Mozambique - Health and Nutrition Project

Document of The World Bank FOR OFFICIAL USE ONLY &Ca AC PI Report No. 7423-MOZ STAFF APPRAISAL REPORT MOZAMBIQUE HEALTH AND NUTRITION PROJECT FEBRUARY 1, 1989 Southern Africa Department Population and Human Resources Division This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (February 1989) Currency Unit = Metical (pl. Meticais) US1$ 620 Meticais Mt 1.00 = US$0.0016 FISCAL YEARS IDA Fiscal Year = July 1 - June 30 Government Fiscal Year January 1 - December 31 MEASURES 1 Meter (m) = 3.28 Feet 1 Square Meter (sq m) = 10.76 Square Feet ABBREVIATIONS AND ACRONYMS ALOS Average Length of Stay DHR : Directorate of Human Resources DPCCN : Departamento de Prevencao e Combate das Calamidades Naturais (Department for the Prevention and Control of Natural Calamitics) DPCS : Direccao Provincial do Comercio de Sofala (Provincial Directorate of Commerce of Sofala) EACB Empresa de Abastecimento a Cidade de Beira (Supply Company for the City of Beira) EACM Empresa de Abastecimento a Cidade de Maputo (Supply Company for the City of Maputo) EC European Community E.E. MEDIMOC : State Import/Export Agency for Medical Supplies ERP Economic Rehabilitation Program GACOPI : Gabinete de Coordenacao de Projectos de Investimento (Investment Program Implementation Unit) GOAM Gabinete de Organizacao do Abastecimento a cidade de Maputo (Organizational Secretariat for Supply in Maputo) FAO : Food and Agricultural Organization ICB International Competitive Bidding IDA International Development Association IPPF International Planned Parenthood Federation LCB : Local Competitive Bidding MCH : Maternal and Child Health MOA : Ministry of Agriculture MOC : Ministry of Commerce MOH Ministry of Health NGO Non-Governmental Organization NORAD Norwegian Development Cooperation Agency NSA Novo Sistema de Abastecimento (New Supply System) OMM : Organizacao das .Mulheres Mocambicanas (Mozambican Women's Organization) PHC Primary Health Care PPF Project Preparition Facility SOE Statement of Expenditure SOP Standard Operating Procedures UNDP : United Nations Development Programme UNFPA : United Nations Fund for Population Activities UNICEF United Nations Children's Fund WFP : World Food Program WHO World Health Organization  FOR OFmFCIAL USE ONLY TABLE OF CONTENTS Pate No. Basic Data ....................................................... i Credit and Project Summary ....................................... ii Estimated Costs and Financing Plan . . . iv I. INTRODUCTION AND ECONOMIC CONTEXT .... ................... 1 II. SECTORAL CONTEXT AND ISSUES ... .............................. 2 A. Health and Nutrition Status .............................. . 4 B. The Health Sector: Policies, Programs and Issues ........ 6 C. Nutrition and Food SecuLity: Policies, Programs and Issues .......................... . 13 D. Bank Group Role ..... . 19 III. THE PROJECT .............................. ............ 20 A. Objectives and Summary Description ........................ 20 B. Detailed Description ... . 21 IV. PROJECT COSTS AND FINANCING .. 30 A. Cost Estimates ............................................ 30 B. Financing Plan ............................................ 34 V. PROJECT MANAGEMENT AND IMPLEMENTATION . . 35 A. Pro'ect Management .... 35 B. Project Preparation and Implementation Schedule . . 36 C. Procurement ............................................... 37 D. Disbursements . . ........................................... 39 E. Special Accounts ... ... .. 40 F. Accounting, Auditing and Reporting . . . . 40 VI. PROJECT BENEFITS AND RISKS ................................ 41 A. Benefits .................................................. 41 B. Risks ..................................................... 42 VII. AGREEMENTS REACHED AND RECOMMENDATION ..................... 42 ANNEXES 1.The Structure of the Ministry of Health . . 44 2.Categories of Health Manpower ................................. 50 This report is based on the findings of an appraisal mission that visited Mozambique in June-July, 1988. Mission members were Mr. J. Innes (m,ssion leader, task manager), Ms. N. Sirur (operations analyst), Ms. T. Genta-Fons (counsel), Mr. R. Heyward (nutrition specialist), Mr. S. Holand (pharmacauticals specialist), Mr. F. Pires (architect) and Mr. J. Urbano (hospital specialist). The report was written by Ms. N. Sirur. Ms. H. Phillips assisted in preparation of cost tables and Ms. M. Swan and Mrs. S.B. Jesus were responsible for report processing. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Page No. 3. Health Care Facility Rehabilitation Program .................. 51 4. Agricultural Production Summary .......... ................. 54 5. Food Prices ...... 0.... . ...... .*....... ........................ 58 6. Letter on Prospects for Developing Health Care ............... 60 7. Structure of Ministry of Commerce ......... 72 8. Investment Program Implementation Unit ...... ...... 75 9. Hospital Efficiency Measures and Phasing of Health Facilities Rehabilitation....................... 79 10. Vehicles for Food Distribution - Terms of Transfer ........... 84 11. Project Cost and Financing ...................... . 87 12. Project Implementation Schedule .... . 6 ................. 