government's medium-term development objectives are spelled out in the PARPA 11, 2006, the country's poverty reduction strategy, and are supported by the Country Partnership Strategy (CPS) preparedjointly by the government and the Bank. The first objective o f the 2007-12 Health Sector Strategic Plan's (PESS 11) i s to reduce child and maternal mortality. It aims at strengthening maternal and child health services, notably through reinforcing vaccination programs, reducing malnutrition, increasing institutional deliveries, and preventing and controlling malaria. To improve access to health services, it promotes an expansion and improvement of: (i)fixed-base facilities; (ii) outreach services; and (iii) community health services. This is directly in line with the conclusions o f the Bank's analytical work. It i s an innovative strategy because health service delivery has so far been largely carried out through fixed-base facilities. Because o f the limited number o f facilities, access by the population has been limited, especially in rural areas. The PESS i s made operational through an annual Economic and Social Plan (PES) of the health sector. The performance of the health sector is monitored jointly by the government and donors using a Performance Assessment Framework (PAF). 5. Borrower commitment. The MOH i s fully committed to the implementation o f PESS I1 and i s keen to receive Bank financial support to scale up health service delivery to achieve the "Bank" i s used throughout the text, meaning "The World Bank Group." The actual financing is provided by the InternationalDevelopment Association (IDA). 2  MDGs. The proposed Health Service Delivery Project (HSDP) is the result o f about two years of policy dialogue. A few days after he took office inFebruary 2005, the Minister o f Healthread the "Better Health Spending to Reach the MDGs" report. He met with the Bank and stated his full agreement with the recommendations o f the report. He asked the Bank to disseminate the findings at the national and provincial levels. On September 29, 2005, the Minister o f Health sent a letter to the Country Director asking formally for financial support to implement the findings o f the report, as well as for malaria control. On December 14, 2005, the Minister o f Planning confirmed the government's request to the Bank, after which the preparation o f the proposedHSDP began. 6. Donors ' involvement. About 25 donors finance about 70 percent o f health expenditures in the context of a Sector-Wide Approach (SWAp). The majority have been channeling their funds through three "Common Funds" (PROSAUDE', Provincial Common Fund, and Pharmaceutical Common Fund). PROSAUDE I1 is a merger between PROSAUDE and the Provincial Common Fund. Inthe medium term, the intention i s to also integrate the Common Fund for Drugs and Medical Supplies. The largest donors are Ireland, Norway, the European Union, and the Global Fund. Some donors like DFID provide overall budget support to the MinistryofHealth (MOH) while others finance more specific sub-sectors or provinces. A large proportion o f donor funds are focused on district health services (community health programs, health centers anddistrict hospitals). 7. The relationship between the Bank and donors is excellent. Although the Bank does not currently provide financing to the health sector (except for HIV/AIDS), the Bank i s an active participant in the Mozambique SWAp. The Bank participates in the regular meeting o f the Health Partners Group (HPG) and in the technical working groups for human resources and investment, as well as inmore formal sessions such as the annual performance evaluation and the Sector Coordinating Committee (CCS). 8. Three important partners in the HSDP are The Canadian International Development Agency (CIDA), Russia, and the Swiss Development Cooperation (SDC). For more than 30 years, Canada has been an active supporter o f development inMozambique. Canadian support i s provided through a balanced combination o f contributions to "pooled funds" with other donors, and support to decentralized projects that target the most vulnerable. All o f this is done within sector-wide programs and priorities o f the Mozambican government, as outlined in the PAFPA. An important objective o f Canada is to work as part o f the global community to help the poorest countries achieve the UNMillennium Development Goals. 9. CIDA's contribution will allow the project to cover practically all the districts of the three Northern provinces6, instead o f only 50 percent o f them if the Bank and SDC had been the only financiers. These three provinces have close to 30 percent o f Mozambique's population and among the worse health indicators in the country. Thus CIDA's contribution would help the country have a large impact in terms o f reaching the health MDGs and reducing socio-economic inequality. CIDA's contribution will also enhance the capacity building planned at the provincial and district level. CIDA i s also involved in other important projects through PROSAUDE i s the name o f the Common Fund for Support to the Health Sector, a fund created in 2003 through which donors provide financial and technical assistanceto the Health Sector by supporting the MOHbudget. Except for three districts ineach province to be covered by CIDA under Canada's Catalytic Initiative. 3  multilateral organizations and will play a role in encouraging the needed collaboration to optimize synergies among these projects. 10. InOctober 2007, the government of Russia signed an agreement with the World Bank Group and the World Health Organization (WHO) through which it committed US$20 million for malaria control in Africa. The contribution marks Russia's growing role as a donor and active partner in international development efforts. Mozambique i s one o f the recipients o f Russia's contributions under the Booster Program for Malaria Control in Africa7. Russia's contribution will help Mozambique scale up its efforts incontrolling malaria. 11. Switzerland is among the ten major bilateral donors in Mozambique. The Swiss Development Cooperation (SDC)'s participation in the HSDP is in line with its five-year development assistance strategy for Mozambique (2007-20 11) that includes support to the health sector as one o f its three pillars. SDC brings significant value added to this project given its long experience o f supporting health service delivery, notably in the North o f Mozambique, its pioneering role in the pooling o f donor fbnds, and its strong knowledge o f health sector policy issues through its active participation inthe SWAP process. 12. Support of government health sector strategy. Project finds will allow the M O H to scale up services inthe three Northern provinces o f Cab0 Delgado, Niassa, and Nampula, which have generally poor health indicators. This project would last five years. Focusing on these three provinces would help the government: (i) improve its chances to reach the health MDGs through expanded coverage, better targeting, and improved quality o f services; and (ii) improve regional equity inhealth service provision. Another benefit o f starting to implement the strategy inthree provinces is that it will allow the MOHto: (i) focus on the implementation details o f the program (e.g. composition o f outreach teams, frequency o f visits to villages, drug logistics, the use o f bed nets and spraying ina complementary way etc.); (ii) develop capacity and experience; and (iii) actualincrementalcostsbeforeexpandingtotherestofthecountry. assess 13. Bankfinds will be deposited ina Designated Account inthe Bank ofMozambique. The HSDPwill use existingMOHprocedures and channels, andthe Bank will work with its partners to help strengthen the government systems. 14. Governance. Governance i s the pillar number one o f Mozambique's CPS for 2008-201 1. The CPS notes that the system o f democracy is still young and institution buildingis inthe early stages. The positive impact from recent reforms in public financial management i s already evident. The foundation for decentralization i s being built which will help enhance public accountability to the people. 15. Mozambique's 2006 Public Expenditure and Financial Accountability (PEFA)8 scores have improved significantly in several areas: (i) policy-based budgeting; (ii) management; cash (iii)comprehensiveness and transparency of budget management; (iv) revenue collection and '*PEFA The other beneficiary country is Zambia. i s a partnership between the Bank, the EC, DFID, Switzerland, France, Norway, the IMF, and the Strategic Partnership with Africa. It aims to support integrated andharmonized approaches to assessmentandreform inpublic expenditure,procurementand financial accountability. 4  management; and (v) predictability o f revenues. Development partners have coordinated and implemented their action plan to minimize off-budget expenditures. 16. Nonetheless, significant challenges remain, including the need to: (i)strengthen the system o f political and institutional checks and balances; (ii) strengthen the legal framework, makejudicial services more accessible to the public, and build the capacity o f government and community at the local level; (iii)continue reforms in budget and financial management, including addressing weaknesses in internal control procedures, audit and procurement, and accelerate civil service reform to address civil servant incentives, and ensure that service providers are more accountable to the public. 17. Health systems are often sustained by vast flows o f public money, .providing incentives and opportunities for corruption. The health sector is susceptible to abuse through various channels. Health systems incorporatenumerous actors ina complex web o f relationships, which makes corruption difficult to identify where it exists. Although all health care systems have vulnerabilities, transparency measures and greater financial accountability can help minimize the risko fcorruption. 18. Potential areas o f fraud include notably: (i)manipulating the drugregistration and procurement process; (ii) drugs andsupplies; (iii) public facilities for private gain; stealing using (iv) requesting for unofficial payments for services that are supposed to be provided at no cost; (iv) charging bribes to provide regular services or to speed up the provision o f services; and (v) using access to patients inpublic hospitals andclinics to transfer them to private clinics. 19. Over recent years, a number o f important measures were taken by the MOH and donors through the SWAP process, mostly to improve financial and procurement management. The main measures were as follows: In2003, an Expenditure Tracking andService Delivery Survey (ETSDS), carried out jointly by DFID and the Bank, assessed the quality o f health care, including governance issues such as stock-outs o f drugs andpresence o fhealth staff on the job. InJuly2003, aMemorandumofUnderstandingwas signedbetweenall financiersof PROSAUDE, the Common Fund. This formulates the framework and financial management obligations o f all financiers, including the rules for disbursement o f external funds. It was modified and signed again inJuly 2008. In2003 aprocurementmanualfor the healthsector was introduced. A Financial Management Committee and its Technical Working Group were created. The committee has been working to introduce a comprehensive integrated financial management system inthe MOH. A financial management manualwas introduced. A modem accounting system is being introduced in CMAM, the health sector entity responsible for the procurement o f drugs and medical supplies and for the 5  management o f the Pharmaceutical Common Fund (FCM), which will be included in PROSAUDEin2009. A modem accounting system was introduced inthe Department o f Infrastructure (DI) DI,the entity inthe MOHresponsible for investment projectmanagement. A private consulting firm was contracted to help the Department o f Administration andFinance (DAF) o f the MOH improve its systems and train staff. As a result, 11 financial specialists were contracted by the MOH, 44 staff were trained in accounting and financial management at the central MOH, and 1200 in the provinces and districts. Financial advisers have started to operate at Provincial Departments o fHealth (DPS). An ambulatory "super accountant" was appointed to help Provincial Departments o f Health (DPS). In2006, there was a significant increase of donor off-budget funds that were put on budget. 20. Despite this progress, recent audits o f the Common Fund show that there continue to be weaknesses inthe system. Part o f these problems result from: (i) a large increase inthe number o f transactions as more donor financing i s channelled through the common funds; and (ii) the lack o f experience o f DAF personnel and loss of high-qualified staff to the private sector. Donors are currently exploring with the government further measures to strengthen the MOH financial and procurement capacity. Improving financial and procurement management in the health sector has started well, but it is a task that will take years to complete. 21. A December 2005 USAlD report "Corruption Assessment: Mozambique", and a 2007 report entitled "Efficient and Transparent Service Delivery in Public Health Facilities in Benin, Mozambique and Tanzania" note a number o f possible areas o f corruption in the health sector. The first report was based on interviews with focus groups; the second relied mostly on household surveys. The first report was delivered to the President o f Mozambique. It was posted on the U.S. Embassy website and received a lot o f press coverage. An anti-corruption task force was created by the government to look into the identifiedissues. 22. Encouraged by DFID, the MOH has conducted a feasibility study on the possible abolition o f user fees in the health sector. The study assessed both legal and illegal fees and suggested ways to reduce the risks of illegal fees in the future, notably through the transfer o f additional funds to health facilities and a review o f healthpersonnel salaries. 23. The Minister o f Health is strongly committed to tackling corruption issues. H e has made surprise visits to hospitals and drug warehouses to assess weaknesses in management and leakages. In regular SWAP meetings, audits and financial management issues are regularly addressed and discussed by donor partnerswith the MOH. 6  B. Rationale for Bank involvement. 24. Mozambique needs additional investments for the country to achieve the health MDGs. Inthe mid-2000s, totalhealthexpenditure as ashareofGDPwas only 4.7 percent, lower thanthe figure for Malawi (9.3 percent) or Lesotho (5.2 percent), though comparable to other countries in Eastern and Southern Africa (about 5 percent). Recently, Mozambique has increased its per capita health expenditure and it reached US$18 in 2007, but financing gaps in specific interventions remain large. Also, the large infusion o f global resources towards H N / A I D S in recent years has left a large unmet financing gap for maternal and child health services, which the proposed HSDP would help fill. In the case o f malaria, the government's proposal for the Global Fund indicated a financing gap o f US$25.7 million in 2007, US$60.2 million in 2008, and US$53.8 million in2009. Although these will be substantially filled, there will still be gaps in malaria financing. Clearly, there is a strong justification for Bank resources on financial grounds. 25. An important objective o f the Bank's lending is to steer the government and donors towards a more focused health sector strategy and its implementation, so as to increase Mozambique's chances o f reaching the MDGs. Donors value the Bank's comparative advantage o fbeing able to influence macroeconomic and fiscal policy as they relate to the health sector. To that effect, the proposed operation may be leveraged through sector targets and milestones inthe coming PRSCs. The Bank can also help ensure that policies and investments outside the health sector (water, waste disposal, roads, telecommunications, energy etc.) have a positive impact upon healthoutcomes. C. Higher levelobjectives to which the Project contributes. 26. The goal o f the FY2008-2011 Country Partnership Strategy (CPS) i s to promote shared growth within the context o f the government's own strategy, the PARPA 11. The focal beneficiary group is the rural poor, who are Mozambique's majority. The objectives o f the CPS are grouped into three pillars. The second pillar, Equitable Access to Public Services, supports PARPA 11's HumanDevelopment pillar, and focuses on the achievement o f the MDGs and on the equitable and efficient provision o fpublic services including health, education, andwater and sanitation services. 27. The operation supports the MillenniumDevelopment Goals (MDGs) as follows: Goal 4: Reduce child mortality; Goal 5: Reduce maternal mortality; and Goal 6: Combat HIV, malaria and other diseases. Regarding goal 6, the HSDP will place more focus on malaria, although HIV/AIDS, tuberculosis (TB), and other diseases will also be addressed through the strengthening o f service delivery inthe Northern provinces. 7  11. PROJECTDESCRIPTION A. Lendinginstrument. 28. The project would be financed through a Sector Investment Loan (SIL). The SIL i s a flexible lendinginstrument appropriate for a broad range o f conditions. It will be used to support the government's strategy inthe context o fPESS 11. B. Projectdevelopmentobjective and keyindicators. 29. The project's development objectives are to: (a) reduce child mortality; (b) reduce maternal mortality; (c) reduce the burden o f malaria; (d) reduce the prevalence o f tuberculosis; and(e) reduce inequityinthe accessto health services inMozambique. 30. Key performance indicators were established for the reduction of maternal and child mortality and for malaria control in the Northern provinces for a period o f five years. A complete results framework is presented inAnnex 3. 31. Oversight of the HSDP by the MOH and donors. The project would be reviewed twice a year, including once through the Joint Annual Review by a group consisting o f Central MOH Directors, the Provincial Health Directors o f Cab0 Delgado, Nampula, and Niassa, the Bank, SDC, CIDA, Russia, and arepresentative o fthehealthSWAP. C. Projectcomponents. 32. The project would cost US$72.4 million. A detailedproject cost i s presented inAnnex 5. The project would have four components: (i)improving service delivery in the three Northern provinces (US$42.6 million); (ii) boosting of national malaria control (USS13.5 million); (iii) updating o f national health sector investment plan (US$0.5 million); and (iv) capacity building and operating costs (US$15.8 million). 33. Comvonent I - Imvrovement in service delivery (US$42.6 million). There would be five main areas o f intervention: (i) the provision of training andtechnical assistance to district health staff in the provinces o f Cab0 Delgado, Nampula and Niassa to enhance their management and planningcapacities, including organization and supervisiono f outreach andcommunity-oriented activities; (ii)Provision o f training and technical assistance to health workers inthe provinces o f Cab0 Delgado, Nampula and Niassa to improve the quality o f health services' provision, particularly in the areas o f maternal and child health, with the boosting o f integrated management o f childhood illnesses and safe motherhood skills, and programs to control tuberculosis and HIV/AIDS; (iii)Provision o f goods and training to benefit public health facilities in the provinces o f Cab0 Delgado, Nampula and Niassa for purposes o f enhancing the Borrower's malaria control activities; (iv) Rehabilitation o f health facilities in the provinces o f Cab0 Delgado, Nampula, and Niassa; and (v) Construction o f about twenty (20) to twenty-five (25) health centers and two (2) houses for MOH health personnel in the provinces o f Cab0 Delgado, Nampula, andNiassa. 8  34. Health facilities would be rehabilitated as needed. In addition, the project would finance the construction o f about 20-25 health centers in the provinces o f Cab0 Delgado, Nampula, and Niassa. This would be done through investment packages o f about US$300,000 each including a health center type 11, two houses for health staff, water supply through a bore hole, and supply o f electricity through solar panels. This would help expand the coverage o f fixed facilities and improve access to health services. Associating the construction o f health centers with staff houses will encourage health staff to go to rural areas, and the provision o f water and electricity will ensure the functioning o f the health centers. This component will finance civil works, goods, consultants, and training. Operating costs (fuel and per diem for mobile teams (US$9.5 million) is included inComponent 4. 35. Comuonent 2 - Boosting of national malaria control program fUS$13.5 million). This component will finance the following activities: (i)Strengthening o f the Borrower's malaria control management program through the provision o f housing rental and training to Borrower's provincial malaria focal points.; (ii) Design and implementation o f a national training program on malaria monitoring &d evaluation; (iii) Strengthening vector control through the provision o f training, technical assistance and goods to Borrower's public health central program andregional staff to support the malaria treatment policy shift from artesunate-sulfadoxine-pyrimethamine to artesunate-lumefantrine; (iv) Acquisition o f essential drugs, long lasting insecticide treated nets, and rapid-diagnostic test kits, microscopes, computer equipment and vehicles; (v) Construction o f storage facilities inthe Province of Zambezia to support the implementation o f the Borrower's malaria control plan.; (vi) Provision o f training on public health operations and monitoring and evaluation activities to Borrower's public health officials in the provinces o f Cab0 Delgado, Nampula, and Niassa; (vii) Preparation o f a geographic information system, consisting o f hardware and software to capture, store, analyze and display data regarding malaria incidence and prevalence for purposes o f calculating the amount o f Borrower's population at risk; (viii) Setting up o f sentinel sites in the provinces o f Cab0 Delgado, Nampula, and Niassa for surveillance o f malaria cases; and (ix) Preparation o f behavior change communication materials. This component will finance civil works, goods, consultants, and training. Operating costs are included inComponent 4. 36. Comuonent 3 - Preuaration of health sector investment plan (US$ 0.5 million). This component will finance the provision o f technical assistance to MOH staff (i) for purposes o f designing a comprehensive and sound ten (10) year health sector investment plan, with a focus on: (a) health infrastructure; and (b) medical and non-medical equipment; and (ii) to develop an implementationplanfor the first five years o fthe investment plan. 37. Comuonent 4 - Capacitv building and Operating Costs fUS$15.8 million). This component consists o f three subcomponents and will support the following: (i) Provision of training, technical assistance and goods to MOH staff to develop a health system observatory for purposes o f evaluating the evolution o f health systems in the provinces o f Cab0 Delgado, Nampula and Niassa; (ii)provision o f administrative and operational support to the provinces o f Cab0 Delgado, Nampula and Niassa, including the hiring o f an operations assistant and a monitoring and evaluation assistant for each o f these provinces; provision o f training to staff at the provincial healthdepartments to enable the use o f lot quality assurance sampling as a tool for Project management and monitoring activities.; acquisition o f hardware, software and office equipment for Project monitoring and evaluation activities; carrying out o f the HWMP and VMP 9  in connection with the implementation and supervision the Project; provision of training to approximately 150 district health staff to enhance their financial management knowledge; and (iii)financing o f operatingcosts. 38. HSDP cost and financing plan. The total project cost would be US72.4 million and would be financed as follows: US44.6 million from the Bank, US15.6 million from CIDA, US$7.9 million from Russia, and US$4.3 million from the Swiss Development Cooperation. The Project will have joint co-financing from the: (a) CIDA; Swiss Development Cooperation (SDC); and Russia. The relevant Administration Agreements and corresponding Trust Fund contracts with both ClDA and SDC have not been concluded yet and the team will finalize them by no later thanthe effectiveness date for the Project. The financing by component would be as follows: Table 1: Projectcost and financingplan SDC 3.6 0.0 0.0 0.7 4.3 IDA 23.4 5.6 0.5 15.1 44.6 42.6 13.5 0.5 15.8 72.4 A detailedproject cost andfinancing planispresented inAnnex 5. 39. In July 2007, the government received a Japanese Social Development Fund (JSDF) grant o f US$l.l million to pilot community-based, outreach, and referral services in selected districts o f the three Northern provinces. Also, in August 2007, the government received a Project Preparation Facility (PPF) to help complete the preparationo f the HSDP. Advances have been made to the Designated Accounts for the JSDF and the PPF. Expenditures under the PPF have just started to be documented, but not under the JSDF. This i s principally because of: (i) delays in appointing key staff at the central and provincial level; (ii)imitating procurement activities; and (iii)transferring funds to the provincial level. These problems have been discussed with the M O H and are currently being overcome. The three provinces have identified the personnel to be trained and will soon initiate the training o f community health workers. They are also putting together their outreach teams which are expected to start their operations once the funds are receivedfrom the central level. D. Lessonslearnedand reflectedinthe projectdesign. 40. The proposed project i s the third Bank-financed health sector operation inMozambique.' This review o f experience draws lessons from Bank projects inMozambique inhealth and other sectors, and similar health projects in other countries inAfrica and elsewhere. The main lessons are presented below. Notincludingthe HIV/AIDSResponseProject(Gr.H-030)andthe TreatmentAccelerationProgram(Gr.H-1040), currentlyunder implementation 10  41. Project design should be built on solid economic and sector work (ESW). Before designing the HSDP, the Bank undertook two pieces o f analytical work: (i)the Mozambique Health Country Status Report (2004); and (ii) Better Health Spending'to Reach the MDGs (2006). Both reports were extensively discussed with the government and donors, and their analysis and conclusions, particularly those of the second one, have been instrumental in the design o f the HSDP. 42. The Bank and governments need to focus more on monitoring and evaluation (MM). Duringrecent years, the Bankhas started to make significant efforts to ensure that clients' frame objectives in measurable terms, obtain baseline data, adhere to plans for routine monitoring, conduct periodic household or clinic-based surveys, and disseminate the results. It is especially important to avoid ambitious development objectives and inappropriate performance indicators, and be realistic and modest with what one project can achieve. Lessons from Implementation Completion Reports (ICRs) show that: (i)it is important to follow a good result framework in project design and M&E: and (ii)one should avoid using higher-level objectives, such as mortality reduction, as project development objectives. These lessons have been applied in the design o f the proposed operation. Realistic project development objectives have been chosen, and a baseline isbeingestablished. The number o findicators has beenlimitedto what is feasible and practical, seeking a balance between those available from routine systems and periodic surveys. Training will be provided to buildcapacity, as needed, notably inthe area o f surveys. 43. The government's commitment and ownership are prerequisites for success. As stated earlier, extensive analytical work and project preparation have been carried out with full MOH involvement. Government ownership is strong both at the central and provincial levels. 44. Flexible and simple design. The operation would be implemented in a phased fashion, which would allow the MOH to build up institutional capacity. The proposed project design makes the objectives o f each component independent, measurable, andmonitorable. E. Alternativesconsideredand reasonsfor rejection. 45. Project alternatives. The "no project" alternative is not desirable because child and maternal mortality remain high in Mozambique, and malaria devastating. Without a targeted operation inthe Northern provinces (where infant mortality is 60 percent higher than in the rest o fthe country), Mozambique's chances o f reachingthe MDGs in2015 would be slim. 46. The Poverty Reduction Strategy Credit (PRSC) alternative for a health service delivery project i s not feasible at this stage because: (i) the activities o fthe HSDP are very technical, and they require a combination o f multiple inputs and actions to be put inplace because bottlenecks vary among provinces; (ii)the project impact is difficult to capture in 2-3 indicators of the PRSC; and (iii) it would require the government and donors to change the existing PRSC indicators, and this has proved difficult. 47. While the PRSC-only scenario i s not considered an alternative, the PRSC could be used to leverage the Bank's investment inthe health sector, andincrease its chances o f success. Inthe future, once the MOHhas acquired experience and capacity through the HSDP and the project is expanded to other provinces, more financial support could be givendu-ough the PRSC. 11  111. IMPLEMENTATION A. Partnershiparrangements. 48. The key partnership arrangements for project implementation will be with CIDA, SDC, and Russia for project implementation itself, and the SWAP partners with whom the Bank participates in the policy dialogue with the government and the monitoring o f the health sector performance. Duringpreparation, the Bank carried out a survey o f donors and non-government organizations (NGOs) active inthe three Northern provinces. Details are presented inAnnex 17 The knowledge acquired though this exercise will help: (i) the HSDP complementary to make what i s already being done; and (ii) buildsynergy with other partners. B. Institutionalandimplementationarrangements. 49. The MOH will have the overall responsibility for the management o f the HSDP. The National Directorate o f Public Health (DNPS) will be responsible for the technical aspects o f project management by providing overall technical guidance and support to the implementing agencies within the MOH. 50. The Directorate o f Administration and Management (DAF) will be responsible for the financial management o f the HSDP, i.e. the budgeting o f activities at provincial and district levels, disbursement o f funds, accounting and transfer o f funds to provinces and districts. 51. The HumanResources Directorate (DRH) will be in charge o f the planning and training o f incrementalhumanresources needed for the HSDP. 52. The Directorate o f Planning and Cooperation (DPC) will support the DNPSCD in the areas o f monitoring and evaluation o f the project, and will be responsible for the updating o f the investment plan (component 3). 53. Planning,procurement, and distribution o f drugs will be underthe responsibility o f DAF, and undertaken by the Central Agency for Drugs and Medical Supplies (CMAM). Procurement for other goods, civil works, consultants, and training will be undertaken: (i) for larger contracts by the DI, a technical unit responsible, in the MOH for procurement o f investments and other activities; and (ii) for smaller contracts by the provinces themselves. 54. The NMCP (under DNPSCD) would be in charge, together with the provinces, o f implementing the boosting o f malaria control (component 2). The NMCP i s headed by a program manager, and the unit is mandated to play a coordination and facilitation role. It has recently expanded its staff capacity at central and provincial levels. A simplified organization chart o fthe MOH i s presented inFigure3 below. 