101 13. List of Documents on the Project File ..................... ... 107 MAP Mozambique - IBRD No. 21274  - i - MOZAMBIQUE HEALTH AND NUTRITION PROJECT Basic Data (All figures apply to 1986 unless otherwise indicated) Area ................................ 802,000 square km GNP per capita .......... US$150 Population ............................ . 14.2 million Rural population as proportion of total population . ............ 87 percent Crude birth rate ... ........... 45 per thousand Crude death rate ............. ..... .. 17 per thousand Population -owth rate .... ............ 3.0 percent per annum Infant moLcality rate ...... # ......... 120 per thousand Child mortality rate . ........... 22 per thousand Life expectancy at birtht (male) ...... 46 years Life expectancy at birth (female) .... 49 years Caloric supply per capita . ........... 1,617 calories Population per physician ..* .......... 46,800 Population per trained nurse ......... 5,400  el"r - ii - MOZAMBIQUE HEALTH AND NUTRITION PROJECT Credit and Proiect Summary Borrower: People's Republic of Mozambique Beneficiaries:Ministry of Health (MOH), Ministry of Commerce (MOC) Amount: SDR 21.0 million (US$27.0 million equivalent) Terms: Standard with 40 years maturity Project ObJectives: To improve health and nutrition status, the project has four main objectives: (a) strengthening capacity in policy formulation and management on health and food security issues, with special attention to resource mobilization, institutional development, information systems, and planning and analysis; (b) improv3lng efficiency, to enhance the impact of services within the tightly constrained budget; tc) improving service quality, to enhance the provision of basic needs to the population; and (d) helping t_ mitigate some of the social costs of adJustment, to help sustain the Economic .'ehabilitation Program (ERP). Project Description: In order to meet these objectives within the context of building a firmer basis for longer-term development and institution-building, the project would involve the following. (a) For the objective of strengthening capacity in policy formulation and management, the project would: (i) facilitate development of improved health policies in the areas of cost-recovery, manpower development, and facility management through studies and assistance in implementation of the studies' recommendations; (ii) strengthen the MOH through reorganizing the central ministry, developing a better fi.nancial management information system and increasing central capacity to manage and supervise investment programs; and (iii) contribute to improving food security policies and information, by aiding in policy analyses on food pricing and distribution and improvements to the food security information system. (b) For the two objectives of improving quality and increasing efficiency of services, the project would: (i) support the health facilities reconstruction program, through renovating and equipping selected health facilities; (ii) improve hospital efficiency through establ.shing better management procedures; (iii) strengthen health facility maintenance at the provincial and central levels through technical assistance and the provision of initial stocks of basic materials; (iv) improve pharmaceutical supply system, througi construction/ renovation of drugs storage facilities with a view to strengthening inventory control, reducing spoilage and upgrading overall management; (v) improve health manpower training, through enhancement of teaching quality, curriculum development and capacity for in-service training, and through upgrading of training centers and teaching materials; and (vi) increase the efficiency of the urban food distribution system through streamlining food supply management and information in the ration system, easing the transport shortage for moving  - iii - food supplies from central and regional depots to areas where the food is needed, and strengthening supplemental feeding programs targetted to school children and factory workers. These activities would, in addition to their othez benefits, also contribute to the fourth objective of helping to m' igate the social costs of adjustment. In particular, the supplemental feeding programs would directly help selected population groups in dealing with the ERP's transitional costs. Additionally, improvements to the rationing system would help ensure regular availability of essential cereals and other commodities to the urban public. Benefits and Risks: The principal direct benefits of the project would be two-fold. First, project interventions directed to key elements of health care d,livery, namely rehabilitation and maintenance of infrastructure and equipment, improved manpower training, and reliable pharmaceutical supply, would increase access to better quality health services throughout the public health system -- particularly in the five provinces of Nampula, Tete, Manica, Sofala, Maputo and in Maputo city, where about 50 percent of Mozambique's people reside. The need for good quality health care is especially urgent given that natural disasters, such as flood and drought, and the ongoing security crisis have had serious consequences for the health status