12  Figure3: OrganizationChartof the MinistryofHealth v Minister I I National Administration Human II Directorate of Medical Directorate of and Finance Resources I Services Planning and I Public Health Directorate Directorate I (DNSP) Directorate Cooperation (D'w ( D W I I ( D W (DPC) 55. As mentioned, the overall oversight ofthe HSDP (for components 1and 2) will rest with the Directorwho will delegate the general coordination to the DeputyDirector of Public Health, who will be the Project Coordinator. The Project Coordinator will manage the day-to-day operations o fthe project andwill ensure that implementation plans o f the HSDP are integrated in the planning systemofthe MOH andProvincialDirectorates ofHealth. The Project Coordinator will work closely with the Provincial Chief Medical Officers who will be the Executive Coordinators o fthe project ineachof the three provinces. 56. To assist the Deputy Director in carrying out these tasks, a Program Manager will be appointed by the MOH. The Program Manager will be directly accountable to the Project Coordinator, to whom he or she will have direct access on a regular basis. These arrangements are presentedinFigure4. 13  Figure 4: Oversight of HSDPby DNPSCD I Director of Public Health I Provincial Provincial Provincial HealthDirector HealthDirector HealthDirector Niassa Nampula Cab0 Delgado ChiefMedical Officer (in eachprovince) Heads of Community Depamnent Point Services District Directors andField ... ........................ ........................................................... ...........,............... I. I............. I.... Formal authority -------- - Facilitation, technical support I 57. The Program Manager will support the Project Coordinator in the implementation and coordination o f activities to ensure that all components o fthe project receive proper attention and resources. The Program Manager will follow up the implementation progress o f the HSDP, assess bottlenecks in implementation and propose measures to overcome them, and obtain the approval o f the Project Coordinator for the proposed activities. The Program Manager will work closely with the Operations Assistant who will be based in the field. He or she will: (i) help provinces develop annual work plans that integrate activities and actions contemplated in the project; (ii)ensure that these activities receive financing from HSDP; (iii) collaboration with in DAF, ensure a timely transfer o f funds; (iv) liaise with DAF, DI, and CMAM in all matters related to logistical aspects, and with DRH for human resources; (v) supervise the work o f the Operations Assistant; and (vi) receive regular feedback from the Operations Assistant and help solve problems that may needthe attention o fthe central level o fthe MOH. 58. There would be an Operations Assistant ineach o f the provinces. He or she will help the Chief Medical Officers o f Nampula, Niassa, and Cab0 Delgado in the planning o f activities, coordination with DRH and training institutes, local procurement, development o f outreach teams and community health workers, monitoring and supervision, and would be the link 14  between the central MOH and the provinces. He or she would undertake field visits with provincial counterparts to follow up the implementation o f the project, identify key problems, and discuss solutions with provincial authorities. The Operations Assistant would receive instruction from the Project Manager, but would also be accountable to the Chief Medical Officers o f each o f the three provinces, 59. Additional human resources. Health workers below the Project Manager and Operations Assistant have the capacity to implement the HSDP. Their performance is expected to increase as they will have better means to carry out their daily tasks. These include health centers rehabilitated and equipped with medical instruments and supplies, bed nets for distribution, radios and solar energy kits, water from drilled wells, vehicles and motorcycles, fuel, and per diem for supervision. 60. However, as mentioned earlier (see D. Project components), for outreach teams, additional staff will be required. The MOH confirmed that this i s feasible and in line with its Mid-term Human Development Plan. A policy letter from the government will include its commitment to fundthe 93 additional positions. 61. The DPC would be incharge o f updatingthe investment planunder component 3, as well as for monitoring and evaluation, and institutional strengthening under component 4. 62. Operational Manual. An Operational Manual will be prepared for the project. Its aim is to provide a guide showing what needs to be done in order to implement the HSDP. The Operational Manual will give the overall HSDP background and rationale, objectives, project components, implementation responsibilities and arrangements, and procurement and financial management procedures. The Operational Manual will be directly inline with the government's own procedures. Adoption o f the Operational Manual by the MOH i s a condition of effectiveness. 63. Geographical implementation. The project would be implemented inthe three Northern provinces o f Cab0 Delgado, Nampula, and Niassa. It would cover all districts ineach province. 64. Each year, the MOHwill prepare an annual action planthat will include, inter alia: (i) the Project activities to be carried out during the twelve months immediately following the presentation o f each said plan; (ii) the procurement plan, and disbursement schedule for each said twelve month period; (iii) the annual budget for Operating Costs for the Project; and (iv) the annual budget for training under the Project. 65. The MOH will also prepare an annual report, integratingthe results o f the monitoring and evaluation o f the progress achieved in the carrying out o f the project during the previous year and proposing measures to ensure the efficient carrying out o f the project duringthe following year. This report will be presented to the Bankby March 1o f each year. 66. Oversight of the HSDP by the MOH and donors. Progress in the HSDP would be reviewed twice a year, including once through the Joint Annual Review by a group consisting o f 15  Central MOH Directors, the Provincial Health Directors o f Cab0 Delgado, Nampula, and Niassa, the Bank, CIDA, SDC, and a representative o fthe HealthPartners Group. C. Monitoringandevaluation of outcomes andresults. 67. Monitoring and Evaluation for the HSDP will fall under the joint responsibility o f the MOH M&E Department in the Planning and Cooperation Directorate, and the provincial M&E units within the provincial planning departments using the MOH health information system (HIS). They will be responsible for routine M&E and the coordination of special studies and surveys. The National Malaria Control Project will be responsible for the M&E o f malaria- specific indicators and activities, including IRS andpesticide and drug-resistance studies. 68. A large proportion o f the HSDP indicators are malaria-related, which reflects both the large contribution o f malaria to morbidity, mortality and the burden on the health system in Mozambique, and the proportionately large investment in malaria interventions in the HSDP budget. The HSDP M&E framework i s simple and yet allows for an adequate monitoring o f the interventions. Malaria-related indicators for the HSDP are drawn from the NMCP strategic plan for 2006-2009. Inmany cases, malaria-related indicators will serve as a proxy for other primary health care indicators. 69. Human resources. The HSDP will help buildthe capacity o f humanresources dedicated to M&E. At the national level, the HSDP will support a senior epidemiologist for the National Malaria Control Project, in addition to the existing data manager. The role o f this expanded M&E team will be to coordinate malaria related M&E activities in the country, aggregate and analyze malaria specific sources o f data from the routine HMIS and Weekly Epidemiological Bulletin (BES), including spraying and resistance studies. It will also use as well as surveys and information for planning, decision making, and assessment o f progress by the NMCP and partners. 70. At the provincial level, M&Efalls withinthe department o fplanning. All three provinces currently have dedicated personnel responsible for data management and input into the HIS database. The HSDP will support one additional junior M&E officer in each o f the three provinces. This officer will be placed within the Planning department, and will help coordinate special studies and surveys, training for District M&E focal points. He or she will help intensify the supervisiono f District M&Efocal points, andprepare the M&Ecomponent of annual Health Consultative Council meetings. 71. In addition, the HSDP will support an additional mid-level technician in biology or epidemiology for each o f the three provinces who will provide support to the malariaprogram. 72. The epidemiologist will coordinate closely with the provincial HIV/AIDS/malaria/TB Coordinator. H e or she will provide the M&E team with data for malaria-specific M&E indicators, including indoor spraying, ITNs and vector control and resistance studies. 73. Technical capacity, logistics and equipment. The NMCP i s adopting the WHO malaria database, with technical assistance from WHO. This database i s a standardized tool that will be used to help the malaria program to centrally manage all the data from routine HIS, 16  entomological data, surveys, and sentinel studies on drug resistance and insecticides. It will enable to produce regular reports at district, provincial andnational level. Inaddition, the HSDP will strengthen the NMCP M&E capacity through the provision o f computers and internet access. 74. At the provincial level, the HSDP will provide support to the provincial M&E team for intensified supervision o f district M&E focal points. It will also help the annual Health Consultative Council meetings with analysis o f data and their use in planning and budgeting. HSDP will finance computers and training process the routine HIS software and the malaria database at the provincial level. Internet access will also be provided. District and facility personnel will receive refresher training and intensified supervision inreporting. Support for the computerization o f data at the district level will be considered as electricity becomes gradually available. 75. Routine health information system and logistics management system. Routine HIS i s divided into two modules. The epidemiologic surveillance system provides information on outpatient and inpatient presumptive cases of malaria and other infectious diseases on a weekly basis. The information is disaggregated by sex and age. 76. The second system, the HIS, provides monthly routine information on outpatient consultations, but not disaggregated by disease or by age. Data from specific M C H programs, including antenatal care, family planning, the expanded program of immunization (EPI), HIV/AIDS, are more complete. Inpatient data are available for admissions, disaggregated by age and sex, and provide details on diagnosis and cause o f death. As inpatient malaria cases are more likely to have laboratory confirmation, this source is useful to evaluate inpatient malaria mortality and case-fatality rate for severe malaria. 77. At the present time, the HIS provides minimal data on indicators for CHW activities, giving only the total number o f people seen and the stock control from "Kit C". The MOH is currently revising the indicators and instruments for C H W activities inthe HIS. Malaria-specific indicators, including IPT, ITN distribution,' and spraying and resistance studies are collected through the malaria program through parallel systems. 78. Special studies. Supplementary M&E information i s available through special studies, including the following: DHS carried out in 2003 and scheduled to be repeated in2008. Data are available at the provincial Ievel, but confidence intervals are wide. Health facility assessment focusing on malaria done in 10 districts in5 provinces in2004. Only 2 districts in the HSDP project area were included. This study was undertaken to provide data for Global Fundindicators. Malaria indicator survey (including anemia and parasitemiarates) to be performed for the first time in2007. Provincial level data should be available in2008. 17  0 A national health facility inventory carried out in the second half of 2007 to catalogue humanresources, infrastructureandlarge equipment. 79. M&E Observatory. The HSDPO would operate dynamically during the implementation o f the HSDP. It would provide evidence that improves the design o f the program during its implementation in the three Northern provinces. It would be in permanent contact with users, implementers and suppliers o f health services to detect good and bad experience o f HSDP activities and document good practices. It would undertake a rigorous analysis o f the data gathered via the HSDP monitoring and evaluation system. It would conduct studies and operational research on specific topics. It would design and launch pilot activities on topics identified as good practices so that they can be replicated inother areas. It would analyze similar experience in other countries and assess their relevance for the Mozambican context. Finally, it would identify issues requiringmore profound analysis through focused studies. 80. Potential areas that could be studied by the HSDPO include: (i) impact o f the HSDP the on the demand for services by users and beneficiaries; (ii)the effect o f cultural factors on demand and the provision o f institutional births; (iii) the unit cost o f health services provided in health units, provided by outreach teams and resulting from community health activities; (iv) funding mechanisms that could be adopted to increase decentralization; and community participation in the debate on health problems and policy issues such as nutrition, traditional medicine, sexual and reproductive healthpractices, STI andHIV/AIDS. 81. The HSDPO would produce evidence-based analytical reports, information and recommendations that can contribute to decision making by the MOH, the Provincial Directorates o f Health, and donors with regard to the possible review o f health policies and strategies. The documents would have recommendations on practices that have shown to be effective inresolving problems. 82. So that the lessons learned be o f interest to the project, the HSDPO would establish partnerships with universities and with local, regional and international institutions. The Observatory would organize working meetings to discuss and disseminate the information gathered, the positive results andto study inmore detail issues that may have a negative effect on the good implementation o f the HSDP. Regional and international specialists and researchers could be invited to these meetings. D. Sustainability. 83. The health sector is currently financed about 30 percent by the government and 70 percent by donors. Although the Mozambique economy i s projected to continue to grow at a rapid pace over the next few years, financing from donors will still remain necessary for a long time. All indications show that donors, who have been present in Mozambique since the peace treaty, are likely to remain present in the medium term. Consequently, sustainability should not be viewed as the likelihood o f the replacement o f Bank and donor financing at the end o f the project, but as to whether the MOH is expected to carry out, in the future, the health service delivery project. initiated under this operation. This would be confirmed by the MOH in its policy letter. 18  84. Thus, the analysis concentrates on two critical aspects o f sustainability. First, on the supply side, the project would promote institutional sustainability by showing that the basic package of services can be delivered cost-effectively in the three provinces. To achieve this, health services would be reconfigured so that they cater increasingly to community and outreach services, inan integrated manner with facility-based services. 85. Second, on the demand side, the project would promote positive changes in household and community behavior in order to sustain their interest in, and increase their demand for, the health services in the project. To this end, the acquisition o f health knowledge would be promoted through an IEC program. Community involvement in decision-making would also be enhanced. Fihally, the social assessment documents cultural and social barriers to household demand for health services, andproposes ways o f easing these socio-cultural obstacles. E. Criticalrisksandpossiblecontroversialaspects. Tab1 2: Risks Risk Risk Rating Risk Mitigation Measure From Outputs to Objective Political and administrative Regularly involving major stakeholders inthe M O H during changes in the MOH at the central M preparation and during project implementation, and regular and provincial levels that may dialogue through the SWAP. affect ownership and management capacity. From Componentsto Outputs Delays in procurement leading to S Training and mentoring to help strengthen the capacity o f delavs inDroiect hlementation. DAF, DI,andCMAM. Delays in recruitment and training Government commitment to fund the additional 93 o f additional human resources M positions to be part o f a policy letter. Covenant to that required for outreach teams. effect included inDCA. Training o f these 93 staff included inthe MOH Accelerated Training Program currently under implementation. Early planning by provinces and training institutes, and close coordination with the Department o f Human Resources of the M O H during implementation. Slow disbursement o f funds DAFhas initiated a programto buildcapacity at the central because o f limited financial H andprovincial levels. capacity. Mechanisms built into project design include: (i)prior Fiduciary problems, including misuse o f funds. review o f large contracts; (ii)randomreviews o f statements o f expenditures (SOEs) during implementation; (iii) S financial management reporting linking performance to financial costs; (iv) random audits o f small executing entities; and (v) financial audits o f all large executing agencies. Overall Risk Rating Project risks would be mitigated through a phased approach S and close monitoring incoordination with partners. H:High S: Substantial M:Mol rate 86. At this stage, there is no clear indication o f stakeholders being threatened by the HSDP. A comprehensive process of consultation has been undertaken with key government, non- government, international stakeholders, andbeneficiaries. 19  F. Creditconditionsandcovenants. 87. Conditionsof effectivenesswould be as follows: (4 The CIDA Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right o f the Borrower to make withdrawals under it (other than the effectiveness o f this Agreement) have been fulfilled. (b) The Russia Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right o f the Borrower to make withdrawals under it (other than the effectiveness o f this Agreement) have been fulfilled. (c) The SDC Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right o f the Borrower to make withdrawals under it (other than the effectiveness o f this Agreement) have been fulfilled. (d) The Operational Manual, including financial management, accounting and procurement annexes, has been issued and adopted by the Borrower, and approvedby the Association. (e) The Borrower has hired within MOH a program manager and three (3) operations assistants, with qualifications and experience, and pursuantto terms o f reference, satisfactory to the Association, inaccordance with the provisions o f Section I11o f Schedule 2 to this Agreement. (f) The Borrower has hired at least one (1) procurement specialist to work inMOH's procurement management unit. 88. Other conditionswould be as follows: (i) The Borrower would cause the MOH to recruit and train duringthe first two years o f the project, for each o f the provinces o f Cab0 Delgado, Niassa, and Nampula, an additional 31 professionals, one third o f whom being nurses and the rest medical technicians or medical agents. (ii) The Borrower shall carry out the Project in accordance with a manual (the Operational Manual), in form and substance acceptable to the Association. Said manual to include, inter alia: (i) an institutional implementationplan o f MOH for the management o f the Project (including, inter alia, allocation o f responsibilities among staff, yearly planningo f activities andbudget and time allocation for those activities); (ii)financial management, accounting andprocurement procedures annexes; (iii) detailed arrangements for the overall carrying out o f the Project (including, inter alia, the procurement, environmental and social guidelines to be followed during Project implementation by the Borrower; (iv) the guidelines for the preparation o f Annual Action Plans and Annual Reports; (v) internal control systems to be followed by 20  MOH during Project implementation; (vi) detailed guidelines and procedures for the implementation o f the HWMP and the VMP in connection with the carrying out o f the Project; and (vii) the guidelines for Project monitoring and evaluation. Except as the Borrower and the Association may otherwise agree inwriting, the Borrower shall not abrogate, amend, repeal, suspend, waive or otherwise fail to enforce the Operational Manual or any provision thereof. (iii) No later than September 15, 2011, or such later date as may be agreed upon by the Borrower and the Association, the Borrower shall carry out, in conjunction with the Association, a mid-term review o f the Project, covering the progress achieved in the implementationo fthe Project. IV. APPRAISAL SUMMARY A. Economic and financial analyses. 89. Project rationale. A review o f Mozambique's health indicators shows the following trends, indicating the need for a new health project to address them. Health status indicators have improved, especially the under-five mortality rate, but overall indicators are still considered lower than that which would be deemed acceptable under the MDGs. Thus, while the MDG target for under-five mortality rate may be met by 2015, Mozambique will need to make significant additional efforts to meet those for the child mortality rate and the maternal mortality ratio. 90. The risk factors for mortality and morbidity, especially among women and children, remain high. Mozambique continues to have one o f the highest rates for stunting and underweight children (41 percent and 24 percent, respectively). It also has the lowest rural household rates o f access to water (24 percent) and sanitation (14 percent) in Eastern and Southern Africa. 91. The extent o f health service coverage leaves much to be desired. Antenatal coverage is only 41 percent for the full four visits, the lowest in Eastern and Southern Africa. The contraceptive prevalence rate i s only 16.5 percent, also the lowest in Eastern and Southern Africa. Births by C-section are only 3 percent, reflecting a shortage o f obstetric care. Severe inequity persists, leaving the poor, lowly-educated, andrural residents severely disadvantaged. 21  2000 (actual) 130 208 1,000 2003 (actual) 101 153 408 2015 (target) 76 80 365 Y 92. Justzjkation for Bank involvement. As was demonstrated earlier (Section I. Rationale B. for Bank involvement), Mozambique needs additional investments for the country to achieve the health MDGs and there is a strongjustification for Bank resources on financial grounds. 93. The HSDP would support Mozambique's poverty-eradication strategy as specified in the PARPAandthe Bank's CPS. The project focus on the three remotest provinces (Cab0 Delgado, Niassa, and Nampula), and the institution-building activities that would be conducted there, are inline with the government's efforts to increasingly decentralize social services. The phasing-in o f project support through design, pilot-testing, evaluation, and scale-up, highlights the Bank's value added in helping implement policy change. In this process, this project would be coordinated with the Bank's existing macroeconomic instruments, e.g., the PRSC, so that the project's sector reform initiatives get firmer traction. 94. Justzjkationfor government involvement. The project would focus on the three remotest (most northerly, and therefore farthest from the capital, Maputo City) and poorest provinces with the worst health indicators. N o significant private sector providers currently operate in these areas, though non-profit NGOs do assist for certain health activities. Preventive andpromotional health interventions (e.g., EX) as well as vector control (e.g., insecticide spraying) supported by the project all have significant externalities. Maternal and child health interventions, though individual services for the most part, are all considered socially beneficial. They are oriented towards disadvantaged population groups and therefore have clear anti-poverty objectives. These services tend to be under-provided by the private sector operating under market forces, and therefore justify government involvement in financing and stewardship. Nevertheless, the project encourages contracting out specific service delivery to non-profit providers and community-based organizations, where they are available, and where it can be clearly demonstrated that this i s a cost-effective approach under public-private partnership arrangements. 95. Cost-effectiveness of project interventions. The project design relies heavily on the analytic work "Better Health Spending to Reach the MDGs" which identified and costed the packages o f interventions that could best reduce the burden o f disease in the country. This modeling exercise presented four options, their respective impact on mortality, and the additional cost per capita, as shown below. These are "ex-ante" impact and cost figures, but the intention o f the project i s to validate these during the pilot phase, and to use the findings to fine-tune health service deliveryduringthe scale-up implementation. 22  34 B. Technical. 96. The HSDP supports a package o f interventions aimed principally at reducing child and maternal mortality, and controlling malaria in the three Northern provinces. Child care and maternal care key interventions, detailed in h e x 16, are supported by a body o f evidence, notably ina series o f five Lancet10 articles published in 2003 as well as Cochrane collaboration reviews11 on interventions to reduce maternal mortality. The World Health Organization reviewed Mozambique's malaria control strategy and found it technically sound, and inline with its norms and standards. C. Fiduciary. 97. Thefinancial management o f the HSDP will be the responsibility o f the MOHthrough its Department o f Administration and Finance (DAF). During appraisal, the Bank reviewed the MOH financial management arrangements, including the proposed systems o f accounting, reporting, auditing, and internal controls to ensure that it would be capable o f recording correctly all transactions and balances, supporting the preparation o f regular and reliable financial statements, and producing Financial Monitoring Reports (FMRs) in accordance with the Bank's requirements. The risk rating for the project in the area o f financial management is substantial. This reflects the general weakness in the country o f public financial management (PFM) systems, the complexity o f the inputs, and the capacity shortage at the provincial level. 98. The review concluded that three actions should be taken by the MOH to ensure that financial management arrangements meet the Bank's financial management requirements: (i) updating by the MOH o f the Manual o f Financial Management Procedures; (ii) agreement with the MOH on the format o f financial reports; and (iii) agreement on TORs for audits. The Manual o f Financial procedures is part o f the project Operational Manual, which i s a condition o f effectiveness. The format o f financial reports and the TORs for audits have already been agreed upon. loThe Lancet, founded in 1823, i s one o f the oldest peer-reviewed medicaljournals in the world, publishedweekly in England. The Lancet is considered to be one of the core general medical journals, the others being the New EnglandJournal o f Medicine, the Journal o fthe American Medical Association, and the BritishMedical Journal. "The Cochrane Collaboration, founded in1993,was developed inresponseto Archie Cochrane's call for up-to- date, systematic reviews o f all relevant randomized controlled trials o f health care. A group o f over 6,000 specialists inhealthcarereviewbiomedical trials andresults ofother research. 23  99. Procurement. The MOH has nominated the Permanent Secretary as the "Competent Authority" (UGEA) for the oversight o f procurement. The UGEA i s part o f the Department o f Administrative and Finance (DAF). Given their experience in specialized procurement, the Department o f Investment (DI) and C M A M will provide help to the UGEA. The DI will undertake the procurement o f civil works and equipment, and C M A M that o f drugs and pharmaceutical supplies. An Operational Manual with a procurement annex will be prepared for the HSDP. 100. There are currently weaknesses inprocurement capacity mainly because there has been a turnover o f staff inthe MOH and the new staff is not well experienced in procurement planning andfiling, andthere is a need for better coordinationbetweenthe UGEA, CMAM, andthe DI. A training planwill be prepared to addressthese weaknesses. 101. The procurement o f civil works, goods, and services will be carried out according to Bankprocurementguidelines. Detailedarrangements are presented inAnnex 8. D. Social. 102. A social assessment was undertaken to better understand local socio-cultural aspects that influence the demand side for health services, particularly in the most disadvantaged communities. The objectives o f the social assessment were as follows: e Community mobilization and participation. Examine opportunities and conditions for participation by stakeholders, particularly the poor and vulnerable, in terms o f their contribution to project design, implementation and monitoring, influencing public choices, and decision making to increase access to project benefits andopportunities. e Social diversity and gender implications interms o f access to the resources o fthe project, the cultural acceptability o f male and female community health workers, and the effects on the use o f services. e Socio-cultural barriers to services. Examine the socio-cultural barriers for women to access pregnancy-related services. This review included a qualitative assessment o f the cultural customs around pregnancy and birth, and explored ways to improve the cultural acceptability o f services to increase facility-based deliveries. 103. The field work took place in two districts inCab0 Delgado: Mecufi and Pemba-Metuge. Formal meetings were held with national, provincial and district health authorities. Interviews were conducted with health professionals, community health workers, and traditional birth attendants. Two focus groups o f 20 participants each were organized with community women and one with men. The following criteria were used to select the participants: (i) from women different ethnic and religious groups; (ii)leadership role inthe community; (iii) reproductive age between 15 to 49 years-old; and (iv) variation in family size. The key findings are presented below. 24  104. Community health workers and traditional midwives. The majority o f community health workers are male. Female participants perceived a barrier indealing with male APEs, especially on reproductive health issues such as sexually-transmitted diseases and adolescent pregnancy. Female community workers are active in the community. Women, especially traditional birth attendants and community leaders, showed interest inparticipating inAPE training. Traditional birth attendants are not recognized as importantly as APEs. They complained about not receiving incentives from the MOH, although they do receive some compensation from families. Traditional midwives expressed concern about losing their informal income if the project encourages an increase ininstitutional deliveries. Most midwives do not have transportation or a regular supply o f clean birthkits. 105. Socio-cultural barriers to institutional deliveries are as follows: (i) i s common there resistance by husbands in accepting that their wives deliver in a maternity room (this i s because o fthe need to confirm the identity o f the baby by a female family member o f the husband, whose presence ina maternity room has only recently been encouraged bythe MOH); (ii) complications during delivery and the subsequent need for an institutional delivery are perceived as a punishment for sexual infidelity; (iii)the distance to health facilities and the lack o f transportation, and the fact that women face violence while trying to reach health facilities at night; and (iv) understaffed maternity rooms, resulting in long waiting times for mothers (multiple demands on nurses' time result in them providing little support during an institutional delivery). 106. Community mobilization and participation. The main observations were: (i)the involvement o f the local community committees is essential to address demand side constraints to access health services; (ii)the participation o f community committees plays an important role inmonitoring the effectiveness ofproject implementation; and(iii)is important to construct a it local network with traditional healers, birth attendants, and religious and community leaders to develop practical solutions to reduce barriersto health service access. 107. nerefore, thefollowing aspects were included in the design of the HSDP: Select a small group o f women to be trained as APEs, and do a gender comparative case study to analyze their effectiveness andreduce the time for the training o fAPES. Regularly provide traditional birth attendants with a clean birth kit, means o f transportation, and well-targeted incentives for institutional deliveries. Encourage the provision o f culturally acceptable deliveries, including the presence o f a family member at birth. Support the active involvement o f community committees for community mobilization and their active participation inthe project to address cultural barriers to institutional deliveries. A provincial level community health worker would be recruited to mobilize communities inthe startingphase o fthe project. 25  (v) Involve communities inthe monitoring and evaluation o f the project through periodic focus groups to monitor the use o f project benefits, outreach coverage, and reduction inbarriers to utilization ofservices. (vi) Organize yearly planning workshops for district managers to discuss challenges, and exchange lessons learned and develop strategies for improvement. 108. Gender equality analysis. Mozambique continues to rank low in its Gender-related Development Index (GDI) with a ranking o f 133 out o f 140 countries in 2005, but the mainstreaming o f gender equality in PARPA I1 i s a significant improvement from the first PARPA. Inequalities continue in education, health, and HIV/AIDS, but the government and civil society are makingefforts to reduce them. 109. The project will directly address gender inequality as follows. Incomponent 1, gender issues and sexual and reproductive health will be addressed in the training o f health staff. In component 3, gender balance will be addressed in the contracting o f consultants for the preparation o f the health investment plan. Finally, in component 4, the operational manual will ensure that gender issues are properly addressed in the course o f project implementation. A detailed analysis o f gender equality i s presented inAnnex 19. E. Environment. 110. The HSDP is classified as Category B (a partial environmental analysis is considered appropriate to address specific environmental issues) for two reasons: (i)the project would involve vector control under its malaria control component that needs a vector management plan (VMP), and (ii) project involves the provision o f medical supplies, which triggers concerns the about healthcare waste management. The project will not finance any pesticides or spraying equipments as all indoor residual spraying activities would be covered under the President Malaria Initiative, executed by the United States Agency for International Development (USAID). 111. The EA documents include a programmatic environmentalassessment for malaria integrated vector management projects, an assessment for IRS inMozambique and a safe use action planfor the use o f dichloro-diphenyl-trichloroethane(DDT), bendiocarb and lambda- cyhalothrin. The environmental assessment for indoor residual spraying was prepared to address the identifiedissues surrounding IRS operations. Because o fthe potential environmental impact o f the pesticides proposed for use, DDT, bendiocarb and lambda-cyhalothrin, the environmental assessmentidentifies the mitigating measures to minimize potential impact while achieving a significant reduction inmalaria incidence. The M O H and the Ministry for Coordination o f Environmental Affairs (MICOA) will implement the risk reduction actions outlined inthe environmental assessment (EA) and vector management planandre-examine the need for DDT while consideringother chemical options for IRS operations to achieve best vector control. The in-country disclosure was on April 26,2007 and the final ENVMP was reviewedby the Bank and submittedto InfoShop on April 30,2007. 112.. Occupational exposure to insecticides will be minimized through personal protective equipment (according to WHO guidelines). A public awareness campaign will educate home 26  owners on their roles and responsibilities during the spray campaign to avoid exposure, and supervisors will remind residents o f these responsibilities during spray campaigns. Environmental contamination will be kept to a minimum through strict auditing, handling, washing, and disposal practices. Each insecticide sachet will be strictly accounted for, contaminated waste-water and rinse-water will be re-used in subsequent days o f spraying (progressive rinsing). Empty DDT sachets will be collected by the MOH and returned to the supplier (ifpossible) or disposed o f inan environmentally safe manner. 113. The Healthcare Waste Management Plan developed under the HIV/AIDS Response Project will be used andmonitored under this project. 114. The project includes the construction o f 20-25 health centers as well as houses for medical staff inCab0 Delgado, Niassa, and Nampula. Indiscussions with Government officials, the project team has been assured that all health centers and houses would be built on hospital grounds or in Government land designated for such purpose. The land acquisition and resettlement assessment will be documented inthe policy specified forms. The project team will verify that no resettlement will occur. F. Safeguardpolicies. 115. The HSDP requires a Category B environmental assessment and triggers operational policies 4.01 on environmental assessment (EA) and 4.09 on pest management. The key safeguard issues are associated with the potential environmental impact from handling toxic chemical pesticides for vector control and from dealing with contaminated health care medical waste. 116. The HSDP i s using a Programmatic Environmental Assessment covering the broader, contextual issues for vector management. The specific operational plans that will govern the vector management activities and the healthcare waste management are addressed through a Vector Management Plan for internal residual spraying (IRS) operations for malaria control, and a Healthcare Waste Management Plan (already developed under the HIV/AIDS Response Project). These safeguard instruments meet the Bank requirements. Annex 10 discusses more specifically how the HSDP will ensure compliance with the safeguard policies. 27  Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP 4.01) [XI [I Natural Habitats (OPBP 4.04) [I [XI Pest Management (OP 4.09) [XI [I Physical Cultural Resources (OPBP 4.11) [I [XI Involuntary Resettlement(OP/BP 4.12) [I [XI Indigenous Peoples(OP/BP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) [I [XI Projects inDisputedAreas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI G. Policy ExceptionsandReadiness. 117. The project does not require exceptions from Bank policies. It meets the Regional criteria for readinessfor implementation. * By supporting the proposed project, the Bank does not intend to prejudice thefinal determination of the parties' claims on the disputed areas 28  Annex 1: Countryand Sector or ProjectBackground MOZAMBIQUE: HealthService DeliveryProject EconomicDevelopment. 118. Per capita GDP has grown by around 7.5 percent per annum since the mid-l990s, reaching US$210 in 2003. The economy is robust and is expected to grow at a similar pace over the next few years. As a result o f economic growth, the share o f the population living inpoverty declined from 69.4 percent in 1997 to 54.1 percent in 2003, a remarkable 15 percentage-point fall over a six-year period. But poverty remains a major problem for Mozambique and is a continuing concern o fthe government. OverallAssessment of the HealthSystem. 119. The Mozambique health system has shown significant improvements over the last decade. This results from: (i) the country's dynamic economic growth; and (ii) investment direct bythe government inthe health sector. The MOHhas rehabilitated andexpanded the network o f health facilities and started to reduce regional imbalances. Both the government and external donors increased financing for the health sector. As a result, drugs have become more widely available, major progress was made in child immunization and the overall production o f health services increased substantially. This was translated into a significant reduction in child mortality. 120. Despite this progress, Mozambique does not perform as well in child mortality reduction as countries with a similar Gross National Income per capita. Maternal mortality appears to have decreased significantly but remains high..Malaria i s the primary cause o f death among children. The prevalence o f HIV is highat 16 percent as o f 2007 and inthe center andnorth regions seems to be leveling-off whereas inthe south regions the epidemic shows an upwardtrend. It remains a concern for the country's health sector and affects overall economic performance. Health sector problems result from both the demand and the supply side. On the demand side, household knowledge about health remains low, so the demand for preventive and curative services is lower than the existing supply, notably in the areas o f family planning, institutional deliveries, breast feeding, and treatment for acute respiratory infections, diarrhea, andmalaria. 121. Onthe supply side, there is still a major gap incoverage, especially inrural areas. Part o f the problem is the shortage o f human resources and their concentration in Maputo and other cities, but the problem also derives from too much dependence on fixed-based facilities and not enough emphasis on community health services and mobile units. Improvement in efficiency andquality remain warranted, but this will not be enough. Additional financing will be required over the mediumterm both from the government and external donors. EpidemiologicalProfile. 122. Mozambique has a classical profile o f diseases o f poverty, with significant levels o f child malnutrition, particularly stunting, and a predominance o f infectious diseases (malaria, 29  tuberculosis, AIDS). Women o f reproductive age most commonly suffer from malaria, anemia, sexually transmitted infections, HIV/AIDS, and child birth complications. Also emerging are health problems associated with economic development, namely hypertension, strokes, and traffic accidents, particularly inrapidly urbanizing areas. 123. In 2001, life expectancy at birth was 42 years, still lower than the average for Sub- Saharan Africa (SSA). In2003, Mozambique had an infant mortality rate (IMR) o f 101 deaths per 1,000 births and an under-five mortality rate o f 153 per 1,000. The IMR dropped by 32 percent between 1997 and 2003, probably one o f the fastest reductions in SSA. With 41 percent of children under 5 years old stunted and 24 percent underweight, malnutrition remains a problem. 124. Mozambique i s one o f nine African countries hardest hit by the HIV/AIDS epidemic. Malaria is the primary cause o f death among children under five. Tuberculosis is a problem and with a case notification rate o f 138 per 100,000 in2002, Mozambique ranks 18thinthe world on WHO'Slist o fhigh-burden TB countries. TheMDGChallenge. 125. The MDG related to child mortality sets a target o f reducing it by two-thirds between 1990 and 2015. Mozambique has reduced the under-five mortality rate from 226 per 1,000 (DHS 1997) to 153 per 1,000 (DHS 2003), which i s about a one-third reduction over a 6-year period. Ifthe same trend continues, it is feasible for Mozambique to reach the MDG goal o f 76 per 1,000 in 2015. Maternal mortality appears to have significantly dropped during the last decade. According to the 2003 DHS, the estimate o f the MMR was 408 per 100,000 live births, close to the MDGtarget o f 365 per 100,000 for 2015. While prospects are good, one should not take for granted that the past trends will necessarily continue, as reversals have happened inother countries. The government will need to continue its effort to increase coverage inunder-served areas andto improve the quality o f health services. HealthExpenditures. 126. Total public health expenditures reached US$134 million in 2001. Health financing remains heavily dependent on external sources that account for more than 60 percent o f all public health spending. Inper capita terms, health spending has grown from US$7.4 in 2000 to US$18 in 2007. The state budget, including budget support, allocates less than half (45 to 47 percent) of resources to salaries andpersonnel-related costs. HealthNetwork. 127. Health care is overwhelmingly provided by the public sector, organized under the National Health Service, and by far the most important provider is the MOH. There are 112 NGOs in the country which provide health services. The private sector is small but growing. There i s a lack of information about community facilities, whose role and potential for expansion should be investigated. In 1975 when Mozambique became independent from Portugal, it inherited a health system that was structured to provide hospital-based curative care to a small elite urban population. As a result, the network o f facilities is unevenly distributed, but the government has made major efforts to reduce inequity o f coverage among provinces. Still, more 30  than half o f the country's 712 doctors work in Maputo City. The variation in staffing across provinces i s striking. At the two extremes are Cab0 Delgado province in the north with 60,000 persons per physician and Maputo City inthe south with 4,000 persons per physician. In2004, Mozambique had one doctor for 44,000 persons, compared to Sub-Saharan Africa that has one doctor per 22,000 persons. The production o f health services has increased over the years: government health service output increased by 59 percent from 1993 to 2000 (World Bank, 2003), and immunization coverage o f two-year-olds increased from 55 percent in 1995 to 82 percent in2001, 128. Key Policy Issues in the Sector are related to: (i) demandissues deriving from the lack o fhouseholdknowledge about health; (ii) supply issues involvingefficiency and equity; and (iii)financing issues involving sustainability, efficiency, andprotection o fthe poor. Household Knowledge. 129. Knowledge about health prevention and care influences household behavior: those more knowledgeable will adopt healthy behaviors at home (washing hands, etc.), understand risky behaviors, recognize ordinary symptoms, and seek timely and appropriate care. The lack o f knowledge o f households in Mozambique results in a low proportion o f the population seeking health care: only 57 percent o fthe rural population who was illsought care. 130. Few mothers have the knowledge to maintain timely vaccinations for their infants. Although most mothers know about oral rehydration salts (ORs), only about 50 percent give it to their children with diarrhea. Knowledge about specific ways o f preventing HIV/AIDS i s low for both men and women. Knowledge about malaria remains low inrural areas. On the other hand, it is well established that knowledge about health increases dramatically with education: the 2003 Demographic and Health Survey (DHS) showed that nearly all children whose mother had secondary education were vaccinated, but it was the case for only half o f those whose mother had no education. This situation calls for major efforts by the government to increase health promotion, especially among households with a low level o f education. Efficiency and Quality Issues. 131. In terms of allocation by level of care, government health expenditures continue to be biased towards higher-level facilities. Third-level hospitals are invariably urban-based and focus on less cost-effective curative care. InMozambique, 38 percent o f health care expenditures are made at the tertiary level compared to 25 percent in South Africa, and only 11percent ineach o f Uganda, Malawi, and Ethiopia. The allocation o f health investments by region also presents a problem o f efficiency because an uneven allocation o f resources reduces the potential impact on morbidity andmortality. 132. Structural quality shows weaknesses and there are questions about the process of deliveringcare. The 2003 Expenditure Tracking and Service Delivery Survey showed that only two-thirds o f health posts offered child vaccination, and only 40 percent o f all facilities undertook environmental health activities. Only 14 percent o f facilities offered malaria tests on site, only 70 percent had a place for staff to wash their hands, and only a minority had any means o f communication (telephone or radio). Only 37 percent o f the health facilities surveyed had electricity. Many facilities lacked basic equipment such as a blood pressure gauge or weighing 31  scales. More than 60 percent o f facilities reported a stock-out o f drugs in the previous six months. A 2001 baseline survey on integrated management o f childhood illness (IMCI) shows both structural and process weaknesses: (i)important materials and drugs were often missing from facilities; (ii)average consultation time was short; and (iii) worker compliance with health protocols in the assessment, classification, treatment, and counseling o f children was generally poor. EquityIssues. 133. The uneven spending across provinces presents an equity issue as some parts o f the population benefit from more health services than others. The proportionally higher spending on urbanhospitals also is a problem as, to a large extent, they cater to a population in the higher socio-economic groups. The uneven implementation o f user fees and exemptions especially affect the poor. As the elasticity o f demand is higher for poorer households, anincrease inprices is likely to reduce their access to care. Currently the government i s contemplating scratching the user fees in government health facilities. "Special clinics" within MOH hospitals give rise to a cross subsidy o fprivate patients through the use o fpublic facilities. HumanResources Issues. 134. Like most African countries, Mozambique faces serious human resources issues in the health sector. The main ones are: (i) the overall lack o f health staff due to limited training capacity and funding; (ii) their lack o f deployment in rural areas resulting from inadequate incentives; and (iii)the lack o f efficiency o f health staff, To address these issues, the government should: (i) improve the efficiency and quality o f training o f physicians and other health personnel; (ii) improve the work force distribution through a review and adjustment o f salaries and incentives and an improvedpersonnel management information system; (iv) improve supervision; and (v) provide stronger support to pre-service training institutions. These issues are dealt with in more detail in the newly developed Human Resources Development Plano fthe MOH. FinancingIssues. 135. The first financing question for Mozambique i s what should be the overall level o f spending per capita for the health sector. Increases, if possible at least in line with per capita GDP growth, are likely to have a positive impact on health outcomes, provided the additional funds are investedina cost-effective manner. 136. The HIV/AIDS epidemic i s increasing the demand for health services as an increasing number o f patients receive treatment for opportunistic infections and anti-retroviral treatment. Although prices o f the latter are decreasing, the overall costs for the system are likely to be significant. The government's strategy has been to raise international funds from donors. The challenge for the government will be to ensure that all donor programs are well coordinated; target the poor and vulnerable for prevention, care, and mitigation, and prevent the non-poor from becomingpoor. 137. The proper coordination o f donor financing applies not just to HIV/AIDS, but to the entire health sector. The sheer number o f donors (about 30) and the myriad o f NGOs they 32  support poses a coordination challenge. Donors have provided an increasing share o f their financing through budget support, a step inthe right direction since this will enhance government ownership as funds get blendedinto the government system. 138. A major issue is that the budget execution rate of the MOH has been slowing down. As late as 1998, the execution rate for the state budget was 99-100 percent, but afterwards, with increasing resources flowing into the system, the execution rate began to worsen, falling to 85 percent in 1999, and 82 percent in 2000. The slow execution rate arises because: (i) state the budget and some donors' financing cycle have different procedures and calendars: (ii) budget funds have become increasingly unpredictable in recent years because tax generation i s not always on time; (iii) there may be different procedures across provinces and within districts of the same province; and (iv) the country continues to suffer from inadequate and poorly trained staff involved in financial management. The net effect o f these factors is the frequent late liquidation o f provinces, thus delaying disbursements by the Ministry of Finance that needs to ensure that receipts from previous disbursement are fully accounted for. 139. Another issue related to financing is the challenge to develop an allocation formula that will help reduce inequity across provinces. The formula is currently based on population, health needs (poverty) and other factors, but could be improved. 140. Finally, an important problem is personnel pay. The salaries, bonuses and incentives o f physicians and other categories o f staff that are scarce in rural areas should be reviewed. For salary reforms to be sustainable and non-inflationary, they need to be guided by the medium- term macroeconomic objectives o f the government. The wage bill, therefore, should follow growth in GDP. This issue goes beyond the MOH as it has implications on the whole civil service. 141. The challenge for Mozambique is how to improve health outcomes and reach the MDGs and to that effect, how to maintain and if possible increase financial resources: (i) to increase household knowledge and use of health services by those who need them; (ii)to improve the coverage o f maternal and child health services through the most effective combination o f community-based care, preventive care and clinic-based care; (iii) to improve equity among provinces and socio-economic groups; (iv) to contain the HIV/AIDS epidemic; and (v) to develop andimplement a humanresources strategy to achieve these outcomes. 33  Annex 2: Major RelatedProjectsFinancedby the Bank andother Agencies MOZAMBIQUE: HealthService Delivery Project Health UNFPA 95,000 Malaria (bednets) UNICEF 580,000 '*Inaddition to SDC's participation inthe HSDP. 34  Annex 3: Results Framework and Monitoring MOZAMBIQUE: Health ServiceDelivery Project 142. The monitoring indicators will be obtained both from routine indicators and regular surveys. The project will introduce the LQAS method for some o f the surveys. LQAS is a sampling method that is used to obtain reliable information on a small geographic or administrative unit using a small sample. LQAS can be used to accurately detect the extremes of performance; those which are exceeding an "upper threshold" o f performance and those which fail to meet a "lower threshold" o f performance. The main advantage o f LQAS is that it uses small samples which makes its cost reasonable compared to traditional cluster sampling methods, makingit possible to undertake yearly monitoring. 143. The LQAS method would be used for a rapid assessment of population-based indicators by district level health management teams, as well as for a rapid assessment o f the quality of maternal and child health service provision inhealth facilities. Both areas o f work will develop tools that can be used regularly and reliably by district healthpersonnel. 144. A high M&E priority will be support to recurrent supervision. This is an area that no donor has targeted andyet there is a highdemand for it from the central, provinces and districts. 145. The population-based and health facility supervision systems work would take place in two phases. The population-based work would come first to establish baseline data. Inphase 1, HSDP supervision teams would be trained inthe target districts during one week, and supported during two additional weeks to collect, and analyze data. Districts would beginto use the 'data for managing their programs. Data would also be collected inone to two control districts ineach o f the target provinces. 146. This work would be immediately followed by a rapid social analysis to interpret the underlying problems detected by the assessment. A strategic planning workshop will be organized to help district and provincial managers use the data for project planning and management. Ideally, phase 1work should take place before project effectiveness. Inphase 2, the LQAS would be integrated with recurrent supervision, which would create economies o f scale. The project will provide training for district and provincial level health workers. Inthe area o f malaria, linkages of HSDP with LSDIwill be encouraged. 147. UNICEF is planning a MICS survey for the second half o f 2009. This survey will include all o f the survey-based household indicators in the results framework that follows and will use a sample size that will permit disaggregation to the provincial level. This survey will serve as the baseline survey for the household indicators. A baseline health facility assessment focusing on the quality o f health services using LQAS sampling will be repeated at mid-term and at the end of the project. Household surveys using LQAS sampling will be introduced in a phased-in manner by districts during the first years o f the project and be repeated at least every two years until the end o f the project. The schedule o f surveys is summarized in the following table: 35  UNICEF MICS surveys using LQAS HSDP to provide eventually be introduced district participating sampling supplemental data and inalldistricts every two years by the triangulate routine endofthe project health system data Quality o f maternal Final for HSDP Sample o f districts that 2012 child health services in will include all pilot health facilities districts Key PerformanceMonitoringIndicators Table 8: PerformanceMonitoringIndicators. Indicators 2009 2010 2011 2012 2013 2014 Percentage o f institutional 50.8 52.2 53.7 56.0 57.0 58.0 deliveries Numberof outreachteams filly 0 4 9 15 22 31 operational Percentage o f children 12-23 45.0 48.0 51.0 54.0 57.0 60.0 months vaccinated with the BCG; DPT3; polio, andmeasles vaccines inthe fust year oflife I 1 I I Number o f community health 200 500 800 1100 1400 workers trained (cumulative) I o Percentage o fpregnant women 0.0 20.0 30.0 40.0 50.0 60.0 who received at least one dose o f IPT Percentage o fhealth facilities 40.0 50.0 60.0 70.0 80.0 90.0 offering fust-line treatment for malaria Preparation o f Investment Plan TORS Consultants First Final finalized contracted draft o f report report 36  DetailedResults Frameworkfor the Three NorthernProvinces PDO Project OutcomeIndicators Use of Project Outcome Information Increase access to, and Percentage o f institutional - Assess the effectiveness o f the utilization o f a maternal and deliveries. program inincreasing the child health interventions proportion o f women delivering in through strengthened a health facility. community -based services, scaled up outreach services, Assess the effectiveness of the and improved facility-based program inscaling up the services first-line treatment for provision of malaria treatment. IntermediateOutcomes Increasedaccess to effective health education that improves knowledge o f protective health practices Increasedaccess to basic primary health care by operational. o f outreach services. pregnant women and children Assess the increase incoverage o f DPT3; polio, andmeasles vaccines inthe first year oflife. Increase access to and utilization o f intermittent preventive treatment by pregnant women Produce a high quality investment plan for extension o f service coverage inline with the 37  F; 8 9 0 (D (0 hl 0 cu rc: !n 0 0 0co 8 8 d r- Q, 9 5 0 0 8 In 8m (0 "! 9 9 N d 0 n s 0 0 8!n 6 4 (v 2n 0 0 8 8 d  Annex 4: DetailedProjectDescription MOZAMBIQUE - HealthService Delivery Project(HSDP) 148. The project's development objectives are to: (a) reduce child mortality; (b) reduce maternal mortality; (c) reduce the burden o f malaria; (d) reduce the prevalence o f tuberculosis; and(e) reduce inequity inthe accessto healthservices inMozambique. 149. Key performance indicators were established for the reduction o f maternal and child mortality and for malaria control in the Northern provinces for a period o f five years. A complete results framework is presented inAnnex 3. 150. Oversight of the HSDP by the MOH and donors. The project would be reviewed twice a year, including once through the Joint Annual Review by a group consisting o f Central MOH Directors, the Provincial Health Directors o f Cab0 Delgado, Nampula, and Niassa, the Bank, SDC, CIDA, Russia, andarepresentative o fthe health SWAP. ProjectComponents. 151. The project would cost US$72.4 million. A detailed project cost i s presented inAnnex 5. The project would have four components: (i)improvement in service delivery (US$42.6 million); (ii) boosting o f national malaria control program (US$13.5 million); (iii) preparation o f national health sector investment plan(US$O.S million); and (iv) capacity buildingand operating costs (US$15.8 million). 152. Component 1 - Improvement in service delivew (US$42.6 million). There would be five main areas o f intervention: (i) the provision o f training and technical assistance to district health staff in the provinces o f Cab0 Delgado, Nampula and Niassa to enhance their management and planningcapacities, including organization and supervision o f outreach and community-oriented activities; (ii)Provision o f training and technical assistance to health workers inthe provinces of Cab0 Delgado, Nampula and Niassa to improve the quality o f health services' provision, particularly in the areas o f maternal and child health, with the boosting o f integrated management o f childhood illnesses and safe motherhood skills, and programs to control tuberculosis and HIV/AIDS; (iii)Provision o f goods and training to benefit public health facilities in the provinces o f Cab0 Delgado, Nampula and Niassa for purposes o f enhancing the Borrower's malaria control activities; (iv) Rehabilitation o f health facilities in the provinces o f Cab0 Delgado, Nampula, and Niassa; and (v) Construction o f about twenty (20) to twenty-five (25) health centers and two (2) houses for MOH health personnel in the provinces o f Cab0 Delgado, Nampula, and Niassa. 153. Health facilities would be rehabilitated as needed. Inaddition, the project would finance the construction o f about 20-25 health centers inthe provinces o f Cab0 Delgado, Nampula, and Niassa. This would be done through investmentpackages o f about US$300,000 each including a health center type 11, two houses for health staff, water supply through a bore hole, and supply o f electricity through solar panels. This would help expand the coverage o f fixed facilities and improve access to health services. Associating the construction o f health centers with staff 39  houses will encourage health staff to go to rural areas, and the provision o f water and electricity will ensure the functioning o fthe healthcenters. 154. The communication system for improved referral o f patients and for surveillance would be strengthened by acquiring radios, batteries and solar panels. Service would also be improved byprovidingbetter lighting. Solar panels would be installedto ensure energy at night at least, in delivery rooms and inemergency outpatient rooms. Water wells would be drilled, and pumping capacity developed for the existing reservoirs to provide water in delivery rooms, children's wards and outpatient clinics, plus one water point for the general use o f other patients. Districts would be provided with ambulances. Maintenance costs for the new vehicles would be included inthe budget. 