of the population. Second, the project's focus on improving the nianagement and overall efficiency of urban food distribution would increase access to food for the populations of Maputo and Beira cities (and peri-urban areas) -- about 1.3 million persons or about 9 percent of the population -- who have had to bear the heaviest burden of the costs of economic transition under the ERP. In addition to these direct benefits, the project's emphasis on improving policy formulation capability and introducing efficiency and cost containment measures in both health and food distribution systems would assist the Government in making better use of scarce domestic and foreign resources, thereby improving both the quality and the sustainability of service delivery within the tight resource constraints facing Mozambique. The project's main risk is that project implementation could be disrupted by the security situation in Mozambique. This risk has been reduced by explicitly restricting project activities to areas which are likely to remain secure. Second, given that this is the first IDA-supported project to be undertaken in the health and nutrition sectors, there is a prima facie risk of delay in implementation. However, this risk has been reduced by: (a) project interventions to strengthen investment program implementation capacity; and (b) the inclusion of consultant services to aid in implementation of key project policy and technical interventions, which can also be expected to help overcome potential problems arising from the relative inexperience of the implementing ministries in executing externally-assisted projects of this magnitude. Overall, the degree of risk is acceptable.  - iv - ESTIMATED COSTS AND FINANCING PLAN a/ (US$ Million) Estimeted Costs Local Foreign Total A. Policy Formulation & Management Strengthening (Sub-total) 0.5 3.3 3.8 1. Health Policy Studies & Implementation 0.2 0.6 0.8 2. Management Strengthening of the MOH 0.2 2.1 2.3 3. Food Security Policies and Information 0.1 0.6 0.7 B. Improving Efficiency and Quality of Services (Sub-total) 5.0 26.3 31.3 1. Rehabilitation of Health Facilities 2.1 7.5 9.6 2. Hospital Efficiency 0.2 1.3 1.5 3. Health Facility Maintenance 0.2 4.0 4.2 4. Pharmaceutical Supply System 1.2 4.0 5.2 5. Health Manpower Training/Effecttveness 0.4 1.7 2.1 6. Urban Food Distribution System 0.9 7.8 8.7 C. Project Preparation Facility 0.0* 0.7 0.7 Total Baseline Costs 5.5 30.3 35.8 Physical Contingencies 0.3 2.2 2.5 Price Contingencies 0.3 3.9 4.2 Total Project Costs 6.1 36.4 42.5 Financing Plan Government 2.2 1.5 3.7 IDA 2.6 24.4 27.0 Parallel Financing WFP 0.2 4.2 4.4 UNICEF 0.2 1.7 1.9 NORAD 0.0 0.2 0.2 Government of Switzerland 0.9 4.4 5.3 a/Net of customs duties and taxes. * US$35,000, which rounds to US$0.0 million. IDA Disbursements IDA FISCAL YEAR 89 90 91 92 93 94 95 Amount Disbursed 0.8 2.2 3.5 5.9 7.0 5.2 2.4 Cumulative Amount 0.8 3.0 6.5 12.4 19.4 24.6 27.0 Percentage of Total 3 11 24 46 72 91 100  I. INTRODUCTION AND ECONOMIC CONTEXT 1.01 During the first half of the 1980s, Mozambique experienced a marked and sustained decline in output and an aggravation of economic distortions and financial imbalances resulting from a combination of adverse exogenous factors, internal disruptions caused by widespread armed attacks and inappropriate economic policies. In the first six years of the decade, overall production fell by nearly 30 percenc, exports declined by nearly 75 percent and imports were compressed by nearly one-third. In response to the growing internal and external imbalances, and the limited impact of initial corrective policy measures undertaken to address them, the Government, in 1987, launched a far-reaching Economic Rehabilitation Program (ERP) intended to deal comprehensively with the structural problems and severe distortions in the economy. By the end of its first year, the ERP, which contains, inter alia, measures to increase reliance on market signals, improve economic incentives and strengthen demand management t -ough appropriate fiscal, moretary, exchange rate and external borrowin6 policies, had begun to reverse the economic decline of previous years. Now in its second year, the main objectives of the ERP have remained fundamentally unchanged -- namely: (a) to reverse the decline in production and restore a minimum level of consumption and income for the population; (b) to substantially reduce domestic financial imbalances and strengthen external accounts and reserves; (c) to enhance efficiency and establish conditions for a return to higher rates of economic growth; (d) to reintegrate official and parallel markets; and (e) to restore orderly financial relationships with trading partners and creditors. The Government appears to be maintaining the momentum of policy reform, and consolidating the encouraging results that have already been obtained. 