155. Districts would receive technical support to improve planningand supervision. Training will: (i) improve the quality o f service provision, particularly in the areas o f maternal and help child health with the strengthening o f I M C I and safe motherhood; and (ii) improve the skills o f health personnel to ensure that cases in need are timely referred to the next level o f care (provincial hospital). Key bottlenecks in the supply o f maternity services would be removed, principally by increasing the number o f nurses, to ensure that the expected increase in demand for institutional deliveries can be satisfied. 156. The project would help develop a network o f outreach teams by broadening the staffing o f existing outreach teams that are now largely focused on immunization. New outreach teams would provide a continuum o f services from child health to maternal health, malaria control (prevention and treatment), environmental health, HIV/AIDS, and TB, as presented in detail in Annex 16. Outreach teams would also be responsible to supervise community health workers. To ensure the proper functioning o f outreach teams, provinces would provide refresher training to existing nurses, and train additional ones. Teams would be provided with adequate vehicles, fuel, per diem, drugs, and solar kits. Additional personnel would be recruited and trained to ensure that health centers remain staffed when the outreach team is on the road. Inthe initial 2-3 years o f the project, there would be a need for an additional 31 mid-level maternal and child health (MCH) nurses, 31 medical prevention technicians, and 31 medical technicians. The HumanResources Department o f the MOH stated that there would be no problem inallocating additional personnel as it included inits recruitment project and inthe Accelerated Training Plan o f the MOH. The government commitment to fund the additional 93 positions would be part o f a policy letter. The financing agreement (FA) would also include a covenant to that effect. Inan initial phase, outreach teams would cover about 10 districts each inthe three provinces, or about 50 percent o f the population. At the mid-tern review, progress in the creation and performance of outreach teams would be reviewed, and a decision to expand the teams to fully cover all the districts would be made13. All other project activities would be province-wide. l3Should it be decided at the MTR not to expand outreach teams to all districts, there would be US$4.4 million available. This would be'used to increase the rehabilitation o f health centers and their equipment with solar panels (only facilities inthe district headquarters and 1-2 other facilities per district with the most urgent need are currently included), strengthen diagnostic capacity at the district level (through the acquisition o f microscopes and other equipment), and rehabilitate houses for nurses and other health staff. 40  157. Teams o f community health workers (CHWs)14 would be developed in each village. They would be trained to undertake growth monitoring, provide oral rehydration therapy, immunization, female education including the use o f bed nets, family planning, promote breast feeding, nutrition, good hygiene such as washing hands, avoidance o f risky sexual behavior, and increasing the capacity o f families to recognize the early danger signs o f some common diseases so to as search for help sooner. The complete list o f services i s presented inAnnex 16. Outreach teams would provide technical support to CHWs when visiting their area. 158. Traditional Birth Attendants (TBAs) would receive clean delivery kits. Traditional Healers (THs) would be given clean blades and some drugs for fever and Agentes Polivalentes Elementares (APEs) would receive drugs from the MOH's Kit C, including oral rehydration salts and artesunate suppositories that can be used by community workers for the pre-referral treatment o f severe malaria. All CHWs would receive information, education, and communication (IEC) materials. Bicycles for APEs and THs would be provided and their ownership transferred to these community workers after one year o f work. All CHWs would have free access to bed nets. CHWs would report on technical matters to the headquarters o f the district and to the outreach team, and to community health leaders on the quality o f their interaction with the community. 159. Nutrition improvement would be an important activity o f the HSDP. Child nutrition would be improved through: (i) breast feeding promotion, advice on supplementary feeding, and growth monitoring by CHWs; (ii) provision o f iron and foliate supplementation by outreach teams; and (iii) vitamin A treatment, weight control, and growth monitoring in primary health care facilities. Maternal nutrition would be strengthened through: (i) the promotion by CHWs o f supplementary feeding for malnourished pregnant women; and (ii) the provision o f iron and foliate acid supplementation by outreach teams. 160. Tuberculosis control will also be an important objective o f the HSDP. This will be carried out through: (i) expansion o f the DOTS strategy, including at the community level; (ii) an a strengthening o f the coordination between tuberculosis (TB) and HIV control; and (iii) an improvement inthe quality o f diagnosis and treatment o f TB cases. 161. HIY/AIDS control would be addressed at the community level through peer education, safe sex promotion, and condom promotion. CHWs would be regularly supervised by outreach teams. 162. At the clinical level, patients would receive treatment for opportunistic infections and for anti-retroviral treatment where possible.l5 163. Malaria control. The followingwill be supported: 14 Community health workers include Agentes Polivalentes Elementares, Traditional Birth Attendants (TBAs), and Traditional Healers (THs). Is The Bank currently supports an HIV/AIDS Responseproject that operates nationwide, and a follow-up operation i s included in the CPS. In addition, the Bank finances the Treatment Acceleration Project that helps strengthen the MOHcapacity andhelps scale up treatment through three internationalNGOs. 41  0 Artemisinin-based Combination Therapy (ACT) will be provided both at facility level and through Kit C at thecommunity level. The procurement o f ACTSinthe country is being supported by PMI and GF. The project will support the procurement, delivery, supervision o f the implementation o f Artesunate rectal suppositories for the referral o f severe malaria and capacity building o f CHW/APEs, as a complement to other donors financing, when necessary. 0 Long-lasting Insecticide-Treated Nets (LLINs)have been seen as most critical inrapidly reducing malaria morbidity through front loading for rapid increase incoverage. A large part o f the HSDP support would go towards procurement o f LLINs to achieve universal coverage in the provinces o f Cab0 Delgado, Niassa, and Nampula. LLINs would be delivered through either stand-alone campaigns or integrated with other health interventions for rapid scale up. This would then be complemented by delivery through ante-natal clinics to maintaincoverage levels. 0 Artesunate suppositories will be provided through the Kit C for pre-referral treatment o f children under five with severe malaria, with a special emphasis placed initially two districts in Cab0 Delgado, Niassa, or Nampula for lessons learned. The implementation o f this intervention will be in the context of a phased scale up as the M O H treatment policy recommends a countrywide implementation o f pre-referral treatment for severe malaria. The project support will generate lessons and help the MOH scale up implementationinthe other provinces. 0 Behavior change communications i s a critical component o f the project support. A more comprehensive and consolidated approach will be undertaken, firstly to review the national BCC strategy and then focus on strengthening o f BCC for LLINs, Artesunate rectal suppositories and new malaria treatment policy. Translation into local languages will be done to ensure increased uptake o f messages. A consultant will support the process and prepare behavior change communication materials. APESwill be used to support this work at community level. 0 Indoor-Residual Spraying. This component will be scaled up in the districts o f Pemba- Metuge, Angoche, and Cuamba. The program concept for the LSDI will be used. The project also aims to strengthen the implementation o f Integrated Vector management using larviciding where appropriate. Supervisory activities will be financed by the HSDP inthe three targeted districts, includingsupervisionduringspray seasons. 164. The project would provide goods and training to benefit public health facilities in the provinces of Cabo Delgado, Nampula and Niassa for purposes o f enhancing Mozambique's malaria control activities. 165. Institutional deliveries. An analysis o f constraints to increase institutional deliveries shows bottlenecks both on the supply and the demand side. On the supply side, the bottlenecks are: (i)limited human resources; (ii) significant variations in productivity o f staff; (iii) limited capacity inhospitals; (iv) varying availability o f drugs, blood supply and equipment; and (v) poor quality o f care. On the demand side, the key limiting factors are: (i) distances to long reach a health facility and lack of transportation; (ii) cultural barriers such as the need for women 42  to have the approval o f the husband before giving birth in a health facility; (iii) waiting long times; and (iv) the perception that the quality o f care inhealth facilities i s poor. 166. Assumingthat the HSDP would ensure that 60 percent o f deliveries were institutional by 2013, the analysis shows the need to: (i) increase the number o f M C H nurses in selected district maternities; and (ii)improve the management o f health services to reduce the difference in productivity betweendistricts. 167. Trainingofhealth workers. The project would provide training to at least 1,400 APES,at least 31 nurses, 31 preventive medical technicians, 31 medical technicians, 100 traditional healers, and 100traditional birthattendants. 168. This component will finance civil works, goods, consultants, and training. Operating costs (fuel andper diem for mobile teams (US$9.5 million) i s included incomponent 4. 169. Component 2 Boosting of national malaria control vrogram (US$13.5 million). This - component will finance the following activities: (i) Strengthening o f the Borrower's malaria control management program through the provision o f housing rental and training to Borrower's provincial malaria focal points.; (ii) Design and implementation o f a national training program on malaria monitoring and evaluation; (iii) Strengthening vector control through the provision o f training, technical assistance and goods to Borrower's public healthcentral program andregional staff to support the malaria treatment policy shift from artesunate-sulfadoxine-pyrimethamineto artesunate-lumefantrine; (iv) Acquisition o f essential drugs, long lasting insecticide treated nets, and rapid-diagnostic test kits, microscopes, computer equipment and vehicles; (v) Construction o f storage facilities inthe Province o f Zarnbezia to support the implementation o f the Borrower's malaria control plan.; (vi) Provision o f training on public health operations and monitoring and evaluation activities to Borrower's public health officials in the provinces o f Cab0 Delgado, Nampula, and Niassa; (vii) Preparation o f a geographic information system, consisting o f hardware and software to capture, store, analyze and display data regarding malaria incidence and prevalence for purposes o f calculating the amount o f Borrower's population at risk; (viii) Setting up o f sentinel sites in the provinces o f Cab0 Delgado, Nampula, and Niassa for surveillance o f malaria cases; and (ix) Preparation o fbehavior change communication materials. 170. Subcomponent 1: Program Management Support (US$O. 7 million). The MOH has identified the need for strengthening staff capacity at central level to effectively meet the demand for scaling implementation as critical. It has identified the following cadres o f staff for immediate contracting to support implementation: Case management focal point, M&E focal point, LLIN focal point, BCC focal point and two consultants to support M&E activities at the central andprovincial levels. The growing demand for comprehensive program scale up requires strengthened central level capacity to ensure leadership on policy direction and supervision o f the provinces and districts. The HSDP will support improvement o f provincial level supervision inthe three targeted provinces. The HSDP will also finance training and housing rental for the Malaria Focal Point and OperationsiMalaria M&E officer. 171. Subcomponent 2: Monitoring and Evaluation (US$0.4 million). Annual Program Reviews (including an Annual Report, and development o f an Annual Action Plan), will be financed by the project. The MOH will work closely with WHO to prepare a national training 43  program on a malaria monitoring and evaluation. A comprehensive M&E framework was developed by the National Malaria Control Program, that considers the various information needs, source o f data, and responsibility for collecting (MOH and partners). The project will help prepare a geographic information system, consisting o f hardware and software to capture, store, analyze and display data regarding malaria incidence and prevalence for purposes o f calculating the amount o f Borrower's population at risk. It will help set up sentinel sites in the provinces o f Cab0 Delgado, Nampula, andNiassa for surveillance o f malaria cases. Finally, the project will help prepare behavior change communication material and will provide training in public health operations and monitoring and evaluation activities to public health officials in the provinces o f Cab0Delgado, Nampula, andNiassa. 172. Subcomponent 3: Treatment and Vector Control (US$l.4million). This subcomponent will support the treatment policy shift from artesunate-amodiaquine (ART-AQ), to Artemether- Lumefantrine (ART-LUM), which i s the new first line malariatreatment inMozambique. The M O H and WHO have developed an action plan for the shift, including a checklist and time line. To that effect, the project will finance training, technical assistance and goods to the public health central program and regional staff. Additional project support will be provided for the strengthening o f Regional Quality Assurance Laboratories (2), the strengthening o f pharmacy- vigilance, and improved clinical supervision for ACT deployment, beginning with the three Northern provinces. Given the importance o f malaria laboratory diagnosis, the project will also prioritize improvement to malaria diagnosis through support to strengthening o f the malaria laboratory diagnosis through the procurement o f rapid-diagnostic test kits, microscopes, computer equipment, and vehicles. Over 1.5 million LLINs are planned to be distributed inthe course o f the project which highlights the need to strengthen mechanisms to improve utilization. The HSDP will finance a review o f the development o f the behavior change/communications strategy and the development o f materials, including in local dialects. With regard to Indoor- Residual Spraying (IRS), the HSDP will finance training for IRS, including the development o f a training facility for IRS inNampula province. 173. Subcomponent 4: Supply Chain and Commodity Buffer Stock (US$ll.O million). Substantial commodity inputs are being provided through support from the Global Fundand the U S President's Malaria Initiative. As a result, commodity financing is limited in the HSDP. However, US$10.7 million will be set aside to procure essential drugs and other commodities as needed to smooth distribution flows. It is expected that a majority o f the fbnds under this subcomponent will be used to finance long-lasting insecticide-treated nets (LLINs), and rapid- diagnostic test kits. Inaddition, the HSDP will finance a limited amount o f storage construction inZambezia (US$250,000) to support the implementationofthenationalmalariacontrol plan. 174. This component will finance civil works, goods, consultants, and training. Operating costs are included incomponent 4. 175. Component 3 - Preparation of national health sector investment plan (US$ 0.5 million). This component will finance the provision o f technical assistanceto M O H staff: (i) purposes for o f designinga comprehensive and sound ten (10) year health sector investment plan, with a focus on: (a) health infrastructure; and (b) medical and non-medical equipment; and (ii) to develop an implementation plan for the first five years o f the investmentplan. 44  176. The infrastructure part o f the planwill take into account the humanresource plan for the sector to ensure proper staffing o f facilities. The plan will prioritize the interventions in the health infrastructure based on criteria taking into consideration: (i) the goals o f the PARPA and the Five Year Government's Program; (ii) disease burden; (iii) size o f the population the the served; (iv) physical access: (v) quality improvement; (vi) efficiency; and (vii) the need to reduce inequity between and within provinces. The presence o f other health care providers, while not significant at the moment, would also be taken into consideration. Detailed terms o f reference are presented inAnnex 15. 177. Consultants contracted to that effect would provide technical assistance to MOH staff to develop an implementation plan for the first five years o f the investment plan, which will subsequently be made operational through the annual Economic and Social Plan (PES) o f the health sector. The consultants will also develop tools to that effect, and create a data base for the follow up o f the investment interventions. 178. Component 4 - Capacitv building and ODerating Costs (US$15.8 million). This component consists o f three subcomponents and will support the following: (i) Provision o f training, technical assistance and goods to MOH staff to develop a health system observatory for purposes o f evaluating the evolution o f health systems in the provinces o f Cab0 Delgado, Nampula and Niassa; (ii)provision o f administrative and operational support to the provinces o f Cab0 Delgado, Nampula and Niassa, including the hiring o f an operations assistant and a monitoring and evaluation assistant for each o f these provinces; provision o f training to staff at the provincial health departments to enable the use o f lot quality assurance sampling as a tool for Project management and monitoring activities.; acquisition o f hardware, software and office equipment for Project monitoring and evaluation activities; carrying out o f the HWMP and VMP in connection with the implementation and supervision the Project; provision of training to approximately 150 district health staff to enhance their financial management knowledge; and (iii)financing o f operating costs. 179. Subcomponent 1 (US$O.7 million) will finance a Health System Observatory for purposes o f evaluating the evolution o f health systems in the provinces o f Cab0 Delgado, Nampula and Niassa (described in detail in the "Implementation" section). It will finance goods, consultants, and training. 180. Subcomponent 2 (US$l.I million) will cover the contracting o f an Operations Assistant and an M&E Assistant for each o f the provinces o f Cab0 Delgado, Niassa, and Nampula. This team will provide support to each Provincial Health Department in programming, program implementation, and monitoring and evaluation. The project will also finance a base line and annual surveys for project monitoring. It will help introduce Lot Quality Assurance Sampling (LQAS)as a tool for project management and monitoring. It will finance supervision usingthe same tool, will help revise the supervision guidelines, and will provide computers (hardware and software), office equipment, and stationery for M&E. It will finance the implementation o f the Health Care Waste Management Plan (US$300,000) and Vector Management Plan; and finally the training o f about 150 district staff in financial management. Subcomponent 2 will finance goods, consultants, and training. 45  181. Subcomponent 3 (US814.0 million) will finance operating costs for the project. Operating costs include: per diem for supervision, vehicle operation and maintenance, office furniture, office supplies; communication costs (telephone, internet, and fax), insurance costs, office rental expenses; travel costs; accommodation, bank charges on Designated Account, and salaries o f support contractual staff. 182. The breakdown o f operating costs is as follows. For component 1, they will cover: per diem and fuel for supervision; office supplies, and maintenance of vehicles. As regards component 2, they will consist o f fuel andper diem; maintenance o f vehicles; and office supplies for subcomponent 1; office supplies; per diem and fuel; air travel costs; accommodation; and internet communications for subcomponent 2; fuel and per diem; office supplies; and (iii) air travel for subcomponent 3. For component 4, operating costs will cover office supplies, internet connection; office rent; air travel; and accommodation for subcomponent 1; and the same plus fuel and per diem for subcomponent 2. 46  Annex 5: ProjectCosts MOZAMBIQUE: HealthServiceDelivery Project 1.Improvementinservicedelivery cost (US$) (A) Strengtheningofcommunity-based service delivery Trainingnew CHWs 2,327,733 Refresher course existing CHWs 196,000 Training THs 465,547 Training TBAS 465.547 Drugs for CHWs (KIT C) 15,281,250 Non-monetary incentives, i.e. kits for CHWs 545,541 Non-monetary incentives, i.e. kits for THs and TBAs 324,821 Bicycles for THs and community leaders 785,680 Clean delivery kits for TBAs and mothers 3,792,919 Cleancut kits for THs 230.688 (B) Scaling-up ofpopulation-basedoutreachservices Training of additional nurses (basic level) 480,000 Training of additional nurses (mid level) 336,000 Refresher course for nurses 784,000 Solar kits for outreach activities 137,500 Vehicles ( 4x4. ambulances and maintenance) 2.632.050 Motorcycles and maintenance kit 615,600 Quad vehicles and maintenance kit 440,000 (C) Improvementof facility-based services Rehabilitation o f health centers 2,950,000 Radios 856,250 Solar kits for health centers (type I) 350,000 Solar kits for health centers (type 11) 1,400,000 Construction of health centers 7,200,000 Total component 1 42,597,125 47  (B)M&E Consultants for ProgramManagement Support at Central level 150,000 National training on M&EDatabase 75.000 Development and use of Geographic Information Systedmapping 200,000 (C) Treatment and Vector Control Training innew Case Management protocol 280,500 StrengthenRegionalQuality Assurance with humanresourcetraining 176,000 StrengthenRegionalQuality Assurance with equipment (RDTandmicroscopy) and medicines 165,000 Behavior Change/Communications DocumentslMaterialsMedia- (on all malaria interventions) 350,000 Establishtraining facility for IRS inNampula 385,141 (D)Supply Chain andCommodity BufferStock ITNs, ACTS, RDTs 10,726,770 Storage facility building 243,530 10.970.300 I Total Component 3 500,000 4. Institutionalcapacitybuildingandoperatingcosts (A) HealthSystemObservatory 700,000 (B) Capacity buildingandoperating costs Preparing the Operational Manual 31,880 M&E Support 278,480 Training infinancial management 500,000 Imdementationo f H C W 300.000 Subtotal 1,110,360 I (c)berating I costs Operating Costs for Component I Supervision by mobile teams (per diemand fuel) 9,528,344 Operating Costs for Component I1 Planningand BudgetingSpecialist (central program) 121,100 48  M&E Central Officer 121,100 Case management officer 121,100 LLINsSpecialist 100,000 BCC Specialist 100,000 Supportive supervision for vector control and programmonitoringby NMCP in all provinces. 350,000 Supervision budget for biologist/malaria focal points and provincial program sumort/M&E officer - 240.280 Total Component 4 15,807,934 Total Project Costs 72,400,000 Theprojectwouldbe financed as follows: 1 49  Annex 6: ImplementationArrangements Mozambique: HealthServiceDelivery Project 183. Institutional and implementation arrangements. The MOH will have the overall responsibility for the management o f the HSDP. The National Directorate o f Health Promotion and Disease Control (DNPSCD) will be responsible for the technical aspects o f program management by providing overall technical guidance and support to the implementing agencies within the MOH. 184. The Directorate o f Administration and Management (DAF) will be responsible for the financial management o f the HSDP, i.e. the budgeting o f activities at provincial and district levels, disbursement o f funds, accounting andtransfer o f funds to provinces and districts. 185. The HumanResources Directorate (DRH) will be incharge o f the planning and training o fincremental humanresources needed for the HSDP. 186. The Directorate o f Planning and Cooperation (DPC) will support the DNPSCD in the areas o f monitoring and evaluation o f the project, and will be responsible for the updating o f the investmentplan(component 3). 187. Planning, procurement, and distribution o f drugs will be under the responsibility o f DAF, and undertaken by the Central Agency for Drugs and Medical Supplies (CMAM). Procurement for other goods, civil works, consultants, and training will be undertaken: (i) for larger contracts bythe Department o f Infrastructures (DI), a MOHtechnical unit responsible for the management o f infrastructures development and related activities; and (ii)for smaller contracts by the provinces themselves. 188. The NMCP (under DNPSCD) would be in charge, together with the provinces, o f implementing the boosting o f malaria control (component 2). The NMCP is headed by a program manager, and the unit i s mandated to play a coordination and facilitation role. It has recently expanded its staff capacity at central and provincial levels. A simplified organization chart o f the MOH i s presented inFigure 3 below. 50  Figure5: OrganizationChart of theMinistryofHealth m Minister I Vice Minister I I Administration I Directorate o f Medical Directorate o f and Finance II I Public Health Services Planning and Directorate I I Directorate Cooperation I (D-@) I I ( D W (DPC) 189. As mentioned, the overall oversight ofthe HSDP (for components 1and 2) will rest with the Director of Public Health who will delegatethe generalcoordination to the Deputy Director, who will be the Project Coordinator. The Project Coordinator will manage the day-to-day operations of the project and will ensure that implementation planso fthe HSDP are integratedin the planning systemo f the MOH andProvincialDirectorates o f Health. The Project Coordinator will work closely with the Provincial Chief Medical Officers who will be the Executive Coordinators o fthe project ineach o fthe three provinces. 190. To assist the Deputy Director in carrying out these tasks, a Program Manager will be appointed by the MOH. The Program Manager will be directly accountable to the Project Coordinator, to whom he or she will have direct access on a regular basis. These arrangements are presented inFigure4. 51  Figure 6: Oversight of HSDP by DNPSCD Director o f Public Health DeputyDirector ofPublic Manager I Ft-----i 1 ChiefMedical Officer e-3 Malaria/HIV/TB Executive Coordinator HS: - (ineachprovince) Planning Assistant Biologist Heads o f Community Malaria Focal - Healthand Medical - Department Point Services District Directors andField Supervisors Health Unit Directors 191. The Program Manager will support the Project Coordinator in the implementation and coordination o f activities to ensure that all components of the project receive proper attention and resources. The Program Manager will follow up the implementation progress o f the HSDP, assess bottlenecks in implementation and propose measures to overcome them, and obtain the approval of the Project Coordinator for the proposed activities. The Program Manager will work closely with the Operations Assistant who will be based in the field. H e or she will: (i) help provinces develop annual work plans that integrate activities and actions contemplated in the project; (ii)ensure that these activities receive financing from HSDP; (iii) collaboration with in DAF, ensure a timely transfer o f funds; (iv) liaise with DAF, DI, and C M A M in all matters related to logistical aspects, and with DRH for human resources; (v) supervise the work o f the 52  Operations Assistant; and (vi) receive regular feedback from the Operations Assistant and help solve problems that may need the attention o f the central level o fthe MOH. 192. There would be an Operations Assistant ineach o f the provinces. H e or she will help the Chief Medical Officers o f Nampula, Niassa, and Cab0 Delgado in the planning o f activities, coordination with DRH and training institutes, local procurement, development o f outreach teams and community health workers, monitoring and supervision, and would be the link between the central MOH and the provinces. H e or she would undertake field visits with provincial counterparts to follow up the implementation o f the project, identify key problems, and discuss solutions with provincial authorities. The Operations Assistant would receive instruction from the Program Manager, but would also be accountable to the Chief Medical Officers o f each o f the three provinces. 193. Additional human resources. Health workers below the Program Manager and Operations Assistant have the capacity to implement the HSDP. Their performance is expected to increase as they will have better means to carry out their daily tasks. These include health centers rehabilitated and equipped with medical instruments and supplies, bed nets for distribution, radios and solar energy kits, water from drilled wells, vehicles and motorcycles, fuel, andper diem for supervision. 194. However, as mentioned earlier (see Project Component 4), for outreach teams, additional staff will be required. The MOH confirmed that this is feasible and in line with its Mid-term HumanDevelopment Plan. A policy letter from the government will include its commitment to fundthe 93 additional positions. 195. The DPC would be incharge o f updatingthe investment plan under component 3, as well as for monitoring and evaluation, andinstitutional strengthening under component 4. 196. Operational Manual. An Operational Manual will be prepared for the project. Its aim is to provide a guide showing what needs to be done in order to implement the HSDP. The Operational Manual will give the overall HSDP background and rationale, objectives, project components, implementation responsibilities and arrangements, and procurement and financial management procedures. The Operational Manualwill be directly in line with the government's own procedures. Adoption o f the Operational Manual by the MOH is a condition o f effectiveness. 197. Geographical implementation. The project would be implemented in the three Northern provinces of Cab0 Delgado, Nampula, and Niassa. Itwould cover all districts ineach province. Financialmanagement.Detailed financialmanagement arrangements are presented inAnnex 7. Procurement management.Detailed procurement management arrangements are presented in Annex 8. 53  Annex 7: FinancialManagementandDisbursementArrangements MOZAMBIQUE: HealthService Delivery Project Introduction. 198. A financial management assessment was carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Board on November 3, 2005. The objective o f the assessment was to determine whether the financial management arrangements for the project are adequate to ensure that: (i) project funds are used only for the intended purposes in an efficient and economical way, (ii) periodic financial reports are prepared in an accurate, reliable and timely manner; and that (iii) entities' assets are safeguarded the properly. CountryIssues. 199. The country's public financial management system has previously beennoted as weak in diagnostic studies carried out in this area. The most recent o f these is the Report based on the PFM PEFA Strengthened Approach (December 2007, based on 2006 data), which itself was a follow up to the country's first Public Financial Management Assessment conducted in March 2006 (based on 2004 data). prior to that, a Country Financial Accountability Assessment (CFAA) had been conducted in 2001. These early reports observed that, up to 2004, the public sector financial management systems in Mozambique were weak and that the overall public sector fiduciary risk inMozambique was high. Furthermore, although satisfactory improvements had been registered inthe management o fthe economy, the comprehensiveness and transparency o f the budget was poor, the medium-term planning and budgeting was weak, while budget execution and accounting andreporting presented serious weaknesses. 