1.02 While there can be little doubt as to the appropriateness of the ERP's objectives (and the policy measures required to achieve them) for Mozambique's goal of moving towards sustained economic growth in the medium- to longer-term, it is also recognized that some adjustment measures have considerable short-term costs for vulnerable population segments -- costs .hich must be at least partially mitigated if the supporting social consensus for the ERP is to be maintained and past progre2ss in human resource development not undermined. For example, increases in food prices and restrained public expenditure for health care and other social services have had severe short-term costs for a number of population groups, in both urban and rural areas, which are now a serious governmental concern. From a human resource perspective, then, the key challenges emerging within the ERP framework are: first, to help lay the foundation for continued provisior. of sustainable and efficient basic social services, such as education and health care, that are critical to developing Mozambique's human potential and hence, preparing for longer-term growth; and second, to assist in the maintenance of a social consensus on the desirability of the ERP through measures that address the uneven burden of adjustment and help offset the transitional costs that bear hardest on the poorest. 1.03 The project proposed in this report aims to assist the Government in meeting these challenges in the areas of health care and nutrition. It would assist in addressing the medium- and longer-term issues in health and food supply through support for needed policy analysis/implementation and for improving the overall quality and efficiency of the health delivery and food rationing systems. In addition, while not specifically providing emergency  - 2 - assistance in the form of commodities, which is being provided by a number of donor sources, the project would assist in increasing national institutional capacity to efficiently utilize emergency inputs to the health and food supply systems, thus helping to ameliorate the short-term costs imposed by the ERP. A detailed description of the proposed project is given in Section III of this report. It is preceded by a summary analysis of the current situation and key issues in health and nutrition (Section II) in order to provide familiarity with the sectoral context within which the project was developed. IJ. SECTORAL CONTEXT AND ISSUES 1/ 2.01 When Mozambique gained Independence in 1975, the level of human resource development, as reflected in the literacy rate and life expectancy at birth, was extremely low, even compared with the prevailing low standards of sub-Saharan Africa. In response to this unsatisfactory situation, and in keepinLg with its socio-political goals of equitable development, the post- Independence Government placed high priority on development of basic social services, including investment in an extensive primary health care (PHC) network, development of the education system and implementation of special interventions aimed at maintaining food intake and nutritional levels at an acceptable minimum. At least partially as a result of these measures, improvements began to be observed in the heal.h, nutrition and educational status of Mozambicans, particularly in the first 5-7 years following Independence. Since then, however, the increasingly widespread armed bandit activity in rural areas has led to severe disruption of existing social services systems and agricultural production, thereby jeopardizing the gains of previous years. Moreover, as discussed in Section I, the growing economic crisis (and the adjustment measures taken to address it) has meant that the Government has been severely constrained in its ability to allocate sufficient resources for social services' operation and development. 2.02 Substantial population growth over the past years has also placed tremendous pressure on Government capacity to provide adequate social services and employment opportunities. Although not among the highest in Sub-Saharan Africa, the annual average rate of population growth in Mozambique is now beginning to approach 3 percent and available estimates are that the country's population doubled in size from 6 million to 12 million between 1950 and 1980, with a further 50 percent increase anticipated by the end of the century. Examination of the components of population growth indicates that while total fertility levels have risen substantially since 1950 and are now about the same as in comparable African countries (i.e., around 7 births per woman completing her child-bearing years), mortality levels (particularly among infants and children) have barely fallen at all over the last few decades and are, therefore, relatively higher. Thus Mozambique's somewhat lower-than- average population growth rate appears to be the result of higher mortality levels, in turn related to lack of significant improvements in health and nutrition status, given continued disruption of social services outside the 1/ A more detailed treatment of sector status and issues is given in Report No. 7422-MOZ, Mozambique: Population, Health and Nutrition Sector Report.  - 3 - main urban areas. In this context, any vigorous campaign to promote family planning for purposes of lowering fertility is likely to prove unconvincing to pare,ats, who have reason to be fearful for the survival of existing children. As such, Government, though aware of the cons?quences of rapid population growth, has not as yet adopted any explicit rials for reducing the national population growth rate. Rather, recognizing the beneficial effects of family planning for maternal and child health/nutrition, it has stressed integration of family planning into health services, focussing on the main urban areas where receptiveness to family planning is presumably higher, given better child survival rates. 