200. Coming out o f these diagnostic reviews, the Government o f Mozambique, with the support o f its development partners, instituted a number o f reforms in an effort to address the weaknesses. These initiatives included the introduction o f a new Financial Management law that forms the basis for the introduction and implementation o f a computerized integrated financial management information system, e-SISTAFE, which has been rolled out in the Ministry of Finance, the Ministry o f Planning and Development, and the majority o f line ministries at national level. To accompany these, the government also: (i) issued regulations for the Financial Management law; (ii) initiated the introduction o f a new and more-detailed functional classifier into the budget; (iii)introduced restrictions on bankaccounts held bypublic institutions; (iv) started to incorporate off-budget revenues as well as donor-funded expenditures into the budget; (v) initiated training for budget staff in double-entry accounting; and (vi) established a consolidated electronic treasury account to improve control o f treasury operations and cash management. 201. Comparing the situation in 2004 to that o f 2006, the 2007 PEFA report confirmed that significant improvements had been achieved in the quality o f PFM systems and processes, particularly inthe areas of: 54  Payroll, Procurement, and Internal Controls; 0 Cash Management; 0 Donor Practices, especially predictability o fbudget support disbursements; 0 Revenue Collection andManagement. 202. On the negative side however, the overall indicators covering accounting, recording, and reporting appear to have deteriorated slightly during the period, although even therein, improvements have been noted in the timeliness and regularity o f account reconciliations, and the timeliness and regularity o f in-year budget reports. What has not happened is a Public Expenditure Tracking Survey (PETS) inthe last three years. 203. The report noted that the quality o f the PFM was expected to continue improving as a natural consequence o f ongoing reforms such as the further roll-out o f e-SISTAFE; but indicated that this would take some time. Institutionalarrangementsfor financialmanagementfor the HSDP. 204. The financial management aspects o f the HSDP will be the responsibility o f the MOH through its Department o f Administration and Finance (DAF). The duties and responsibilities o f this directorate are defined by law. Its organizational structure provides for the departments o f Finance, Logistics, Administration, and Maintenance, in addition to a general office for support services. 205. DAFhas the ultimate responsibility for the administration and management of financial andmaterial resources managedbythe MOH. DAFis responsible for creatingthe conditions for processing reliable information that helps decision-making and the preparation o f allocation plansbased on correspondence between activities andneeds. 206. The DAF is headed by a National Director. The Financial Department is headed by a qualified, experienced financial manager. Overallpolicyguidancefor financialmanagement. 207. A Financial Management Committee (Comite de Gestio Financeira - CGF), chaired by the Permanent Secretary, has traditionally provided overall oversight arrangements o f the DAF's management o f funds provided under PROSAUDE 11. The CGF is comprised of: The National Director o fHealthPromotion andDisease Control (DNPSCD): The Director o f Planning and Cooperation (DPC); 0 The Director o fAdministration and Finance (DAF); and The Director o fHuman Resources (DRH). 208. Its key operational tasks were: (i) To verify and approve the annual budgets and quarterly budget plans produced by the cost centres; 55  (ii)To approve proposals on the allocation o f funds and authorise disbursements to the cost centres, PROSAUDE I1and to the M O H foreign exchange account for international procurement; (iii)ToapproveandreviewquarterlyandannuallythePROSAmEmanagementreports presented by the CGF; (iv) To authorise annual redistributionproposals and contingency expenditures; and (v) To approve and review the internal and external audit reports and ensure that their recommendations are implemented. 209. However, due to other pressing commitments o f its members, the committee has in practice been un-operational, and been replaced by a Conselho de Cordenacao Conjunta - (Council for Joint Coordination) for Accounting and Audit, chaired by the Director o f Administration and Finance (In practice this chairing role i s delegated to the Deputy Director, DAF), and the council has representatives from each MOH directorate. The key operational tasks o fthe CCC are to ensure: (i) the presentation to the Financiers o f formal requisitions for the disbursement o f funds in accordance with the Annual Work Plan; and (ii) the approval o f the monthly, quarterly and annual PROSAUDE financial and management reports presented by the DAF. GovernanceandAnti Corruption. 210. The government o f Mozambique approved an Anti-Corruption Law in 2004. The law stipulates that all contracts to which state or municipal bodies are partymust incorporate an anti- corruption clause and that whistle blowers are protected. Public officials now have to present a list o f their assets every year and a final list on leaving office. Critics argue, however, that although the law is extensive in scope, implementation i s lacking. The Central Office for Combating Corruption (GCCC) has been established within the Attorney General's Office, replacing the now defunct anti-corruption agency from 2003 (known as the Anti-Corruption Unit). The GCCC carries out investigations of complaints in relation to corruption-related offenses within the public sector and has delegations in Maputo, Beira and Nampula. The unit receives an increasing number o f reports on corruption, but the number o f investigations and prosecutions is still low, due partlyto under-staffing and lack o f fhds. 211. While no specific issues o f governance and accountability came to light during the FM assessment, the following steps will be undertaken to minimize the incidence o f corruption duringimplementation o fthe project: 0 Civil Society Participation: To increase transparency in the identification o f beneficiaries and beneficiary institutions for those components with community type activities, civil society organizations and community based organizations will be afforded a major say inthe decision making and selection processes o f the ultimate beneficiaries. Nominated beneficiaries will be well publicized in local publications, and the budgets or allocated amounts clearly indicated. The threat o f being exposed by an aggrieved 56  community i s a major deterrent to any thoughts o f diverting resources away from the agreedselected beneficiaries; PFMsystem development: To enhance the use o fnational systems inthe management of the credit proceeds, as well as ensure adherence to laid done procedures and controls, all finds flow, accounting, and reporting will be through e-Sistafe, the government IFMIS. As part o f the HSDP capacity development component, funds will be provided for the training o f at least 150 district level FM staff on general FM as well as e-Sistafe related procedures; Strengthening Internal Control: The MOH intends to strengthen its internal audit capacity by expanding the unit and locating at least 2 auditors to each province nationwide; ExternalAudit: The TORSfor the auditors will include specific responsibilities towards the detection and reporting o f fraud and corruption inproject activities. 212. The above steps are anchored inthe Mozambique country assistance strategy's three pillars for achieving growth with equity, namely: i) Strengtheninggovernance; ii) Spurring broad-based economic growth by improving the business environment; iii) Improvingtheprovisionofservices,particularlytothepoor. RiskAssessment. 213. In order to ensure a strong financial management system, the implementing agency should have an adequate number and mix o f skilled and experienced staff. The internal control system should ensure the conduct o f an orderly and efficient payment and procurement process, andthe proper recording andsafeguarding o f assets andresources. 214. The accounting system should support the project's requests for finding and meet its reporting obligations to the financiers, inclusive o f the government, the Bank and other donors. The system should also be capable o f providing financial data to measure performance when linked to the outputs o f the project. Lastly, the project's financial statements and internal controls shouldbe the subject o f an independent audit. 215. The table below shows the results o f the FMrisk assessment. It identifies the key risks that the project management may face in achieving project objectives, together with the appropriate ratings. It outlines the risk mitigating measures that have been incorporated into the project design. 57  RiskRatingSummary InherentRid Country Level Poor PFM systems including low The government i s highly committed to a reform staff capacity. Rating S program that i s underpinned by the introduction o f a new legal and regulatory framework and the introduction o f an integrated financial management system, the e-SISTAFE. However, there still exist major weaknesses in the FM environment resulting mainly from capacity shortages. The government's reform program aims to strengthen accounting and audit capacity through the recruitment and training o f FMspecialists, accountants and auditors. ResidualRisk Entity Level Sector level human and technical The legal and institutional framework supports capacity shortcomings. Rating H program oversight and implementation by the MOH. The use of a computerized information system should enable the timely preparation and submission o f accounts to the ministry. There also exist arrangements for overall policy guidance related to financial management. Provincial administrations also play a key implementation role, yet capacity at that level is severely limited. Strong internal control procedures and inspection arrangements will be adopted to ensure compliance. There will also be a provision for training staff. E-Sistafe has now been introduced at the provincial level, further enhancing control and reporting capacity. Residual Risk S Project Level Dispersed nature o f activities, The M O H will ensure that its department with especially the fact that the project i s responsibility for financial management remains confined to the northern-most and adequately staffed. Key project activities will be remotest provinces where general implementedat the provincial level. The flow of funds accessibility is limited and staffing will be carefully coordinated, and procedures will be poor. Rating S adopted to ensure the proper recording and reporting o f these. Residual Risk S Overall S Residual Risk S [nherent Risk Control Risks Budgeting M The M O H follows the government's budget program and procedures for budgeting, budgetary control and the initiation o f any budgeting revisions. Accounting M The project will use the Borrower account coding system. The system allows for a bespoke account analysis to be introduced, which will enable easy customization to produce required reports. The project will adopt Government Accounting Standards, which are said to be equivalent to international accounting standards. [nternal H There is adequate segregation o f duties between the clontrol units initiating expenditure, the execution, and payment for the activities. In addition, the M O H has internal audit officers that compliment the process with 58  compliance checks, by carrying out pre-payment checks to ensure adequate supporting documentation and evidence o f the necessary approvals before payment canbe effected. Boththe Inspection departments o f the MOH and MOF have the duty to ensure compliance with procedures. However, at the M O H the human resources and skills available are limited, with only 4 staff members for the entire ministry. Funds Flow Funds will flow from the Bank (be they IDA or Trust funds, to be administered by the Bank) to each of the Designated Accounts (IDA, CIDA, SDC, Russia) to be opened at the Banco de Mozambique and maintained inUSDby the MinistryofHealth. These funds willbe used to finance project activities at the two levels (provincial, and central) o f project implementation Strict procedures will be adopted to account to the centre on the use o f funds by each level. The disbursement o f funds will be linked to the project's planning and reporting. Activities within districts will bepaid for fromthe Provincial level where e-SISTAFE i s connected, with the exception o f those districts that are linked to e-SISTAFE, that will be allowed to process their own payments within the system. Financial M The DAF already has experience o f reporting to donors Reporting on SWAP-type operations. There are regular reporting requirements to facilitate timely preparation o f the required reports. The format o f reporting statements will be specified in a Manual o f Project Financial Management Procedures to be produced by effectiveness this is a new manual replacing the old Manual that has basically become obsolete with the introduction o f e-SISTAFE. Overall policy guidelines will ensure that project management reviews financial information and implement relevant recommendations. Auditing S The Tribunal Administrativo (TA) will have overall responsibility the external audit o f the project, including in the interim, the appointment o f qualified private sector auditors for the project. International auditing standards are followed inMozambique. Audit reports are generally timely, and management letters address issues that help management ensure the continuing adequacy o f the financial management arrangements. Overall ControlRisk , I S OverallRiskRating: H H-High S - Substantial M-Modest L-Low 216. The risk rating for the project in the area o f financial management is high. This reflects the general weakness of PFM systems in the country, the complexity of the operation, and specific human resource capacity issues at the provincial level at which many o f the project activities will be carried out. Inmitigation however, e-SISTAFE has now been rolled out to the provinces, hence with more sustained training on the use o f this IFMIS, these historical 59  weaknesses associated with low staff capacity and manual processing o f payments and reports will be alleviated. The project will still need to maintain sufficient FM capacity at the central level in the MOH in order to ensure that internal control procedures are complied with at all levels. 217. To firther reduce the identified risks and to ensure effective implementation o f the project, the following additional action i s envisaged: Issue RemedialActions Recommended,andWho by DueDate Manual o f Project Manual to be prepared before effectiveness specifying Effectiveness Financial Management procedures for withdrawal o f credit funds from IDA, Procedures, as part o f summary reports, and frequency o f production; DAF. project Operational 218. Strengths. The strengths o f the operation are as follows: (i) The MOH's experience inworking with the Bank; and (ii) Operation o f e-SISTAFE up to the affected Provincial levels 219. Weaknesses. The principal weakness o f the operation is a human capacity weakness as FMinthe public sector at all levels is acceptedas weak. 220. Flow Mechanisms and Disbursement of funds. In order to ensure timely provision of funds to finance project activities, the MOHwill establish and maintaina DesignatedAccount in U S dollars, at the Bank o f Mozambique, under terms and conditions acceptable to IDA, for each of the IDA credit, CIDA trust find, SDC trust fund, andRussian Trust Fund, makingit a total o f four designated accounts. The trust funds will be administered by the Bank. The project will draw down from the DAs, on a predetermined basis, funding requirements per the operational plan. Funds drawn from the DA s will be deposited into the CUT - DNT coding account, ring fenced, and thereafter made available to the spending units. Disbursement to implementing provinceswill be inaccordance with government fundingprocedures. The project will use direct budget execution, and service providers will be paid direct by the provinces. N o funds will be transferred beyond the Provinces to districts with the exception o f those districts that are already connected to e-SISTAFE. In addition, where districts come online during implementation, onward transfer o f project funds to that level will be allowed in line with approved government procedures. 221. Disbursement Arrangements. Disbursement o f the IDA funds will be done based on quarterly interim unaudited financial reports (IFRs). An advance will be made to each o f the Designated Accounts at the inception o f the project. The advance will be meant to cover financing requirements from that funding provider for a period o f 6 months as indicated in the initial six-month cash flow forecast. After every subsequent quarter, the project will submit IFRs which include a cash flow forecast for the following 6 month period. The cash requested at the reporting date will be the amount required for the forecast period as shown inthe approved IFRs less the balance in the Designated Accounts at the end of the quarter. Any amount transferred 60  from the Designated Accounts to the Transit Account/CUT and not yet reported in the IFR as used for eligible expenditure will also need to be deducted from the forecast. While some components will be financed exclusively by one financier, other categories will be financed by more than one financier. However, actual payments will be made from one CUT account, containing the combined sum of transfers from all the DA s. The IDA and Trust Account funds inthe CUTproject account will beco-mingled for the operation, suchthat any unusedbalance in the CUT at each point contains funds from all the project's sources. Figure 7: Illustration of Project Funds Flowingthrough the CUT 1 I DAs (USD) %KIF(DNT) Transit Account (Mtn) CUT (Mtn) (MOH PmjC;ctAce) 222. Financial Managementfor Local Organs of the State. For the purposes o f the HSDP, the provincial administration, the Provincial Directorates o f Health (DPS) are included within the structure of the MOH. Within the DPS i s located the Provincial Departments o f Administration and Finance. The latter has functional autonomy and is comprised o f Provincial Finance and Procurement Branches, and Provincial Sections for Administration and Maintenance. They are now linkedto e-SISTAFE to enhance treasury control. 61  223. Internal controZ and accounting procedures. The project's internal controls will include arrangements to provide reasonable assurancethat: (i) operations are being conducted effectively and efficiently and in accordance with relevant financing agreements with the respective financiers; (ii)financial and operational reporting are reliable; (iii)applicable laws and regulations are being complied with; and (iv) assets andrecords are safeguarded. 224. The accounting systems, policies and procedures employed by the project in accounting for and managing project funds will be documented in the MOH's Manual o f Financial Management Procedures which will comply with the Borrower's financial reporting guidelines and regulations. This manual replaces the 2003 Manual which i s now redundant. The new manual will clarify procedures for accessing funds from the DAs, the reports to beproduced, and frequency thereof. 225. In addition to the Manual, provinces will obtain guidance on internal and control procedures from: (i) directives issued by the MOF for the execution o f annual budget; and (ii) guidelines accompanying SISTAFE. 226. Accounting system. Accounting will be e-SISTAFE based and used to track, record, analyze and summarize the project's financial transactions relating to the activities for which they are responsible. The project's accounts will be prepared on a cash basis inaccordance with Borrower accounting standards which are said to equate to International Accounting Standards. 227. E-SISTAFE allows for the proper recording o f project financial transactions, including the allocation o f expenditures in accordance with the respective components, disbursement categories, and sources o f funds. Controls over the preparation and approval o f transactions exist to ensure that all transactions are correctly made, recorded and reportedupon. 228. The system integrates budgeting, operating and accounting systems to facilitate monitoring and reporting. It also enables the automatic generation o f interim, annual and other financial reports. Accounting staff will be further trained (by UTRAFEin accordance with their own training plan for all civil servants using e-SISTAFE) to improve their management o f the system and controls institutedto safeguard the confidentiality, integrity, and availability o f the data. The system helps to reduce the risk o f human errors in record keeping, and enhances efficiency inpreparing reports. 229. A proper filing system that allows authorized users easy access will be set up to ensure that all accounting and supporting documents are retained on a permanent basis and properly maintained. 230. Provincial administrations will also maintain the accounting records and documents for transactions financed using project funds. These will be kept at their premises and made available upon request during the regular reviews carried out by the MOH or during supervision and audit missions. 231. Reporting Arrangements. The Project will use e-SISTAFE to produce sufficiently detailed information to manage the project, and provide stakeholders, including government and 62  the Bank with regular consolidated Interim Unaudited Financial Reports (IFRs), to be produced quarterly and submitted within 45 days o f the end o f the quarter, and annual consolidated financial statements. The consolidations are a summation o f individual provincial reports. The Manual on Financial Management Procedures documents the responsibilities at each level o f implementation for the production o f reports and financial statements. DAF will be responsible for consolidated reports submitted byprovincial administrations. 232. Formats and responsibilities for preparing periodic financial reports to be generated from the financial management system will be included in the Manual on Financial Management Procedures. The financial reports will be designed to provide quality and timely information to project management, implementing agencies, and various stakeholders on project performance. These quarterly reports include Designated Account Activity Statements, Summary Statements o f DA expenditures subject to Prior Review, as well as DA expenditure not subject to prior Review; Sources and Uses o f funds; Detailed Use o f Funds Schedule by Project Component/ Disbursement Categories, by province if required, comparison with budgets; and short-term forecasts o f expenditure. A narrative summary o f implementation highlights for the quarter helps the readers understand the financial statements better. 233. Funds showing funds from IDA and the co-financing partners individually, and consolidated, a Summary o f expenditures analyzed by both Component and Category, and the supporting Notes inrespect o f significant accounting policies and accounting standards adopted by management. Designated Account Activityfor theyear showing deposits and replenishments received, payments substantiated by withdrawal applications, interest that may be earned on the account and the balance at the end o f the fiscal year; anImplementation Report, which would be a narrative summary o f the implementation progress for the project; and a Summary of Withdrawals using IFRs, listing individual withdrawal applications by reference number, date andamount. 234. Internal Auditing. The MOH internal audit unit is made up o f a professional auditor in the form o f TA from DANIDA, with support from three officers in the ministry with no real background in audit. They are training on the job, but otherwise they variously hold degrees in management, and in law. The intention i s to eventually have 2 auditors per province, and to develop the unit into a modem audit unit going beyond the current compliance work they do. The limited numbers obviously reduce the coverage that the unit i s able to make, and consequently its effectiveness. While government is committed to growing the unit and its influence, no firm timeline has been agreed. 235. MOFplays a central role inthe management o fpublic finances andinthe coordination o f the implementation o f e-SISTAFE. Its organizational structure includes the Inspectorate General o f Finance. For operational purposes, the IGF is split into three geographical teams based in Maputo, Nampula, and Beira, with each team covering provinces in the southern, northern, and central regions respectively. 236. External Auditing. The Tribunal Administrativo (TA) i s constitutionally mandated to audit all government projects. The audit may be subcontracted to a firm o f private auditors, with participation by TA staff in the actual audit (private audit firms would be unable to access e- SISTAFE without this assistance). Where the audit i s subcontracted, the selected external 63  auditor will be acceptable to IDA and will conduct a year-end audit according to international Standards on Auditing, based on terms o f reference acceptable to IDA. At this time, audit reports are not published inMozambique, nor are they reviewedby Parliament. 237. The audited financial statements together with the auditor's report and management letter (incorporating management's comments) covering identified internal control and accounting system weaknesses will be submitted to IDA within six months o f the end o f each financial year. A single audit opinion will be issued and will cover all project income and expenditures, Designated Accounts and quarterly reports. Any firm o f auditors subcontracted to carry out the audit will meet IDA'Srequirements in terms o f independence, qualifications and experience. A revisedFMManual i s currently beingprepared and expected to be ready by March 31,2009. 238. Financial Covenants. A financial management system, including records and accounts will be maintained by the MOH. Financial Statements will be prepared ina format acceptable to IDA, and will be adequate to reflect resources and expenditures o f the project, in accordance with sound accounting practices. 239. Supervision Plan. Supervision will be risk based, and will include: review o f quarterly IFRs; review o f annual audited financial statements and management letter as well as timely follow up o f issues arising; andparticipation inproject supervision missions as appropriate. The Bank Financial Management Specialist incharge o fthe HSDP will play a keyrole inmonitoring the timely implementation o f the financial management arrangements. As a substantial risk project, a minimumo ftwo supervision missions will be fielded per year. 240. Conclusion. The overall conclusion of the assessment is that the overall risk i s substantial and that the Bank has asked the MOH to take remedial actions including: (i) the updating o f the Manual o f Financial Procedures; (ii) the format o f financial reports; and (iii) TORs o f audits. The Manual o f Financial procedures i s part o f the project Operational Manual, which i s a condition o f effectiveness. The format o f financial reports and the TORs for audits have already beenagreed upon. 241. The Project will have joint co-financing from the Canadian International Development Agency (CIDA); Swiss Development Cooperation (SDC); and Russia. The relevant Administration Agreements and corresponding Trust Fund contracts with both CIDA and SDC have not been concluded yet and the team will finalize them by no later than the effectiveness date for the Project. 64  - Category IDA CIDA SDC Russia T o of Expenditures to beFinanced 3,600,000 IDA:53% (1) Goods, works consultants' services, CIDA:38% -k andtraining for Component 1of the SDC:9% Proji c t (2) Goods, works 5,600,000 7,900,000 IDA:41% consultants' services,---I- andtraining, for Russia:59% Component2 ofthe Project (3) Consultants' 500,000 IDA:100% services for Component 3 of the Project (4) Goods, consultants' services, andtraining for Component4 of the Proji c t (5) Goods, 1,100,000 cinsultants, services, andtraining for Component4 of the Project (6) Operatingcosts 14,000,000 IDA: 100% under Component4 of the Proiect (7) Refundof 1,165,000 100% PreparationAdvance TOTAL AMOUNT 44,600,000 15,600,000 4,300,000 7,900,000 65  Annex 8: Procurement Arrangements Mozambique: Health Service Delivery Project 242. Procurement Reform. During 2006, the procurement system in Mozambique has been under reform, based on the recommendations o f the 2002 Country Procurement Assessment Report that was endorsed by the government and development partners. The government enacted the Procurement Law (Regulamento) replacing previous procurement legislation. This law covers procurement for government agencies under the central government as well as local authorities. It became effective on June 13, 2006. Inapplication of the provisions of the "Regulamento", the government issued decrees to implement the institutional framework for the setting of: (i) the Unidade Funcional de SupervisZo das Aquisiqbes, Functional Supervision Unit for Procurement (UFSA), the procurement monitoring body, under the MOF; (ii) nomination the o f a "Competent Authority", i.e. a person in each Contracting Entityresponsible to oversee the procurement process; and (iii) the Unidades Gestoras Executoras das Aquisiqbes (UGEAs), units incharge of managing the whole procurement process, in support of and under the Competent Authority. 243. On September 8, 2006, the government issued by decrees in the Gazette a number o f standard biddingdocuments (SBDs) for works (large and small size), goods andnon- consulting services (normal and small size), drugs and medical supplies and consulting services. These SBDs are generally consistent with Bank guidelines. As regards national preference the Bank will ensure that (i) domestic preference applies only for the international competitive bidding (ICB) procedure, and that under national competitive bidding (NCB) domestic preference shall not apply, even when foreigners do show interest; (ii)domestic preference for locally manufactured goods shall be applied only for ICB without limitation to the nationality o f the goods' manufacturer; and (iii)when it i s an ICB the bidding documents as well as the advertisement shall also be made available inthe English language. 244. Procurement Implementation Arrangements. The DNPSCD will be responsible for the project management in its technical aspects by providing overall technical guidance and support to the implementing agencies within the MOH. The National Director will delegate the general coordination to the DeputyDirector o f DNPSCD for Community Health, who will be the Project Coordinator. A Project Manager will support the Project Coordinator by (i) incollaborationwith DAF, ensuring a timely transfer o f finds; (ii) with DAF, the Department o f Investment liaising (DI), and CMAM in all matters related to procurement o f drugs and medical supplies; (iii) supervising the work o f the Operations Assistant who should provide h i d e r with regular feedback; and (iv) helping solve problems that may need the attention o f the central level o f the MOH. 245. Provincial Level. An Operations Assistant would be based ineach o f the three Northern provinces. He or she would assist the Chief Medical Officers o f the three provinces in: (i)the planningo f activities; (ii) coordination with DRH and training institutes; (iii) procurement; local (iv) development o f outreach teams and community health workers; (v) monitoring and supervision; and (vi) would be the link between the central MOHand the provinces. 