2.03 This approach of using health services as an entry point for introduction of population/family planning services and education appears to be well-suited to the present Mozambican context, and is being implemented satisfactorily by the Government with assistance from external agencies, princirily the United Nations Fund for Population Activities (UNFPA) and the International Planned Parenthood Federation (IPPF). The main strategy is to target family planning services to women at medical risk from child-bearing as determined by the elapsed interval since the last pregnancy, the age of the woman and the number of children already born to the woman. This is now being done effectively in most urban areas, where family planning services are provided by specially trained para-medical workers, a wide variety of methods is offered, and contracf-otive supplies are adequate, although there could be shortfalls in the future as demand for family planning increases. Information and Lommunications activities related to family planning are carried out with the assistance of women's organizations linked to the ruling party, and by health workers, primarily through woman-to-woman contacts. This modest approach has been relatively successful in gaining acceptance of family planning, with contraceptive prevalence estimated to be highest in Maputo (about 15 percent), where infant and child mortality as relatively lower, and grow.ng in other urban areas. Substantial further progress in other areas will probably have to await improvements in health and nutrition and related child survival rates, in tutn, largely dependent on easing of the current security crisis. 2.04 Paras. 2.05-2.31 below provide an in-depth analysis of prevailing sectoral conditions and issues in the sreas of health and nutrition as they relate to the proposed project. The content of the project takes into account, and is to a large degree based on, a Bank study of the population, health and nutrition sectors (Report No. 7422-MOZ), and on extensive discussions within Government and between Government officials and Bank staff. In addition to health and nutrition, population/family planning issues were carefully considered in these discussions and it was jointly determined that a separate component or sub-component for population/family planning would not be appropriate at this time given the suitability of the existing family planning approach to the current security and socio-economic climate and the fact that satisfactory levels of assistance are already available from donor sources (i.e., mainly UNFPA and IPPF). Rather, through strengthening key aspects of the health and nutrition sectors, the proposed project is expectid to help lay the basis for a more comprehensive family planning program in the future, insofar as it can be expected to help lower mortality and strengthen the network of health facilities/programs through which family planning  - 4 - cervices are delivered. Government is committed to implementation of such a broader population/ family planning effort once security and socio-political conditions permit, and expects to secure assistance from international agencies, incluJing the Bank, for the effort. A. Health and Nutrition Status 2.05 Status Indicators. Accurate information on the health and nutritional status of Mozambique's population is limited. World Development Report estimates 2/indicate, however, that life expectancy at birth is about 48 years; the crude death rate is about 17 per 'housand population; and infant and child mortality are about 120 and 22 per thousand, respectively. Daily calorie supply per capita is estimated to be 1,617, considerably below requirements of 2,300 calories, and the percent of babies born with low birth weights -- an important indicator of maternal malnutrition -- is around 16. These health and nutrition status indicators compare very unfavorably with the averages for all low income economies, even when China and India are excluded. For example, average life expectancy for low income countries (excluding China and India) is 52 years, well above the Mozambican figure, and daily calorie supply per capita averages about 2,100. Including China and India, the corresponding averages for all low income countries are: life expectancy -- 62 years and daily per capita calorie supply -- 2,329. 2.06 Main Health Problems. The available data suggest that the principal causes of morbidity and mortality in Mozambique are infections and parasitic diseases, particularly malaria, gastrointestinal illnesses, pneumonia, measles, neonatal tetanus and tuberculosis. Communicable diseases, often complicated by malnutrition, account for up to 75 percent of all visits to rural health facilities. For all age groups combined, the most common diagnoses are trauma (including all accidents), anemia and malaria and the most frequently reported infectious diseases are measles and tuberculosis. While the full extent of the AIDS problem is unknown, anecdotal evidence suggests that it is less severe than in neighboring countries. However, the social dislocation caused by armed attacks indicates that the potential for its rapid spread is high. 3/ Among children, available statistics show that the most common causes of illness and death are anemia, malnutrition, pneumonia and diarrhea. 