66  246. Central Level. Pursuant to the procurement law provisions, the MOH has nominated the Permanent Secretary as the "Competent Authority" for procurement oversight inthe MOH. The UGEA has been created in the Logistic Department under DAF. The DAF's Financial Department will generally be responsible for the financial management o f the HSDP, i.e. the budgeting o f activities at provincial and district levels, disbursement o f funds, accounting and transfer of funds to provinces and districts. The UGEA will have the responsibility to oversee the procurement at provincial level, carry out due diligence at the time o f the transfer o f funds, during supervision missions, and will provide assistance to the Operations Assistant when necessary. The UGEA will be assistedbythe Department o f Investments (DI) andCMAM. UGEA Overall Responsibility for Procurement Department o f Investment C M A M (DI) (specialized in (specialized ininfrastructure drugs andmedical andequipment) supplies) 247. Specialized Procurement. Given the experience accumulated by C M A M and the DI, the MOH wants them to continue being involved in the procurement o f large contracts for works, goods and drugs and medical supplies. Therefore, planning, procurement, and distribution of drugs will be undertaken by CMAM, which is under the DPS authority. Procurement for other goods, civil works, consultants, and training will be undertaken: (i) for larger contracts by the DI, a technical unit under DPC, responsible, in the MOH for procurement o f investments and other activities; and(ii) for smaller contracts by the provinces themselves. 248. An Operational Manual will be prepared for the project. The Operational Manual will have a procurement annex aimed at detailing the procurement procedures. It will include a provision mandating the preparation o f a Procurement Plan in line with the Annual Work Plan, and the use o f a set o f SBDs for civil works, goods and consulting services that have been produced and published in the framework o f the government's new procurement regulation. A single and unified set of procedures will be agreed by all the partners through a memorandum o f understanding. The format o f the procurement plan, SBDs, and the procurement thresholds will be reviewed and jointly agreed by the MOH, the Bank, and other partners. The Operational Manual will be inline with the government's own procedures. 249. The procurement o f I C B contracts for civil works and goods will be carried out in accordance with the Guidelines: Procurement under IBRD Loans and IDA Credits (May 2004, 67  revised October 2006). Bank's Standard Bidding Documents and Standard Bid Evaluation Forms for works and goods under ICB will be used. Since the government has prepared SBDs for the procurement o f works and goods under National Competitive Bidding (NCB), the procurement o f works and goods under N C B will be carried out using these documents. The Bank's Standard Bid Evaluation forms will be used for NCB contracts with necessary modifications. 250. The selection of consultants, for large contracts i.e. estimated at US$200,000 equivalent or more, will be carried out in accordance with the Guidelines: Selection and Employment of Consultants by the World Bank Borrowers (May 2004, revised October 2006). The Bank's StandardRequest for Proposals andevaluationforms willbeusedwhere applicable. 251. For NCB, the government has issued SBDs through several decrees. These are consistent with the Bank Guidelines. They are listed in Table 1 with comments on the issues to be addressed for full compliance with Bank's Guidelines. These documents were reviewed to ensure that default clauses are used. Table 17: List of Standard BiddingDocumentsissuedby Government Decree StandardBiddingDocumentsfor 145/2006 Works (Obras Publicas). This document can be used either for NCB or ICB depending on what is said inthe Data Sheet. 146/2006 SmallWorks (Pequenas Obras). This document is for Shopping for smallworks. Meant more for the district level where a limited number of contractors are invited to submit price quotations for well-defined works. Only price is a factor for contract award. 147/2006 Goods and Non-Consultant Services (Bens e Serviqos Gerais). This documeni can be used either for NCB or ICB depending on what i s provided in the Data Sheet. It is important to note that the default clause is that "Preference" is nor applicable. 148/2006 Goods Small size contracts (Bens e Serviqos Gerais de Pequena Dimensao). This document is for shopping for goods. It is meant for shopping in general and for the district level where a limited number of suppliers are invited to submit price quotations for well-specified goods. Only price i s a factor for award of contract, after compliance. 149/2006 Drugs and Medical Supplies (Medicamentos e Artigos Medicos). This document that is very much in line with the Bank's SBDs for drugs and medical supplies, canbe usedeither for NCB (which i s very unlikely giventhat there is no local production of drugs) or ICB depending on what i s provided in the Data Sheet-It is important to note that the default clause is that "Preference" is not applicable. 151/2006 Consulting Services (Serviqos de Consultoria). This document is very much in line with the Bank'sRFP. 68  252. National Competitive Bidding, subject to the following additional provisions: Elinibility. No bidder, foreign or domestic, shall be precluded from participating in the biddingprocess for reasons unrelated to their eligibility or capability to perform the contract. Examples o f reasons that may not be used to preclude a bidder from so participating include the following: proof that the bidder is not under bankruptcy proceedings in the territory o f the Borrower; appointment by the bidder o f a local representative in the territory o f the Borrower; prior registration by the bidder in the territory o f the Borrower; or license or agreement allowing the bidder to operate in the territory o fBorrower. Qualification. Bidders shall be post-qualified unless the Procurement Plan explicitly provides otherwise. Irrespective o f whether post qualification or prequalification i s used, both national and foreign bidders who meet the qualification requirements stated inthe biddingdocuments shall be allowed to participate inthe biddingprocess. Bidding Documents. Bidders shall use standard bidding documents for the procurement o f goods, works and services, consistent with the provisions o f the Procurement Guidelines. Preferences. No preference for domestically manufactured goods or for domestic contractors shall be allowed. Bid evaluation. The qualification criteria shall be clearly specified in the bidding documents, and all criteria so specified, and only such criteria so specified shall be used to determine whether a bidder is qualified; the evaluation o f the bidder's qualifications should be conducted separately from the technical and commercial evaluation o f the bid. Evaluation of bids shall be made in strict adherence to the criteria set forth in the bidding documents; criteria other than price should be quantified in monetary terms. A contract shall be awarded to the qualified bidder offering the lowest technically responsive evaluated bid. Bidders shall not be eliminated from detailed evaluation on the basis o f minor, non-substantial deviations. Rejection o f All Bids and Re-bidding. In cases where the Borrower rejects all bids and solicits new bids for a contract, it shall, as soon as possible, notify the Association o f such decision. Complaints by Bidders. Complaints by bidders shall be handled by the Borrower, who shall inform the Association o f any such complaint. Rinht to Inspect/Audit. Each bidding document and contract financed out o f the proceeds o f the Financing shall provide that the bidder, supplier or contractor, and any subcontractor, shall permit the Association, at its request, to inspect their accounts and records relating to the bid submission and performance o f the contract, and to have these accounts and records audited by auditors appointed by the Association. An act by the bidder, supplier, contractor or subcontractor intended to 69  materially impede the Association's exercise o f its inspection and audit right constitutes an Obstructive Practice. 253. Advertising. A General Procurement Notice (GPN) i s mandatory and will be publishedin the United Nations Development Business (UNDB), in the UFSA website, and in a national newspaper o f wide circulation upon Board approval. The GPN will list the project components and goods, works and consulting services for which specific contracts will be advertised. The Borrower will keep a roster o f the responses received from potential bidders. Specific Procurement Notices (SPN) for goods and works to be procured under I C B and N C B and for consultant services will be publishedina national newspaper o f wide circulation and may also be advertised inthe UNDB and dgMarket inorder to get the broadest interest possible from eligible bidders. The date o f the SPN should coincide with the date that the bidding documents are available for purchase by interested bidders. Large consulting services will be advertised on the "on-line version" o f the UNDB and in an international or technical newspaper, in order to seek expressions o f interest (EOI) prior to the preparation o f the shortlist. A copy o f this advertisement will be sent to those firms which responded to the expression o f interest for consulting contracts listed in the GPN. Requests for EO1for other consulting services will be advertised ina national newspaper o f wide circulation. At least two weeks should be allowed for the submission o f EOIs. 254. Procurement capacity. A procurement capacity assessment was carried out to assess the capacity o f the entities that will be responsible for implementing procurement under this project. Procurement will be handled, as explained earlier, by the DAFAJGEA, CMAM, with support from Medicamentos de Moqambique (MEDIMOC) as the procurement agent), andthe DI. 255. The UGEA o f the MOH is a unit in the Department o f Logistics, under DAF. It comprises five staff, including the head o f the unit. A consultant i s providing technical support to build capacity -- essentially training in the government new procurement law (Decree 54/2005). The assessment findings are that the UGEA is not likely to filfill its duties in accordance with the procurement law, because much o f the procurement i s carried out o f its purview by the DI for large contracts for civil works, goods and consultancy services and by C M A M for drugs and medical supplies. The issue i s not so much to require that all procurement be carried out by the UGEA, but that the unit be kept informed by the other MOHprocurement agencies for it to be able to have consolidated information on how and what procurement has been carried out and report that to the "Competent Authority" in the MOH, as well as to the UFSA. 256. In terms of its internal organization and capacity, the UGEA should have its status increased so as to have deputy director at its head. The capacity and experience o f the staff i s weak. UGEA's staff needs more training and incentives to stay in the unit once trained. The procurement filing is not done properly as it is not based on procurement processingby contract, and financial information on contract execution are inexistent inUGEA filing. All these make it difficult to find accurate and rapid information which pose a problem o f accountability and auditing. It is recommended that a consultant review the way procurement i s handled by the various entities and propose solutions for better organization, efficiency and accountability o f the system. 70  257. The Table below shows the risks and weaknesses identified during the assessment and the measures that should be taken to ensure that the UGEA could to carry out its part o f the procurement under the HSDP inan adequate manner. Table 18: Risksa dWeaknesses-Assessment an Measures Risk Risk MltigationMeasure Procurement filing not adequate, Establish an acceptable MOWDAFAJGEA does not allow easy control and procurement filing andrecord - To be includedinthe retrieval o f comprehensive keepingsystem. procurement manualby information. effectiveness. Procurement procedures are not Produce an acceptable MOWDAFAJGEA laid out indetail ina Manual for Procurement ProceduresManual - By effectiveness. easy reference. as part of the HSDP's Operational Manual. UGEAnot involved inall stages A consultant to carry out a study MOWDAFLJGEA o fprocurement carried out under on the way procurement i s - This i plannedto be s M O Hbudget. handled by various and separate carried out by the end of entities to propose an organization the first year of that will enable to have a implementation. streamlined, consolidated, efficient and accountable system that can be monitored. Procurement staff inUGEA has Additional training to UGEA staff MOWDAFLJGEA weak capacity. needs to be carried out at earnest. - recruitment of consultant or firmfor capacity buildingand mentoringPresenceo f a skilled person i s necessary for mentoring and hands-on experience. -carryingoutoftraining i s programmedfor the first year o f implementation. 258. The DIi s under DPC. Since its creation at least ten years ago, it has been acting as the executing agency and project coordination unit for all projects financed from external sources. It has well-equipped offices across from the MOH main building in Maputo. It is headed by a Director and has two departments, one technical and one administrative. The technical department has several architects and engineers for the management o f civil works contracts. The procurement unit is part o f the administrative department, which also include the financial management unit. Several staff are under contract which are about to terminate. This will put the DIat risk o fnot being able to carry out the part ofthe procurementthat will be delegated to it. 71  Table 19: RisksandWeaknesses-Procurement available 259. C M A M i s the entity in charge, for the planning and provision to the national health system o f drugs and medical supplies. It is assisted by MEDIMOC acting as the procurement agent, in charge o f preparing pre-qualification and bidding documents, receiving and evaluating bids. C M A M provides the technical specifications and clarifications during selection process, the quantities o f goods and drugs based on their stock monitoring system and consolidation of requests from health facilities. It also monitors and supervises the procurement processed by MEDIMOC and takes the final decision with regardto pre-qualification (carried incollaboration with anindependent body such as WHO), and awards proposals. 260. A number o f new staff have been recruited in CMAM, but with little procurement knowledge. At the present time (March 2006), there is a experienced contractual staff providing procurement advisory services to the new staff who need additional training. There is another risk that needs to be mitigated in case MEDIMOC would no longer be involved inprocurement and its tasks being taken over by CMAM. Table20: R sks Procurementstaff of CMA I - Risk Risk Mitigation Measure Agency Responsible and Deadline Procurement staff o f C M A M i s not CMAM staffto be trained inall MOWCMAM experienced inplanning and aspects o f drugs and medical - Training plan and procurement o f drugs and medical supplies procurement by a training o f staffby the end supplies consultant and with involvement o f o f the first year o f the existing adviser implementation CMAM does not have the capacity to Should MEDIMOC no longer be MOWCMAM assume all the tasks handed over by contracted, the MOH should have a MEDIMOC capacity buildingplan and strengthening o f CMAM, including recruitment o f qualified staff and training o f the existing ones 261. Overall Procurement Risk Assessment. The overall procurement risk assessment for the project at both the central and provincial levels is rated high. The risk and mitigation measures are detailed for each procuring agency inthe tables following the assessment o f each o f them. 262. Procurement Plan. The Borrower has developed a procurement plan for project implementation, which provides the basis for the procurement and selection methods. The plan has been discussed in detail during appraisal and finalised. This plan will form the basis o f procurement for the first 18 months. The plan will be available at MOH offices and also be available inthe Project's database and inthe Bank's external website. The procurement planwill 72  be updated in agreement with the Bank annually or as required to reflect the actual project implementationneeds and improvements ininstitutional capacity. ProcurementMethods 263. Civil Works. The project will support the rehabilitation o f some damaged primaryhealth care facilities inthe selected provinces. The Health Sector Investment Plan (PIS), financed four years ago under the Health Sector Recovery Project (closed in2003), will be updatedbefore civil works packages are firmed up. Only small rehabilitation works are contemplated under the HSDP, thus no ICB packages are envisaged. Individual civil works costing more than US$ 75,000 equivalent but less thanUS$ 1,000,000 equivalent will be procured through NCB. Civil works costing less that US$ 75,000 equivalent per contract will be procured on the basis o f simplified biddingdocuments by soliciting quotations from not less than three qualified domestic contractors. The invitation shall include a detailed description o f the works, including basic specifications, the required completion date, a basic form o f agreement acceptable to the Bank, and relevant drawings, where applicable. Inall cases the award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to complete the contract successfully. 264. Goods. Goods to be procured include pharmaceuticals, medical equipment and supplies, including bed nets, solar kits, radio equipment, motor vehicles, motorcycles, office equipment andfurniture. For goods estimated to cost US$200,000 equivalent andabove per contract will be procured through ICB. Individual contracts costing more than US$ 50,000 equivalent and less than US$200,000 equivalent will be procured through NCB procedures. Pharmaceuticals, medical equipment and supplies with an estimated value o f less than US$50,000 equivalent may be procured from UNICEF, WHO, and other specialized agencies o f the United Nations. Other goods with an estimated value o f less than US$50,000 equivalent may be procured through shopping, based on comparing price quotations from at least three eligible suppliers. Requests for such quotations will be in writing, and will include time and place for delivery o f the quotations, a clear description, specification and quantity o f the goods, as well as requirements for delivery time, place for delivery o f goods, and installation requirements where needed. Quotations will be opened and evaluated at the same time. 265. Consulting services and training. Consulting services required for implementation o f the project components, including studies, technical assistance, and the supervision o f civil works, which require the recruitment o f consulting firms or individual consultants, will be procured in accordance with the Bank's Guidelines for the Selection and Employment o f Consultants by World Bank Borrowers. All consulting services contracts above US$lOO,OOO equivalent for firms will be awarded on the basis o f Quality and Cost-Based Selection (QCBS) method in accordance with Part I1o f the Guidelines. Shortlists for contracts costing less than US$200,000 equivalent may consist o f national firms only in accordance with provision o f paragraph 2.7 o f the Guidelines provided that at least three qualified firms are available at competitive costs. However, ifforeign firms have expressed interest, they will not be excluded from consideration. 266. Other consulting services contracts below the threshold o f US$lOO,OOO equivalent for firms may be awarded on the basis o f Consultants Qualifications (CQ) or Least-Cost Selection (LCS) in accordance with Guidelines Part 111. Individual consultants will be selected in 73  accordance with Guidelines Part V. The selection o f UN agencies and NGOs will be in accordance with paragraphs 3.13 and 3.14 o f the Guidelines and individual contract will be limited to US$50,000 equivalent. 267. Training Programs including workshops and study tours are geared toward building capacity, information sessions and improving management skills. Training programs will be part o fthe HSDP's annual work plans andwill be included inannual procurement plans. 268. Operating Costs. Operating costs shall consist o f office supplies; operation and maintenance costs for vehicles and equipment; travel expenses and subsistence expenditures; costs related to the carrying out o f training and workshops, i.e. hiring o f venues and related expenses, stationery, etc; among others. The operating costs will be procured using the MOH's administrative procedures which were reviewed and found acceptable to the Bank. 269. Prior Review Thresholds. All civil works contracts estimated to cost US$350,000 equivalent or more will be subject to Bank review in accordance with the procedures in Appendix Io f the Procurement Guidelines. All goods contracts estimated to cost US$200,000 equivalent or more will be subject to Bank review in accordance with the procedures in Appendix Io f the Procurement Guidelines. 270. Consultancy contracts with firms estimated to cost US$200,000 equivalent or more, and consultancy contracts with individuals estimated to cost US$50,000 equivalent or more will be subject to Bank review in accordance with the procedures in Appendix Io f the Consultant Guidelines. 271. The Bank will review, on behalf o f the partners, the Procurement Plan as well as the set o f SBDs to be used for civil works, goods and consulting services. The format o f procurement plan, standardbiddingdocuments, the procurement methods and the thresholds for prior review will be reviewed andjointly agreedby the MOH, the Bank, and other partners. 272. Contracts which are not subject to prior review will be selectively reviewed by the Bank duringproject implementation (post review) and will be governed by the procedures set forth in paragraph 4 o f Appendix Ito the relevant Guidelines. All documentation used for the procedures o f contracting, recruitment o f consulting services, evaluation and award shall be retained for subsequent examination by auditors andBank supervisionmissions. 273. The annual independent procurement audit report will: (i) verify that the procurement and contracting procedures and processes followed for the projects were in accordance with the procurement manual; (ii)verify technical compliance, physical completion and price competitiveness o f each contract inthe selected representative sample; (iii)review and comment on contract administration and management issues as dealt with by executing agencies; (iv) review the capacity o f executing agencies inhandlingprocurement efficiently; and (v) identify improvements needed in the procurement process in the light o f any identified deficiencies. 274. Frequency of procurement supervision missions. Once every six months, including special procurement supervision for post-review and audits. 74  Annex 9: Economic and FinancialAnalysis MOZAMBIQUE: Health ServiceDelivery Project 275. This annex provides the economic analysis o f the HSDP. It reviews the project rationale, the justification for Bank and government involvement, the cost-effectiveness o f project approach and interventions, and the sustainability aspects of project components and thrusts. The analysis confirms the overall soundness o f the project. The country as a whole has dramatically improved some health indicators, but these continue to be woeful inthe poorest and remotest provinces. Thus, a decade after the civil war ended, there continues to be justification for government involvement in the sector, and for Bank support not only for financing, but for technical support and innovation. The economic analysis demonstrates the cost-effectiveness of the chosen project approach, as well as the specific health interventions to be supported by the project, underpinned as they were by a thorough economic modeling using the marginal budgeting for bottlenecks (MBB) framework (World Bank, 2007). The analysis also highlights the potential benefits to be generated by the project, and its focus on the most disadvantaged areas. Finally, the analysis documents some o f the continuing challenges inhealth financing that hamper service delivery, and which the project and other Bank non-health instruments and programs should deal with. Review of Project Rationale 276. Health status indicators have improved, but are still lower than what is deemed acceptable under the MDGs. Under-five mortality rate has declined, but other indicators are still considered lower than what would be deemed acceptable under the MDGs (see Table 1). For instance, while the MDG target for under-five mortality rate is likely to be met by 2015, the maternal mortality target i s not likely to be achieved. Year Under-5 Mortality MaternalMortality Rate Ratio 1990 240 1,440 1995 221 980 2000 208 1,000 2003 153 408 2015 (target) 80 365 277. The risk factors for mortality and morbidity, especially among women and children, remain unacceptably large, and health service coverage leaves much to be desired. Table 2 shows the continuing high rates o f malnutrition among Mozambican children, the low access to water and sanitation especially inrural areas, and the low usage o f condoms as sexual protection among the young. Table 2 also shows the low rate o f institutional births, contraceptive prevalence, TB detection, and sick children taken to a health facility or given oral rehydration treatment (ORT). 75  Table 22: Indicators of Disease Risk Factors and Health Service Coverage in Mozambiaue. 2000s %o f children under-5 stuntedfor age, 2003 41.O % o fchildren under-5 underweight for age, 2003 23.7 % o fnewborns with low birthweight, 2003 14.0 % o furbanhouseholds with accessto improvedwater source, 2002 76.0 % o frural households with access to imtlrovedwater sources. 2002 24.0 Source: WHO (2006). 278. Severe inequity in health persists, leaving thepoor, lowly-educated, and rural residents largely disadvantaged. As Table 3 shows, the richest 20 percent o f Mozambican households register an immunization rate of 96.4 percent, compared to only 60.8 percent among the poorest 20 percent o f households. The most highly educated mothers have children almost all o f whom (99.1 percent) were immunized, compared to only 65.6 percent among children o f the least educated mothers. Finally, about 90.8 percent o f urbanhouseholds were immunized, incontrast to only 70.8 percent o frural households. Similar householddifferences inservice coverage (e.g., births attended by skilled health personnel), risk factors (e.g., children stunted for age), and health status (e.g., under-5 mortality rate) are also demonstrated inTable 3. Under5 Children Births M eas1es mortalityrate under 5 years attendedby immunization Indicators (per 1,000 stuntedfor skilled health coverage (%) live births) age (%) personnel (%) 0 Lowest quintile 196.0 49.3 24.8 60.8 0 Highest quintile 108.0 20.0 60.8 96.4 76  Lowest ed. level 200.5 47.7 31.4 65.6 0 Highested. level 85.7 14.5 34.8 99.1 Rural 192.0 45.7 34.1 70.8 Urban 143.2 28.5 80.7 90.8 279. Mozambique needs additional health investmentsfor the county to reach the health MDGs. Inthe mid-2000s, total health expenditure as a share o f GDPwas only 4.7 percent, lower than the figure for Malawi (9.3 percent) or Lesotho (5.2 percent), though comparable to other countries in Eastern and Southern Africa (about 5 percent). Recently, Mozambique has increased its per capita health expenditure and it reached US$20 in 2006, but financing gaps in specific interventions remain large. In the case o f malaria, the government's proposal for the Global Fundindicates a financing gap o fUS$25.7 million in2007, US$60.2 million in2008, and US$53.8 million in 2009. The large inhsion o f global resources towards HTV/AIDS in recent years has closed the financing gap inthat area, but inthe process has left a large unmet financing o f maternal child health services, and the proposedHSDP will help fill the gap. Clearly, there i s a strong justification for Bank resources on financial grounds, but more importantly, because Bank financing i s considered by Government to be flexible. Table 24: HealthCareExpenditureson MozambiqueComparedto OtherIDA Countriesin East andSouthernAfrica, 2003 Countries out-of- as % of private itures Kenya 61.3 82.6 Lesotho 20.3 18.2 Malawi 9.3 25.1 35.2 64.8 42.7 Mozambique 4.7 40.8 61.7 38.3 38.8 ranzania 4.3 I 12 I 12.7 I 44.6 44.6 81.1 Zambia 5.4 21 9.2 51.4 48.6 68.2 iurce: World HI 280. Government involvement is highlyjustifiable, given theproject's focus on thepoorest and remotest provinces, the overwhelming incidence of communicable diseases in theseprovinces, the absence of private providers, and the needfor the government to drive the health reform process and steward the sector, both at the national andprovincial levels. The project will focus on the three remOtest (most northerly, and therefore farthest from the capital, Maputo City) and poorest provinces with the worst health indicators. These are the provinces o f Cab0 Delgado, Nampula, and Niassa. N o significant private sector providers currently operate in these areas, though non-profit NGOs do assist in certain health activities. An analysis o f the burden o f disease shows that the top five cases ineach o f the provinces are overwhelmingly communicable 77  diseases (Table 5), including malaria, diarrhea, dysentery, HIV/AIDS,and TB, which underlies the importance o f public health interventions. Thus, preventive and promotional health interventions (e.g. IEC) as well as vector control (e.g. insecticide spraying for malaria) supported by the project will all have significant externalities. Maternal and child health interventions, though individualized for the most part, are all considered socially meritorious. In addition, all are oriented at currently disadvantaged population groups and, therefore, have clear anti-poverty objectives. These services tend to be under-provided by the private sector operating under market forces, and therefore indicate a clear government involvement in their financing and stewardship. 281. The project encourages contracting out specific service delivery to non-profit providers and community-based organizations, where they are available, and where it can be clearly demonstrated that this is a cost-effective approach under public/private partnership arrangements. Nevertheless, it i s clear that in Mozambique as in other poor countries, the government i s needed to drive the process o f change in service delivery and financing, and to provide leadership and stewardship, both at the national andthe provincial levels. Table 25: Number of Cases of the Five Most Common Diseases in the Three Focus Provinces, 2000s Source: World Bank (2007). Justification for Bank Involvement 282. The project is in line with the PRSP and CPS. This new Bank project's poverty orientation (focusing on the three poorest provinces) i s in line with Mozambique's poverty- eradication strategy as specified in the PARPA and the Bank's CPS. The programmed institution-building activities that will be conducted in Cab0 Delgado, Niassa, and Nampula also support the government's efforts to increasingly decentralize social services. The Bank brings to bear its technical leadership inthis project, which the government andother donors recognize. 283. The Bank combines policy reform, impact evaluation, and large-scale implementation experience that the project can use. The phasing-in o f project support through design, pilot- testing, and scale-up i s also deemed to highlight the Bank's value added inpolicy reform. Inthis process, this project will work closely with the Bank's existing macroeconomic instruments, e.g., the PRSC, (and the decentralization initiative) so that the project's sector reform thrusts get firmer traction. 78  284. Thefollowing projectfeatures should be highlightedfor their cost-effective elements: (a) The "step-wise" project approach o f pilot-testing to gain experience and scaling up based on experiences gained and additional hnds made available, is deemed more cost-effective than an outright national implementation. (b) The focus on a few key interventions that have a significantly large impact on reducing disease burden, rather than outright provision o f a comprehensive package. (c) The conduct o f impact evaluation to demonstrate the cost- effectiveness o f service delivery packages, and to compare ex-ante (assumed) vs. ex-post (actual) costs. (d) The use o f more flexible humanresource policies to hire and retain health workers, including the provision o f a range o f staff incentives that will be evaluated interms o f increased service coverage andproductivity. 