2.07 Data on non-infectious morbidity and mort2lity, including war- related trauma, are more limited. In Maputo City, about 7-10 percent of deaths reported annually are attributed to cardiovascular causes, and another 6-11 percent to malignancy. War-related injuries have overwhelmed the 2/ All figures are from the World Development Report 1988 and pertain to 1986 unless specified otherwise. 3/ The Government with assistance from the World Health Organization (WHO) has developed a medium-term action plan for addressing the AIDS problem. Funding for implementation of the plan has been provided by a number of bilateral and multilateral donors.  available surgical, intensive care, orthopaedic and other rehabilitation services at hospitals. For example, the patient case load of the only artificial limb service in the country (operating in Maputo) rose nearly eightfold in four years from 53 in 1981 to 392 in 1985. These represent only a fraction of actual needs. In general, the incidence of medical problems arising from the prolonged bandit activities in Mozambique, ranging from civilian injuries during bandit attacks to the mental trauma suffered by eyewitnesses, have, not surprisingly, been underreported and catered for by a health system designed for times of peace. 2.08 Malnutrition. As indicated in paras. 2.05 and 2.06 above, malnutrition, particularly among the highest at-risk groups (infants, young children and pregnant and lactating women), is a serious and widespread problem in Mozambique as in many other African countries. Spot surveys carried out in the past 2-3 years in secure areas have found that prevalence of chronic malnutrition among children, measured by weight-for-age (stunting), is between 30 and 40 percent; while severe malnutrition, measured by weight for height (wasting), is prevalent in an average of about 6 percent of children surveyed. The situation is presumably much worse in areas cut off by bandit activity. For example, Red Cross representatives in Zambezia report that 20-25 percent of children arriving in resettlement camps are severely malnourished, versus the 6 percent average for accessible areas. Micro- nutrient deficiencies common in Africa are also prevalent in Mozambique, namely Vitamin A deficiency (with consequent xerophthalmia) and widespread anemia among women. While earlier studies/surveys have shown nutritional status to be better in Maputo and in provincial capitals than elsewhere, results of a new, 1988 monitoring system for child growth show rates of faltering growth to be at about the same level as in other parts of the country -- probably because of the recent substantial influx of families from de-stabilized areas. Moreover, increases in food prices under the ERP would appear to have negatively affected the food intake of urban-dwellers (see para. 2.26). 2.09 The food supply situation is a key factor in current nutritional problems. Food production, like agricultural development in general, is at present in a state of crisis, having fallen substantially since Independence, and by a quarter between 1981 and 1986 alone. The causes of this deterioration include the neglect of the dominant smallholder sector in both colonial and post-Independence times, inappropriate agricultural pricing systems since Independence, droughts in four of the past six years, and the disruption of food production and internal distribution networks caused by bandit activity. Food production will probably fall further this year, despite higher producer prices under the ERP, given the renewed drought. The South has been particularly hard-hit since remittances from labor migrants to South Africa, an important supplement in earlier times to family farming, have fallen drastically due to South Africa's post-Independence cuts in recruitment from Mozambique.  - 6 - B. The Health Sector: Policies, Programs and Issues Sector Description 2.10 Health Organization and Management. The Ministry of Health (MOH) is the principal provider of medical services in the country. The MOH is headed by a minister and vice-minister and contains five central directorates and two central departments, each consisting of between two and seven divisions or sections. The five directorates include: (a) the National Directorate of Health; (b) the National Directorate of Social Action; (c) the Directorate of Human Resources; (d) the Directorate for Administration and Finance; and (e) the Directorate of Supplies. The two central departments include the Department of Planning and the Department of Cooperation, intended to coordinate donor activities in the sector. Furthermore, the MOH also possesses a number of subordinate and adjunct units (e.g., institutes for research, training, laboratory work, maintenance, printing, procurement and storage). This fragmented and elaborate structure leads to apparently "understaffed" sections and units, as well as duplication of responsibilities and lack of coordination between units thereby hampering the efficient functioning of the ministry. An organogram of the MOH, together with a summary description of the functions of its various divisions, is given in Annex 1. 