285. Project interventions have been shown to be the most cost-effective packages. The project design process relied heavily on the analytic work, "Better Health Spending to Reach the MDGs" which identified and costed out the packages o f supply interventions that could best reduce the burden o f disease inthe country. This modeling exercise presented four options, their respective impact on mortality, and additional cost per capita, as follows: (a) Option 1, strengthen the outreach mechanismto hrther improve population-based preventive services; (b) Option 2, scale-up community-based care; (c) Option 3, improve facility-based care; and (d) Option 4, innovatively deliverprimarycurative care through an outreach strategy. Table 6 shows the illustrative impacts on under-five and maternal mortality reduction and additional cost per capital o f these four options. These are "ex-ante" impact and cost figures, but the intention o f the project i s to validate these duringthe pilot phase, and to use the findings to fine-tune health service delivery duringthe scale-up implementation. The options are not mutually exclusive and can be implemented all together or selectively, based on the country's needs and available financial resources. Table26: Impactson Under-Five andMaternalMortalityReductionandAdditionalCost 4 IIncrease outreach services" I 9% 2% 1.00 ProjectBeneficiaries 286. Theproject deliberatelyfocuses onproviding services in the threepoorest provinces with the worst health indicators. These provinces -Cab0 Delgado, Nampula, and Niassa (all in the north) -and their demographic and health indicators are shown in Table 7. They have a total l6Delivery of curative care through an outreach strategy. 79  population o f 6.2 million (about 32.6 percent of Mozambique's total population), o f which about 3.4 million (some 411,000 households) are poor. Prevalence rate among 15-49 13.2% 7.5% 8.1% 11.1% vears old Total fertility rate 5.5 5.9 6.2, 7.2 Birthsattended by skilled 47.7% 31.4% 38.2% 47.0% healthpersonnel Birthsdelivered inhealth 49.0% 29.6% 36.8% 46.0% institutions Budgetingand FinancingIssuesthat Impact on Service Delivery 287. Project preparation workshops showed that provincial and district health managers continue to be hamstrung by highly centralized rules, norms, andpractices that need to be eased in order to achieve dramatic expansion in service coverage. Among these are: (a) The allocation of resources remain very highly centralized, almost all o f which are provided "top-down'' from the central authorities (MOFMOH) to provinces/districts either as resources earmarked for specific purposes (personnel emoluments) or in-kindresources (drugs and supplies), leaving little 80  discretionary funding that can be used flexibly to address key constraints. The recent government decision to fiscally decentralize US$300,000 for all sectors to each o f the 125 districts i s a response to this problem, but this amount needs to be properly allocated across sectors and activities. (b) Incremental budgeting continues to be the norm, sometimes with little relation to real health needs at the peripheral levels. Moreover, such budgeting tends to perpetuate the facility-based (and therefore urban) focus o f health services. (c) Existing health strategic plans (both for capital investments and human resources) are not directly linked to envisioned service coverage or health outcomes. The weak link in these key factors at the provincial and district levels is clearly demonstrated in the severe under-funding o f community health services, including the neglect o f community health workers, their inadequate supervision, and inadequate commodity support. (d) The existing incentive structure for management and health workers is poor. 288. Theproject seeks to ease some of these budgeting bottlenecks. Some o f these policy and programmatic bottlenecks would take a medium- or long-term horizon to resolve. However, it appears that a number o f provinces and districts are already trying to address some o f these problems with innovative ideas but which, for lack o f resources, clear policy guidance, or evaluation have not been expanded. The project will provide these resources, either through technical assistance (costing o f health needs), experimentation and evaluation (service packages, human resource incentives), and if necessary, policy change at the national level (resource allocation, hiringand firing o f staff). Sustainabilityof ProjectInvestments 289. Firstly, sustainability eforts willfocus on demonstrating thefeasibility of implementing the basicpackage of services cost-effectively in poor provinces. Given the highlevel o f poverty inthe three provinces where the project will be located, the project focuses less on the financial sustainability o f project inputs through direct household contributions or other alternative local financing. Rather, the project will focus on three critical ingredients o f sustainability. First, on the supply side, the project will promote institutional sustainability by showing that the basic package o f services can be delivered cost-effectively in the three provinces. To achieve this, health services inthe three provinces will have to be reconfigured so that they cater increasingly to community and outreach services. A key challenge in this regard and which has significant - budgetary implications - is the provision o f adequate staff training, remuneration, incentives, transport, and supervision support. This ''package o f incentives" is intensely being debated. For empirical evidence, the project plans to mount a "case/control" design in the pilot phase, where some areas ("cases") will provide training and/or incentives, while others will not ("controls"). The findings will informpolicy decisions onthis issue when the project goes to scale-up. 290. Secondly, sustainability efforts will also be directed to achieving policy support at the national levelfor the demonstrated improvements in health coverage and outcomes. This policy reform project is non-threatening as it i s based on an agreed-upon agenda, and i s supported by evidence, both through the modeling exercise that was conducted as part o f project preparation, and also through the impact evaluation work that will be done as the project proceeds. 291. Thirdly, the project will support demand-side household behavior change interventions. On the demand side, the project will promote positive change in household and community behavior in order to sustain their interest on, and increase their demand of, the health services in 81  the project. Towards this end, the acquisition of health knowledge will be promoted through IEC activities. Community involvement indecision-making will also be enhanced. Finally, the social assessment documents cultural and social impedimentsto household demand for health services, andto propose ways ofeasing these obstacles. 82  Annex 10: SafeguardPolicyIssues MOZAMBIQUE: HealthServiceDeliveryProject 292. The HSDP i s classified as Category B (a partial environmental analysis i s considered appropriate to address specific environmental issues) for two reasons: (i) the project would involve vector control under its malaria control component that needs a vector management plan (VMP), and (ii) project involves the provision of medical supplies, which triggers concerns the about healthcare waste management. The project will not finance any pesticides or spraying equipments as all indoor residual spraying activities would be covered under the President Malaria Initiative, executed by the United States Agency for International Development (USAID). 293. Environmental Assessmentfor Indoor Residual Spraying (IRS) and Vector Management Plan. An international development group (RTI International) was selected to elaborate an environmental assessment for all indoor residual spraying operations. The EA documents include a programmatic environmental assessment for malaria integrated vector management projects, an assessment for IRS in Mozambique and a safe use action plan for the use o f dichloro-diphenyl-trichloroethane (DDT), bendiocarb and lambda-cyhalothrin. The environmental assessment for indoor residual spraying was prepared to address the identified issues surrounding IRS operations. The draft EANMP was reviewed by the Bank and was posted on the Ministryo f Health (MISAU) website for public consultation. A national workshop was organized on April 26, 2007 in Quelimane to give the opportunity to all stakeholders to comment on the draft document. The workshop was open to the public and included representatives o f local NGOs, representatives of the Ministry o f Health (MISAU), environment (MICOA), and Agriculture (MINAG). Public comments were reflected in the final version o f the EANMP which was official submitted to the Bank for final approval and disclosure in InfoShop on April 30,2007. 294. This IRS project is part o f the President's Malaria Initiative (PMI) inAfrica, working in partnershipwith the World Bank, the Global Fund, andother members o f the RollBack Malaria Partnership. Within the USAID/Mozambique IntegratedHealth Sector (HIS) Strategic Objective Agreement, an initial Environmental Assessment (2005) identified the distribution, use and re- treatment o f ITNs and Long-Lasting Insecticidal Nets (LLINs) as a major intervention for malaria control. This intervention came with a number o f conditions, listed in the Safer Use Action Plan, and based on recommendations from the Programmatic Environmental Assessment for Insecticide-Treated Materials inUSAID Activities inSub-Saharan Africa. 295. Under the PMI, USAID proposes to help the government o f Mozambique implement an IRS program using DDT, bendiocarb and lambda-cyhalothrin for malaria vector control. Mozambique i s characterized by perennial malaria transmission, and IRS will be used to reduce malaria incidence inthe seasons o f highest transmission. This IRS program will be part o f other vector management measures supported and implemented by the MOH that include the distribution and use o f bed nets. Inthe long-term, it i s proposed to move towards an integrated vector management approach that would include larviciding and environmental management where appropriate. The component on larviciding was not covered under this EANMP. 83  296. Because o f the potential environmental impact o f the pesticides proposed for use, DDT, bendiocarb and lambda-cyhalothrin, this environmental assessment identifies the mitigating measures to minimize potential impact while achieving a significant reduction in malaria incidence, 297. Because o f the proposed use o f DDT, substance controlled under the terms o f the Stockholm Convention on Persistent Organic Pollutants, this environmental assessment has been reviewed and it shows that support remains consistent with stipulations inAnnex B, Part I1o f the Stockholm Convention, Mozambique's National Implementation Plan (NIP), and Stockholm Conventionpartyreporting requirements for DDT use. 298. The MOH and the Ministry for Coordination o f Environmental Affairs (MICOA) will implement the risk reduction actions outlined in the environmental assessment (EA) and vector management plan and re-examine the need for DDT while considering other chemical options for IRS operations to achieve best vector control. The Safer Use Action Plan is to be implemented with relevant partners as a management tool for dealing with and accomplishing the objectives. IRS supervisors, team leaders, and spray operators will be trained according to WHO guidelines as well as Ministry o f Agriculture standards. Insecticide poisoning management training will be provided to health workers. Pyrethroid, DDT and carbamate poisoning treatment medications and antidotes will be provided to trained health workers by the MOH. Insecticide storage facility storekeepers will also be trained inproper store management. 299. Occupational exposure to insecticides will be minimized through personal protective equipment (according to WHO guidelines). A public awareness campaign will educate home owners on their roles and responsibilities during the spray campaign to avoid exposure, and supervisors will remind residents o fthese responsibilitiesduring spray campaigns. 300. Environmental contamination will be kept to a minimum through strict auditing, handling, washing, and disposal practices. Each insecticide sachet will be strictly accounted for, contaminated waste-water and rinse-water will be re-used in subsequent days o f spraying (progressive rinsing). Empty DDT sachets will be collected by the MOH and returned to the supplier (ifpossible) or disposed o f inan environmentally safe manner. 301. The HSDP team will actively monitor ongoing activities for compliance with the requirements and recommendations in this assessment, and modify or end activities that are not in compliance. If additional activities ire added to this project that are not described in this document, an amended EA will be prepared and approved prior to implementation o f those activities. This includes any commodities, pesticide products being considered under the project butnot covered inthe present EA. 302. HeaZth Care Waste Management Plan. The Healthcare Waste Management Plan developed under the H N / A I D S Response Project will be used and monitored. 84  Annex 11: Project Preparation and Supervision MOZAMBIQUE: Health Service Delivery Project Planned Actual PCNreview December 8,2005 December 8,2005 InitialPID to PIC December 8,2005 December 8,2005 Appraisal April 11,2007 May 11,2007 Negotiations September29,2008 December 17,2008 Board approval April 162009 Planned date of effectiveness July 15,2009 Planned date o f mid-termreview September 15,2011. Planned closing date February28,2014 K e y institution responsible for preparationof the project: Ministry of Health. Bank staffandconsultants who worked onthe project included: Name Title Unit Suprotik Basu Public Health Specialist AFTHD Slaheddine Ben-Halima Senior Procurement Specialist AFTPC Jog0 Blasques de Oliveira Public Health Specialist Consultant Eduardo Brito Senior Counsel LEGAF Antonio Chamuco Procurement Specialist AFTPC Noel Chisaka Senior Public Health Specialist AFTHD HumbertoCossa Senior Health Specialist AFTH1 Jean-Jacques De St. Antoine Task Team Leader AFTH1 Mary Green Program Assistant AFTH1 JosephKizito Senior FinancialManagement Specialist AFTFM Abdelaziz Lagnaoui Senior Pest Management Specialist ENV Luz Meza-Bartrina Senior Counsel LEGAF SuzanneMorris Senior Finance Officer LOAFC NathalieMunzberg Senior Counsel LEGAF Brighton Musungwa Senior FinancialManagement Specialist AFTFM Oscar Picazo Senior Economist AFTH1 JonathanNyamukapa Senior Financial Management Specialist AFTFM Jog0 Tinga Financial Management Analyst AFTFM JosephValadez Senior Monitoring and Evaluation Specialist AFTHD Monique Vledder Health Specialist AFTH1 DonaldWhitson Monitoring and Evaluation Specialist Consultant FengZhao Health Specialist AFTH1 Bank finds expended to date onproject preparation: 1. Bankresources: US$138,000 2. Trust funds: US$90,000 3. Total: US$228,000 85  Estimated Approval and Supervision costs: 1. Remaining coststo approval: US$24,000 2. Estimated annual supervision cost: US$lOO,OOO 86  Annex 12: Documents in the Project File MOZAMBIQUE: Health ServiceDelivery Project 1. World Bank.Better Health Spending to Reachthe MillenniumDevelopment Goals, May 2006. 2. World Bank.Mozambique Health Country Status Report, August 2004. 3. Mozambique, Malaria Gap Analysis, August 2006. 4. Mozambique, Demographic andHealth Survey, 2003. 5. Mozambique, Health Sector Strategic Plan, September 2007. 6. Mozambique, Malaria Strategic Plan, 2006. 7. Martinez ,J., Implementing a Sector-wide Approach inHealth: the Case of Mozambique. 8. World Bank, Mozambique IntegratedHealth Service Delivery Pilot. 87  Annex 13: Statementof Loans andCredits MOZAMBIQUE: HealthService DeliveryProject Differencebetween expected and actual Original Amount in US$Millions disbursements ProjectID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd ~ PO93165 2006 MZ-Market Led Smallholder Dev (FY06) 0.00 20.00 0.00 0.00 0.00 20.75 0.71 0.00 PO71465 2006 TFCA & TourismDev (FY06) 0.00 20.00 0.00 0.00 0.00 28.66 -0.63 0.00 PO87347 2006 Tech & Voc Edu& Training(FY06) 0.00 30.00 0.00 0.00 0.00 29.62 1.74 0.00 PO86169 2006 MZ-Financial Sector TA Project 0.00 10.50 0.00 0.00 0.00 9.82 -0.10 0.00 PO82618 2005 MZ-Beira Railway SIL (FY05) 0.00 110.00 0.00 0.00 0.00 91.10 -1.76 0.00 PO69183 2004 MZ - Energy ReformandAccess SiL 0.00 40.26 0.00 3.09 0.00 42.95 24.57 0.00 (FY04) PO01807 2004 MZ-Decentr Planning&Fin SIL (FY04) 0.00 0.00 0.00 0.00 0.00 28.32 8.23 0.00 PO72080 2003 Pub Sec Reform(FY03) 0.00 0.00 0.00 0.00 0.00 24.62 21.53 0.00 PO78053 2003 MZ-HIV/AIDS Response SIL (FY03) 0.00 0.00 0.00 0.00 0.00 39.27 0.83 0.00 PO69824 2002 Higher EducationSIM (FY02) 0.00 60.00 0.00 0.00 0.00 26.32 10.27 0.00 PO01806 2002 MZ-MunicipalDev SIL (FY02) 0.00 33.60 0.00 0.00 0.00 11.04 14.60 6.14 PO73479 2002 MZ-ComSec Reform 0.00 14.90 0.00 0.00 0.00 7.89 4.52 0.00 PO01785 2002 MZ-Roads& Bridges MMP (FY02) 0.00 162.00 0.00 0.00 0.00 48.61 23.08 -6.18 PO01808 2001 MineralNRMCP(FYOI) 0.00 18.00 0.00 0.00 0.00 1.57 -0.36 0.00 PO70305 2000 MZ-Coastal& MarineBiodiv Mgmt 0.00 5.60 0.00 0.00 0.00 1.oo 0.51 -0.86 (FYOO) PO42039 2000 MZ-Railway & Port Restr (FYOO) 0.00 100.00 0.00 0.00 '0.00 25.53 20.52 12.03 PO35919 2000 GEF Coastal& MarineSIL (FYOO) 0.00 0.00 0.00 4.11 0.00 1.39 4.10 3.15 PO52240 1999 Natl Water 2 (FY99) 0.00 75.00 0.00 0.00 0.00 42.54 21.64 3.27 PO01799 1999 MZ-Am Sec Peu (FY99) - . . 0.00 30.00 0.00 0.00 0.00 2.64 2.25 2.08 I Total: 0.00 729.86 0.00 7.20 0.00 483.64 156.25 19.63 MOZAMBIQUE STATEMENTOF IFC's HeldandDisbursedPortfolio InMillions ofUS Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2004 ENH 0.00 18.50 0.00 0.00 0.00 13.37 0.00 0.00 GTFP BDC 0.11 0.00 0.00 0.00 0.11 0.00 0.00 0.00 1997 MOZAL 29.70 0.00 58.50 0.00 29.70 0.00 58.50 0.00 2001 MOZAL ' 10.12 0.00 0.00 0.00 10.12 0.00 0.00 0.00 2000 SEF Ausmoz 0.72 0.00 0.00 0.00 0.72 0.00 0.00 0.00 1997 SEF CPZ 1.oo 0.00 0.00 0.00 1.oo 0.00 0.00 0.00 2000 SEF Cab0Caju 0.58 0.00 0.00 0.00 0.51 0.00 0.00 0.00 2001 SEF GrandPrix 0.33 0.00 0.00 0.00 0.33 0.00 0.00 0.00 2004 SEF Merec 1.02 0.00 0.00 0.00 1.02 0.00 0.00 0.00 Total portfolio: 43.58 18.50 58.50 0.00 43.51 13.37 58.50 0.00 88  Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. Totalpendingcommitment: 0.00 0.00 0.00 0.00 89  Annex 14: Country at a Glance MOZAMBIQUE:*Health Service Delivery Project - - sub- SshMaTl Lcm- Aflica inComt 21.4 8m 1,296 I 330 952 578 7.1 762 749 T 2.3 2 5 2 2 1.6 2 6 27 54 36 36 32 42 51 57 96 94 85 21 27 29 42 58 68 58 64 105 94 94 113 99 1w 97 88 89 1987 1991 2006 2007 Economicraiios' 2.4 3.8 7.0 7.8 17.0 20.6 19.0 19.2 6.6 13.4 40.7 38.6 Trade -7.7 9.3 13.0 12.3 - -14.9 4.6 3.2 2 8 -29.4 -16.3 -16.0 -16.5 0.8 1.1 0.4 175.3 M3.4 46.9 23.5 19.2 1.9 10.1 23.9 1987-97 199757 2006 2007 2007-1I 4.2 7.7 8.5 7.3 7.0 1.6 5.2 6 3 5.3 5.9 12.6 ras 8.0 -8.2 10.0 t987 1997 2006 2007 I 44.1 M.9 27.6 27.6 21.4 17.8 26.6 25.7 m 9.8 16.3 15.2 O 34.4 47.4 45.8 46.7 -m 96.7 83.9 76.1 75.6 11.1 6.8 10.9 12.1 31.4 24.6 46.6 45.6 1987-97 1997-07 2006 2007 Growth d expats and kqmrts (%) I I 2.6 5 3 10.9 6.6 1.9 13.9 9.1 6.6 M 4.5 13.7 6.0 5.0 20 4.6 6.6 7.9 6.4 0 3.0 5.3 8.4 8.6 -20 -0.2 -1.8 0.4 17.2 5.3 7.2 13.1 4.2 26 5.0 10.0 -21 90  IC t S 1D 0 4 987 4,325 Q 57 55 0 0 43.8 284 -33 6 0 414 45 0 4B 0 4.8  Annex 15: Terms of Referencefor the Developmentof a Sector InvestmentPlan MOZAMBIQUE: HealthService Delivery Project 303. Background. InJune 2003, the Ministryo f Health (MOH) approved a detailed Health Sector Investment Plan for the period 2004-2008, with an indicative investment plan for 2009- 2013. The cost o f both the Plano de Investimentos da Saude (PIS) and the indicative plan was estimated at US$ 120 million each. The PIS was developed to respond to a perceived lack o f long-term vision and policy for the development o f the health network to respond to the health challenges the country faces. The main objectives o f the PIS were to: (i) develop a policy for investments in health; (ii)systematize investment projects in the sector in a medium and long term perspective; and (iii) translate those into annual investment budgetsinthe form o f Triennial Public Investment Plan, the tool the government uses to identify, describe, finance and follow up all public investment programs. 304. Since its approval, the PIS has not been explicitly used to guide investment decisions o f the M O H for different reasons. Firstly, the PIS was not translated into operational plans partially because funds were not available, especially after the closing o f the Bank-financed Health Sector Recovery Project (HSRP), which was the main source o f finding for investments in health. Meanwhile some isolated initiatives to rehabilitate or build new facilities were taking place almost everywhere in response to different opportunities arising from different partners and NGO. These ad hoc construction and rehabilitationprojects often were not adequately appraised as regards to the functions o f the facility andthe population that would be served. Often they did not conform with the approved standard architectural designs, and with the characterization and functions o f health facilities as defined inthe Diploma de Caracterizaqio Tkcnica de Funq6e.se Caracteristicas das USo fthe MOH. 305. Secondly, the emergence o f global health initiatives accompanied by large amounts o f resources for the health sector provided an opportunity for the MOH to scale up care and treatment o f certain diseases (malaria, HIV/AIDS and tuberculosis). This implied a revision o f the investment options to strengthen the health infrastructure, including supportive services. Finally, one reason for the failure to implement the PIS is that it didnot sufficiently addresses the gap between infrastructure development and other health inputs such as human resources and equipment. 306. Currently, the number and characteristics o f the health facilities throughout the country is not accurately known and since many health facilities have lacked maintenance for many decades their physical condition and functionality i s not known. Also many health facilities have more than 30-50 years o f life requiring a thorough evaluation o f their physical status for rehabilitation or replacement. Another factor hampering the functionality o f the facilities is the precarious state o f the equipment and the absence o f basic utilities such as water supply, electricity and communication equipment. Some basic equipment such as operating tables, surgical instruments, laboratory and X-ray machines were acquired more than three decades ago andare unreliable. 92  Eventsandinitiativesrelatedto investmentsin the sector. 307. Mapping of health facilities. The information about types and functioning o f public sector health facilities and its staffing inMozambique i s incomplete. Inmany instances facilities classified as general or rural hospital do not meet minimumcriteria to b c t i o n as such as a result o f incomplete staffing or the non-bctioning o f critical units (surgical theater, laboratories, X- rays). To fill this information gap, partner agencies working in some provinces have supported initiatives to map health facilities using digital technology (GPS). Despite the value o f the data collected invarious provinces, the diversity o f tools and information obtained does not allow for a national assessment o f the state o f the healthnetwork. 308. Recently, the MOH decided to undertake an overall mapping o f the health facilities inthe whole country, startingin June 2007. The mapping will also include an exhaustive audit o f the physical condition, maintenance and fhctionality o f equipment, vehicles, and staffing. To this effect the MOH developed extensive questionnaires to collect data, and a pilot test o f the questionnaires will be carried out. The exercise i s ambitious and will require a great deal o f resources to be able to complete the mapping by the end o f 2007 as planned. At the moment, the MOH wants to carry out the mapping itself, but questions whether it has the adequate institutional capacity needed to carry out the task. During the last annual Sector Coordinating meeting, donors suggested to the MOH to contract a specialized agency to do the work under the coordination o f the MOH. 309. The mapping o f the health network will provide updated information on numbers, location and staffing o f each type o f health facility throughout the country. This knowledge will assist the MOH in the process developing an investment plan for infrastructures at the local, provincial andnational levels. 310. Revisionandupdatingof the Health Sector StrategicPlan(PESS). The current PESS (2000-2005) i s beingrevised. The MOH has contracted Liverpool Associates inTropical Health to help revise the PESS. A costed PESS should be completed by early 2008. The objectives and priorities o f the PESS will provide the policy framework and general guidance for the development o fthe health sector investment plan. 311. Human Resources for Health Development Plan. In order to address the human resource crisis that Mozambique faces and to take into account the policies and strategies set out inthe new revisedPESS, the MOHwillupdate its HumanResource DevelopmentPlan(HRDP). To that effect it has approved the terms o f reference for the development o f the HRDP. It will contract consultants to facilitate stakeholder consultation that will provide inputs for the formulation o f the plan. 312. Health Sector Investment Plan. The M O H intends to update its investment plan and articulate its human and financial resources implications. In addition, the investment plan will explicitly address equipment needs to make facilities, warehouses, and training institutions fully functional. The mapping exercise expected to be completed in December 2007 will provide a complete and clear picture o f the state o f the health infrastructure inthe country and will be used to identify the needs and gaps, and guide the development o f the health sector investment p l h (HSIP). 93  313. Clearly there should be harmonization between the PESS, HRDP and the HSIP. The harmonization should not be seen as a sum o f the parts but rather than an institutionalized process to ensure a high degree o f consistency o f the products and delivery timing between the HSIP, HRDP and the procurement plan for equipment and other health inputs. Equally important, these inputs must be adequately costed and incorporated in the Medium Term Expenditure Framework (MTEF) o f the sector. Inthis way the sector can construct various investment scenarios based on the availability o f financing. This technical product will guide policy decisions but the final decision on the options to be adopted will be taken by the MOH in line with the objectives o fthe Plano f Action to Alleviate Absolute Poverty (PARPA). 314. The Bank has a comparative advantage inthe area o f investments inthe health sector not only because o f its previous involvement in the Health Sector Rehabilitation Project (closed in 2003), but also because o f its breadth o f expertise and experience in economic analysis and medium term planning including the development o f MTEFs. Thus, under the proposed HSDP, the Bank will proposes to support MOH efforts indeveloping a sound and comprehensive HSIP. The Bank and other donors are members o f the Technical Working Group for Investments a sub- group o f the Health SWAP. The aim o f this working group is to facilitate and assist the M O H in developing a solid investment planto be financed by the government and development partners. 315. Scope, The aim o f the consultancy is to develop a comprehensive and sound 10-year investment plan with a focus on health infrastructure, and medical and non-medical equipment according to the norms and standards defined for each type o f facility. The infrastructure part o f the HSIP must take into account the humanresource plan for the sector to ensure proper staffing o f facilities. The HSIP should prioritize interventions in health infrastructure based on explicit criteria encompassing the goals o f the PARPA and the Five Year Government's Program. In parallel, prioritization criteria should also consider the disease burden, the size o f population served, physical access, quality improvement, efficiency, and the need to reduce inequity between and within provinces. The presence o f other health care providers, while not significant at the moment, should also be taken into consideration. 316. The consultant should also develop the first five years implementation plan o f the HSIP, which will subsequently be made operational through the annual Economic and Social Plan (PES) o f the sector. The specific investment activities will be included in the PTIP. The consultant should also develop tools to ensure that the implementation plan o f the HSIP will be translated into the PES and PTIP. Finally the consultant will create a data base for the follow up o f the investment interventions. 317. Tasks. The following are the maintasks that the consult will perform: El Undertake a desk review of the existing documentationon investments inthe sector. Inthe process the consultant will interact with relevant Departments o f the MOH, namely HRH, Planning and Cooperation, Administration and Finance and the two newly-created Departments that replace the previous Department o f Health (Department o f Health Promotion andDisease Control, andDepartment o fMedical Assistance). 94  El Interview and meet with key stakeholders of the sector including the MOH leadership, relevant departments o f the Ministry o f Planning and Development, Ministry o f Financing, members o f the TWGI and other development partners. El Review the health mapping findings andbased on that, identify the major gaps incoverage andquality to be addressedinthe medium andlongterm. El Propose criteriato guide investments decisions andprioritization ofthe HSIP, particularly for health infrastructure, inclose consultationwith the MOH. El Estimate the costs of the HSIP, including the recurrent costs needed to operate the facilities andother support infrastructure. El Develop investment scenarios inline with various estimates ofpotential resources available andmake recommendations for the best options to allocate funds for investment. El Organize a consultation process among key stakeholders to build consensus around the situation analysis o f health investments and criteria to guide investment decisions, including the HRHimplications, equipment andother health inputs. El Write areport onthe proceedings ofthe workshops. El Put together the HSIP ina document ofno more than 100pages including maps, tables and annexes. 318. Deliverables 1. Comprehensive report o f no more that 25 pages analyzing the health infrastructure situation and clearly analyzing the strategic issues that need to be tackled. This report will be used for the workshop to buildconsensus around key issues and challenges o f the HSIP. 2. Comprehensive and fully costed HSIP for the period 2009-2018. 3. Implementation Plano f the HSIP for the first five year. 4. Tools and guidelines to facilitate the translation o f the implementation plan o f the PES andPTIP andthe respective budgets. 5. Monitoring and evaluation framework o f the HSIP, including a database that will allow the MOH to effectively follow up the implementation o f the investments interventions. As mentioned above, the MOH will undertake a mapping exercise o f health facilities throughout the provinces and districts to identify, classify and determine the functionality o f its health network. 95  319. Timeframe. The consultancy will be done ina maximum periodo f 12months including the completion o f the reporting. The consultancy is expected to start in January 2008, assuming that the mapping exercise would have been completed. 320. requirements and qualifications. The consultancy will be carried out by a team o f experts consisting o fthe following professionals: Health Economist or Health Systems Specialists with a Ph D or Masters degree and a minimumo f 5 years experience inhealth planning. Preference will be given to those with working experience in a developing country setting andinthe African region. Public Health Specialist at a level o f Masters or Ph D degree with 10 years experience in health management and human resources planning and management. Experience in developing countries i s preferable. Medical Engineers or Hospital Equipment Specialists with at least 5 years o f experience. Knowledge and experience o f developing countries will constitute an added value. Hospital Architect or Civil Engineering Specialists with 10 years experience inplanning and development o f health facilities design and implementation o f civil works. Experience o f similar assignments inthe region is preferable. 321. Other relevant information. The consultants will work on the premises o f the MOH and will report directly to the Director o f Planning and Cooperation o f the MOH. On a daily basis, the consultants will work with the Departments o f Infrastructure, Administration and Finance andthe Department o fMedical Assistance. 96  Annex 16: Key High-Impact Health Interventionsby Service Delivery Level MOZAMBIQUE: Health Service Delivery Project [ntervention 1 Service Child Health Maternal Health Malaria Environmental HIV I AIDS TB Delivery Health Arrangements 9 Breastfeeding B CleanDelivery 9 ITNspromotion b Latrines B Awareness I.Family promotion 9 Condom generalpopulation 9 SafeWater raisingthrough Community 9 SafeWaterHandling Promotion Storage peerbased aased health andStoragepromotion B oral 9 Anti-malarials b Handling education promotion Safe interventions (includingChlorine) Contraceptive (chloroquine) for b 9 Hand-Washing 9 Promotion childrenless than 5 (including Chlorine) SexPromotion promotion Supplementary andadults b Hand-Washing Behaviorchange 9 ITNs usepromotion feedingfor promotion (numberof sexual childrenless than5 malnourished 9 SolidandLiquid partners b ORT pregnant women Waste management b Discuss b Zinc treatmentin promotion traditional norms, associationwith ORT rituals andtabus 9 Adviseon favoring Complementaryand HlViAIDS supplementaryFeeding transmission 9 CleanDelivery 9 9 Temperature 9 Condom Managementand marketing Kangaroocare 9 Condom Promotion 9 Massmedia campaigns b supportto orphans 9 SupervisionofHealth 9 Supervisionof 9 Supervisionof b Healthyhomes b Supervisionof b TBaN 2. Population Promoters Health Promoters HealthPromoters environment Health Promoters raising basedoutreach b FamilyPlanning 9 FamilyPlanning promotion 9 Management 9 Case 9 Supportand identificati services b IronandFoliate (Depo-Provera, ) 9 Indoor b Identification supplementation 9 IronandFoliate Insecticide spraying Managementof care b TBD( 9 TetanusToxoid acid b Surveys/HMIS mosquitobreeding b FirstAid follow-up 9 BCG,Measles, DPT3 supplementationto places 9 Universal b VitaminA pregnantwomen 9 Indoor Precautions supplementation 9 Birthsplanning Insecticide 9 HIBvaccine andcomplications spraying. B ACT anti-malarials readiness 9 Controlof for childrenless than5 9 ITNspregnant insects,rodentsetc 9 SupervisedORS women b Foodsafety b SurveydHMIS 9 Prenatalcare, measures postnatalcare 9 Educationon 9 SurveysJIMIS preventionof accidentsand illnesses b SurveysiHMIS 3. Clinical b Assisteddeliveries 9 Assisted 9 ACT 9 u P 9 TTofSTI 9 TB services b Antibiotics for deliveries 9 HAART identificati pneumonia(ARI tt) 9 Antibiotics for follow up DOTSinit 9 PMTCT a. primary 9 Antibiotic treatment prematureraptureof membrane(PRh4) b Treatmentof clinicalcare for dysentery 9 Resuscitation 9 TtofSTI Opportunistic 9 TreatmentofSevere b Basic to infections Anemia comprehensiveEOC > U P 9 Vitamin A treatment b Post-abortion 9 Treatmentof care neonatalsepsis B Norplant 9 PMTCT b IUDinsertion 9 Severemalaria 9 * Manag ). referral 9 Managementof P CEOC 9 Managementof P Management :linicalcare severeprematurity/LBW P BloodSafety complicatedMalaria ifresistantAIDS )fMulti6 and neonatalsepsis tesistant T 9 Managementof complicatedMalaria 97  Annex 17: DonorsandNGOsOperatinginthe ThreeNorthernProvinces MOZAMBIQUE: HealthService DeliveryProject Niassa 322. The table below contains a list o f partners including faith-based organizations (FBOs) andnon-government organizations (NGOs) operating inthe healthsector inNiassa province. l7 Mecula of VCT andART services. PSI Province Supportto the HIV/AIDS programinthe province. Acord Lago Supportto communityhealthprojectsandHIV/AIDS. Pedal-Ibis Marmpa, Mavago, Support HIV/AIDS and communityhealthprojects. Mecula, Muembe, Ngatima Pedan Lichinga and Sanga Constructionandrehabilitationof healthfacilities. 323. Most NGOs and FBOs are currently involved in HIV/AIDS and malaria-related interventions. Also some are involved in the rehabilitation and construction o f health facilities, andthe training o fAPES, TBAs, andhealthactivists. 324. Ireland. Irelandhas been the main donor, with a significant presence inNiassaprovince since 1997. Irelandprovides multisector support to the provincial government o fNiassa. 325. MSF Suisse. This organization is providing HIV/AIDS care services, namely VCT, - PMTCT and Antiretroviral Therapy (ART) in Lichinga city. They also help in training of local staff inHIV/AIDScase management. "Source:Relat6rioAnualprovincial,2005,Direc@oProvincialdeSacdedoNiassa. 98  326. Caritas Diocesan (Comissao Diocesiana de Salide - CDS). The CDS i s engaged in community health projects with a focus on essential health services for remote villages and those located 20 km or more from a health facility. To deliver the services the project uses APEs who receive training in the Lichinga training center supported by CDS. The candidates for this training are usually selected by the beneficiary communities. The training of APEs runs for 4-5 months and covers disciplines o f community health, infant and child health, maternal health, IEC, community participation, and communicationtechniques. 327. CDS helps mobilize communities to participate in the construction o f improved community health post for the APEs. CDS also organized an information system for community health workers including APEs and TBAs. There are monthly supervision visits to assist APEs in problem solving and ensure the quality of health interventions. The main constraint hampering supervision visits i s the limited number o f vehicles to cover the large distances that characterizes Niassa districts in general. Bicycles were provided to community posts for APEs use, to minimize the problem. The management and control o f the bicycles rests with the community council leader. 328. ESTAMOS. ESTAMOS is a domestic NGO involved in HIV/AIDS prevention, and water and sanitation projects. They provide IEC/BCC interventions, home-based care for HIV/AIDS and water and sanitation activities. For HIV/AIDS interventions, they have trained 12 activists. They have offered them bicycles to undertake the activities and pay them a monthly salary o f about US$36 (around 60% o f the minimumsalary). Inaddition, ESTAMOS introduced bicycle ambulances in the communities where they work, which are helping with the referral o f patients andpregnant women to health facilities. These bicycles ambulances are managed by the local leader (RCgulo - a traditional leader). The experience o f this NGO shows that the acceptance o fbicycle ambulances inperi-urban and urbansettings i s lower than inrural areas. 329. Associaqlo Progresso. This organization supports the Expanded Program of Immunizations o f the MOH and HIV preventive interventions. Progresso has been supporting the logistics o f the EPIprogram including the maintenance o f the cold chain. 330. UNFPA. UNFPA receives bding form Sweden to provide support to the Youth and Adolescent Friendly Health Services, a project know as Geraqgo Biz. 33 1. Concern International. This NGO focuses on participatory approaches to community health interventions. It promotes the functioning o f Community Health Committees (CCS, Portuguese acronym) which are inoffice for two years after which a new CCS is selected by the community. The main services provided include H N / A I D S counseling, IEC for nutrition, water and sanitation. Health activists provide these services and are paid a monthly amount o f about US$15. Cab0 Delgado 332. The main development partners supporting the health sector in Cab0 Delgado are the FrenchDevelopment Agency (AFD), the EuropeanUnion, the Spanish Cooperation through two Spanish NGOs (Medicus Mundi and Medicos del Mundo), Solidanned (Switzerland), and 99  Village Reach (USA). The table below summarizes the interventions that each partner is currently implementing inthe province. Table 29: Interventions Partner and timeframe of their Typeof activities Integration with DPS (or DDS) presencein province GroupeAgence Franqaisede Infrastructure, equipment, technicalassistance(architect, engineer, Integratedinplanning. DCveloppementGAFD PISCAD pharmacist,informationspecialist, hospitalconstructionmanager), Partialintegrationof finance (2004-2009) maintenance,initial andcontinuous training(90 persons), budget with budget support. Run support, financingof salariesuntil appointmentby MOH. independentlybyaPMU. EuropeanUnion (2004-2006) Infrastructure(healthcenters of level Iand11, maternitysections, water Integrationinfinance with systems,houses for healthpersonnel), equipment (communication budget support to the systems, ambulance), training, budgetsupport for recurrent costs inthe province districts. MedicusMundi (Spain) (since Budget support to the districts, infrastructure(waiting houses for Integratedinplanning, 1994) (latest programperiod pregnantwomen, maternitysections inhealthcentersandruralhospital, financingand services 2004-2007) solar energy, water, housingfor personnel), equipment, information provision system improvementinepidemiologicalsurveillance andreporting from healthunit upwards, training inPHC, strengtheningof district management by improving inspection, financialmanagement (budgeting, execution, accountancy), district plandevelopment, malaria project,HIV/AIDS, healtheducation (preventionofmalaria, malnutrition,constructionandmaintenanceof latrinesandtrainingof communityactors), maintenance,financingof salariesbefore nomination,continuoustraining (malaria, maternalhealth, HIV/AIDS; informationsystemdevelopment for follow-up oftraining andtrained. Medicosdel Mundo (Spain) Budgetsupport, infrastructure(health centers, electricity) equipment Integrationinfinancing, 2001-2004 (radios, technicalassistance, healtheducation, HIVIAIDS (joint activity planningandtraining with GAFD) ,continuous training (planning, management andspecific Source: Finland, Provincial Study, To Evaluate the Approaches to SupportingHealth Sector Developmentat Provincial Level, MOZAMBIQUE 2001-2005 333. French Development Agency (AFD). Currently AFD is the single largest external financier o f the health sector in Cab0 Delgado with an estimated 14.0 million euros to support the Cab0 Delgado Integrated Health Project whose Portuguese acronym is PISCAD, for the period 2004-2009. PISCAD also includes funds for an adult literacy program (around 700,000 euros) that uses Agentes Polivalentes Elementares (APES- a type o f community health worker) as literacy facilitators. PISCAD has a project management unit established within the premises 100  of the Provincial Health Directorate and provides technical assistance in a number o f specialty areas as show inthe table above. 334. The EuropeanUnion. The EUprovides financing for infrastructure development inthe province. The funds in an amount o f approximately 2.5 million euros are channeled to the province through PROSAUDE, a mechanism used by other development partners to provide budgetsupport for operations o fthe health sector at the provincial level. 335. Spanish Cooperation. The Spanish government is helping the province through technical assistance inhealth planning through two NGOs - Medicos Del Mundo and Medicus Mundi.A briefsummary o fthe activities o fthese two NGOs isprovidedbelow. 336. MCdicos DelMundo. This NGO supports four districts inthe province: Mechfi, Pemba- Metuge, Ibo and Quissanga. In total the organization has a 2.0 million euros budget for the period 2006-2010. MCdicos Del Mundo supports the province in planning and programming of HIV/AIDS interventions, strengthening o f district health services, infrastructure rehabilitation and construction, and community based interventions. They have worked with traditional birth attendants (TBAs). The organization is currently financing the construction o f a maternity (500,000 euros) in Mechfi district. They also plan to introduce the use o f boats and radios for patient referral in3 islands inIbo district. 337. Medicus Mundi. Medicus Mundi provides support to 4 districts: Ancuabe, Namuno, Balama and Montepuez. The areas they support include, primary health care, IEC activities, budget support, work with TBAs and APES,rehabilitation o f facilities, maintenance o f medical equipment, training o f staff (continuing education), support to outreach and supervision, malaria and HIV/AIDS. This organization has also carried knowledge, attitudes and practice (W) studies on HIVIAIDS at the district level relatedto healthproblems. 338. Village Reach. This NGO is providing logistical support for the MOH Expanded Program o f Immunizations. Essentially the organization provides refrigerators for the cold chain. These refrigerators use butane gas instead o f kerosene. A supply system was organized with the participation o f private sector suppliers o f Vida GAS. The functioning o f gas refrigerators is considered a better alternative than kerosene ones that present a bigger logistical challenges. 339. Aga Khan Foundation. The Aga Khan foundation supports health, education and agriculture in all districts o f Cab0 Delgado. In health it is involved in the rehabilitation of infrastructure, community interventions, HIV/AIDS, nutrition, andwomen's' health, 340. AssociaqZLo Progresso. This is a domestic NGO with an estimated annual budget of US$550,000. They work the districts of Ancuabe, Quissanga, Ibo, Mueda and Muidumbe They do essentially community health promotion, and IEC for HIV/AIDS and malaria. They also support TBAs by providing refresher courses and encouraging them to encourage pregnant women to deliver their babies inhealth facilities. 101  Nampula 341. The following are the NGOs currently active in the health sector in Nampula: Care International, AIFO, Save the Children, World Food Program, and the Mozambican Red Cross. The Swiss Development Cooperation (SDC) has an office in Nampula City that helps improve district planning, but it does not intervene directly the health sector. Like other bilateral donors inthe health sector, SDC provides budget support to the Provincial Health Directorate through the Provincial Common Fundto finance mainly recurrent costs, but also some investment costs. Below is a brief description o f the areas o fwork o f each organization. 342. Care International - APPLE ($4.6 million euros). Care International supports HIV/AIDS activities in Nampula through a project named APPLE (AIDS Prevention, Positive Living and Empowerment). APPLE is a three year project (2004-2007) aimed at slowing the spread o f HIV and mitigating its impact. It concentrates on young people aged 15-24 and on mobile populations along the Nacala Corridor (from the Port o f Nacala, through Nampula and Niassa provinces to Malawi). The project supports HNnetworks that provide VCT, care, and referral services. APPLE i s also implementing a behavior change communication strategy and is assisting CBOs, FBOs and associations o f PLWHA. APPLE works inpartnership with GOAL, RESNSIDA, Khulisa, Media and the International Organization for Migration (Nampula has some refigees from the great lakes) inthe implementationo fthis project. 343. Care International - HIV/AIDS Initiative (US$700,000, 2005-2006). Care International has been seeking funding from Columbia University to support one o f its APPLE project components in Nampula city aimed at strengthening the follow-up o f community health services integrated with one health center (25 de Setembro) and the Nampula Central Hospital. The main objectives o f this component are to: (i) increase supply o f good quality health services for PLWHA in 25 de Setembro VCT and day hospital; (ii) increase BCC activities with a focus on access to health services and on treatment, and (iii) increase community-based capacity to provide quality prevention, care and support services. 344. OKUMI'* - Child Survival and Reproductive Health Project ($2.1 million USD, 2005-2008). This project is implementedjointly by Care and Save the Children US, andtargets 14 districts o f Nampula province. This project addresses malaria, HIV/AIDS through community education, VCT, youth interventions, and treatment and referral services. The project also covers immunization, nutrition for women, infants and children, family planning, and improved diarrheal disease prevention and case management. 345. World Food Program. The World Food Program supports food supplementation programs in 120primaryschools. The agency also provides support to orphanages. 346. MozambiqueRed Cross. The Mozambique Red Cross has been implementing a pilot project during the last two years inthe area o f HIV/AIDS inNamialo District situated along the Nacala corridor. Specific activities o f the pilot include home-based care interventions, nutritional support, advocacy and support to PLWHA. The Mozambique Red Cross also partnered with CARE to implement H N / A I D S preventive activities inNampula city. '*Okumii s a Macua (dominant language ofNampula province) word meaning "people's health." 102  347. The organization supports health in general in the districts of Murmpula, Muecate, Mongicual ad Meconta. Specific activities include IEC, first aid, and HIV prevention. From 2005-2007, the Mozambique Red Cross has been implementing an integrated water and sanitationproject inMalema andRibhue districts. 348. AIFO. AIFO is an ItalianNGOthat supports a leprosy control project. Nampulahas the highest number ofpeople with leprosy inMozambique. 349. SDC. The Swiss Development Cooperation support to Nampula province is geared to rural development projects, and district planning. Districts that benefit from these interventions are Mecubcri, Erhti, Muecate and Chicre (inCab0 Delgado). 103  Annex 18: GenderEqualityAnalysis MOZAMBIQUE: HealthService DeliveryProject 350. Mozambique continues to rank low inits Gender-related Development Index (GDI) with a ranking o f 133 out o f 140 countries in 2005. Although equality between women and men i s enshrined in the Constitution, and the Government o f Mozambique has made explicit commitments to gender equality, there continues to be significant barriers to the full and equal enjoyment by women o f their human rights, o f economic gains, and o f social, cultural and political decision-making. 351. The Government o f Mozambique's second Poverty Reduction Strategy (2006-09) (PARPA) treats gender equality as a cross-cutting issue. While there remains room for improvement, the mainstreaming o f gender equality inthis PARPA i s a significant improvement from the first PARPA. Some significant measures were identified in PARPA I1to promote the full and equal participation o f girls, boys, women and men in education, primary health care services, extension services, and credit and labor. Unfortunately, PARPA I1does not adequately integrate gender equality issues inthe poverty analyses, nor inthe strategic plans that ensure that women and menbenefit equitably and inequalitiesbetweenthem are reduced. 352. Political and Legal Context and Gender. The indicator often used to represent women's political status i s the participation o f women innational government, measured by the percentage o f seats innational legislatures or parliaments occupied by women. InMozambique, approximately 30% o f parliamentarians are women, reaching the target agreed upon in Beijing. The ruling party, Frelimo, instituted a quota system whereby at least 30% o f election candidates are women. Nevertheless, only 15% o f civil servants are women, few women hold senior government positions, andthere are few female judges. 353. The National Policy and Strategy on Gender identifies major constraints and interventions to achieving gender equity for sustainable human development. Despite political commitments by the government, the institutional capacity within the Ministry o f Women and Social Action's National Directorate o f Women and all line ministries to effectively integrate a gender perspective inpolicies and programs continues to be very limited and often dependent on a few individuals. Furthermore, there i s a lack o f gender-disaggregated data and information critical to the design o f comprehensive and sustainable development interventions. 354. Overall, Mozambique has a legal framework that i s fairly conducive to (although significantly under-resourced for) promoting gender equality principles. Many traditional laws are, however, silent on domestic and sexual abuse. Moreover, poverty (which has a female face inMozambique) limits women's ability to seek legal action. 355. EconomicContext andGender.Inspite o f gender-specific provisions inthe Labor Law, gender imbalances in the labor market persist. The World Bank's August 2005 Country Economic Memorandum states that men are more likely to be wage earners or self-employed, and women are more likely to be working in a family business. Factors that influence wage levels include education, marital status and gender. Of the sixteen percent o f workers who are waged, the labor marketpenalty for being female is 28%. 104  356. Women play a significant role in subsistence agriculture - in fact 89% o f women are engaged in subsistence agriculture activities, mostly on a very small-scale basis. The small size o f female-headed farms is largely the result o f their additional reproductive responsibilities, their low formal educational and their lack o f access to resources such as land, labor, agricultural inputsandcredit. Women's participation insubsistence agriculture is critical to food security, as they are the mainproducers o f crops for household consumption. 357. Social Context and Gender. The World Bank's Poverty, Gender, and Social Assessment for, Mozambique" confirmed that women, especially rural women, remain disempowered despite the legal equality granted by the new family law. M e n and women both report that women make the household expenditure decisions. Income from household enterprises is generally attributed to the senior male in the household. The results can include poor access to health services for women, loss o f assets if the mandisappears or if custody with the mother isnot supported, andlower levels o fhumancapital. 358. Education. Although improving (particularly at the early primary level), discrimination in girls' access to education persists in Mozambique inpart due to customary attitudes, early marriages and pregnancies, unremunerated work responsibilities, inadequate and gender-biased teaching and educational materials, sexual harassment and lack o f physical and otherwise accessible schooling facilities. Girls are generally the first to be withdrawn from school to: care for the sick and for younger siblings; assume responsibility for subsistence farming, food preparation and water collection; and boost family income through paid labor (sometimes engaging inbehavior that puts them at risk). 359. In spite of progressive improvements since 1997, gender disparities remain fairly pronounced inprimary education in Mozambique. In2004 the ratio o f girls to boys inEP1 was 0.83 (as compared to 0.71 in 1997). Girls are also less likely to complete the full basic education cycle thanboys. Moreover, the secondary school female enrolment rate inMozambique i s below 10% making it among the nine lowest in the world. Nevertheless, the Ministry o f Education - and Culture's Education Sector Strategic Plan aims to increase access to education and places special emphasis on girls' education. 360. Health(includingHIV/AIDS). The right to a healthy life is recognized inarticle 94 o f the Mozambican Constitution. However, only 50% o f the population has access to formal health care. Maternal mortality continues to be a serious health problem inMozambique. Although the Ministry o f Health's target o f 52% institutional deliveries for 2007 was reached, serious constraints remain in access to and quality o f reproductive health services. Limited availability o f integrated reproductive health services, and lack o f qualified health personnel are key contributing factors to the highincidence o fmaternal mortality inMozambique. 361. The official estimated 2007 H N / A I D S prevalence rate (among people aged 15-49) was 16% (significantly up from 8.2% in 1997). Women, and especially young girls, are socially and physiologically vulnerable to the virus. In 2005, the estimated HN prevalence rate among young Mozambican women aged 20-24 was 21.9% (as compared to 7.2% for young men inthe same age group). Beatingthe Odds; sustaininginclusion inMozambique's growingeconomy, World Bank, Group 2008. 105  362. Married women have limitedto no ability to negotiate safe sexual practices (e.g. condom use) and are, therefore, at greatest risk o f contracting HIV. Child marriage also puts girls at increased risk. 363. Although official statistics are not kept, according to health officials, women's groups and other sources, violence against women, particularly spousal rape and beating is widespread in Mozambique. Inmany cases, violence against women and girls occurs in the family or in the home, where it i s often tolerated and goes unreported. Evenwhen such violence i s reported, it i s often not given due attention by police as it is seento be a private matter. 364. Institutional Context and Gender. The analysis o f the institutional context covers: government structures, civil society, partners and donors, andthe Ministry o f Health. 365. Government Structures. The National Women's Department o f the Ministry for Women and Social Action i s responsible for promoting and coordinating gender equality and gender mainstreaming inall ministries. Established in2000, the Ministryfor Women and Social Action i s a relatively young ministry with limited financial and human resources. This has contributed to its fairly weak positionwithin the government structures. 366. The National Council for the Advancement o f Women, led by the Ministry for Women and Social Action, was formed in 2004 to encourage inter-sectoral coordination on gender equality andto promote and monitor the implementationo f gender related policies andprograms. Similar versions o f this structure exist at the provincial level, presided over by the Provincial Directors o fthe Ministry for Women and Social Action. 367. Gender Focal Points are the key people that do the day-to-day work to mainstream gender in line ministries, institutions and many CSOs. In spite of policy achievements to strengthen gender mainstreaming, Gender Focal Points often face marginalization within their ministries. 368. Civil Society. Forum Mulher (Women's Forum) is probably the best known and strongest women's organization in Mozambique. It i s an umbrella network organization that carries out sensitization activities and monitors the implementation o f international instruments related to women's rights. Membership includes national and international associations, women's NGOs, political parties, church organizations, government bodies (e.g. representatives o f Gender Units), and research and training institutions. They work in close collaboration with the Ministry for Women and Social Action, are part o f the National Council for the Advancement o f Women, and are represented on the Boardo f the National AIDS Council. 369. In addition, Women and Law in Southern Africa and the Foundation for Community Development are actively involved in promoting the women's and children's agenda. Women andLaw inSouthern Africa is a regional, action-research oriented NGO that promotes the status o f women in legislation and in other service areas while the Foundation for Community Development has a strong field presence and a good network. While these organizations are strong, there is a need to encourage and foster broader involvement o f NGOs and CSOs in the gender equality debate. 106  370. PartnersDonors. The Gender Coordination Group, involves the Ministry for Women and Social Action, civil society umbrella organizations, multilaterals and bilaterals. The Gender Coordination Group serves as an information exchange forum, provides recommendations to visiting missions, participates in Joint Reviews, and comments on major policy and programming initiatives. 371. Ministryof Health. Since 1995, a Gender Advisor to the Minister o fHealthhas been in place. In2001, the Ministry also recruited a gender technical advisor to support the process o f gender mainstreaming within the MOH. The Health Sector Strategic Plan (PESS) identifies the strengthened integration o f gender equality into health sector programming as an integral strategy inpromoting the full and equal access and utilization o f health services by Mozambican women and men, girls and boys. In2008, the MOH developed a Health Sector Gender Strategy that is pending Ministerial approval before being publicized. The Ministryhas also designated gender focal points in all Department o f Public Health, and recently launched an initiative o f Gender Responsive Budget pilot project that the MOH has recently launched. Despite all these efforts, the Sector Annual Evaluations since 2003 up to 2008 related a very low performance in terms o f achievement inthe gender area. 372. What will the project do? The HSDP represents a good opportunity to contribute to more gender equality results inthe Northern part o f Mozambique, where key socio-demographic indicators are low, particularly inrelation to education andhealth. Achieving results will depend on behavioral changes for males and females within the target populations. The involvement o f the MOH's Gender Advisor and focal points at central and provincial level, along with the consideration o f the MOH's Gender Equality Strategy, i s therefore crucial in all stages o f the project, and especially inmonitoring and evaluation. 373. Inconsultation with key stakeholders and CIDA's support, the project team will develop a gender strategy document that will guide all interventions and ensure that gender equality i s taken into consideration through specific milestones and selected targets during project implementation. More specifically, the project would implement activities as per below: .. 374. Projectin General: Desegregate by sex as much as possible all aspects of the components; The Career Development Training/Workshop for Central program staff (3 per year) - will . be an entry point to consider gender balance and opportunities for both male and women have equal access to career development; Develop modules to facilitate gender equality integration into project activities to: work with communities on gender sensitive indicators, gender sensitive monitoring and evaluation systems and organize national training on M&E database for instance. 107  . 375. Component1: Improvementin ServiceDelivery: Prepare trainers on issues o f gender and health at the community level prior to their provision o f initial or refresher training to Community Health Workers (CHWs), so that ' CHWs can incorporate gender equality into their work and impact on women's lives; Incorporate gender issues and sexual and reproductive health and rights into the training curricula and training materials. This activity will also reach TBAs and THs - both important stakeholders in the three provinces, therefore representing a good entry point, . as communities tend to follow the recommendations they receive from both TBAs and THs; Incorporate relevant gender issues, contextualized with matrilineal society and/or Muslim society (North o f Mozambique), which will impact on the level o f acceptance and adoption o fkey messages; Establish targets with percentage o f male and female, which will allow the project team to get sense o f evidences (and possibly trends) in terms o f gender equality impact o f activities like training, incentives to employees, and services delivered. 376. Component2 Gender balance instaffing. 377. Component3: Preparationof HealthInvestmentPlan ' 0 Gender balance inhiring consultants (with same level o f competencies) will be good practice; it i s also applicable when joining efforts o f international consultants with local consultants. Using this model will help reinforce local consultants skills and abilities; International travel will benefits professionalpeople o fboth sexes; Analyze how the plan takes into consideration gender equality and formulate recommendations for their inclusion into the plan. 378. Component4: InstitutionalCapacityBuilding: . Development o f the operational manual: the manuals will be analyzed or prepared with the support o f a gender advisor to make sure that gender equality is well articulated in all aspects o f the project as this will help to regulated infavor o f gender equality inthe health system. 108  IBRD 33451R1 30