2.11 In addition to the central MOH, each of Mozambique's ten ?rovinces has a provincial health directorate headed by a Provincial Health Director. The provincial directorates are responsible for all staff and curative and preventive activities, and plan their own expenditures within the guidelines and global budgets provided by the central level. The provincial health service areas are in turn subdivided into district health directorates, whose main function is the supervision of rural hospitals, health centers and healtn posts, and district preventive activities within their respective districts. 2.12 The Health System. All modern health care in Mozambique is provided thirough government health services and private practice is not permitted. The sale of some drugs is permitted through private pharmacies and a number of private general traders operating outside the main urban areas, though all drugs are supplied to such outlets by E.E. MEDIMOC, a state-owned import house which is the sole importer of drugs and most medical supplies in Mozambique. Traditional healers are reported to provide a significant amount of health care, whose nature and quality are little known. 2.13 Public health facilities in Mozambique are organized into four tiers: the first being health posts and health centers; the second, rural and general (i.e. urban) hospitals; the third, provincial hospitals; and the fourth, central hospitals. The lowest level unit in the health system is the communal village health post, served by multipurpose basic-level agents who are selected and paid by the community. At the next tier up is the locality health post, which is staffed by a midwife and a health agent. Many health posts function essentially as first-aid stations. The next higher level is the health center, which acts as a transitional unit between the primary and secondary health care systems and serves a population of 150,000 to 200,000. It has up to 20 beds and is staffed by midwives, HCH nurses, preventive health  -7- agents, laboratory and pharmacy workers, technicians, and sometimes a full- time physician. The health center may function as a small hospital whenever there is no rural or general hospital nearby, and distinctions between them are often blurred. However, rural and general hospitalj often also possess radiology and dental facilities, have more physician services available, can usually do simple surgery and contain 50-100 beds. The provincial hospitals have about 200 beds as well as a surgeon, a gynecologist, a pediatrician and an internist on their staff. The three larger central hospitals, located at Maputo, Beira and Nampula, act as provincial hospitals for their respective provinceF and the latter two also act as regional referral points. The Maputo hospital, besides serving the population in its surrounding area, is also the ultimate referral facility for the whole country. 2.14 Numbers of health facilities increased dramatically after Independence, particularly those at the lowest, primary level -- in keeping with the Government's strong commitment to PHC. Between 1975 and 1985, numbers of operating primary care facilities (health posts and centers) rose from 546 to 1,416. Unfortunately, bandit activity has damaged a significant part of this primary health care network in recent years. By 1985, 196 peripheral units (particularly health posts, centers and rural hospitals) had been destroyed and another 288 looted and forced to close, constituting altogether a quarter of the network. Some provincial hospitals have also been damaged or looted and both these and the central hospitals have suffered from gross neglect as limited Government resources have become focussed (appropriately) on rebuilding and operating the primary network. The Government, with assistance from a number of external donors -- bilateral, multilateral and non-governmental organizations (NGOs) -- is putting in place a program of rebuilding and rehabilitation of health facilities to repair the damage. 2.15 According to MOH statistics, numbers of patient visits (out-and in-patient) peaked at nearly nine million in 1985, or just over half a visit per person per year on average. Visits had increased rapidly prior to 1985 (from 6.5 million in 1979) but then fell by 15 percent in 1986, largely due to security problems. Outpatient curative visits made up almost 80 percent of total recorded contacts with the health system, most occurring at the primary and secondary levels of the system. Reliance on data regarding visits to health facilities, however, probably underestimates the extent of the population's contact with the health system: special programs such as the Expanded Program of Immunization and the Child Survival/Development Program have involved extensive outreach efforts whereby people are reached in their communities or homes. Both programs, which are supported by the United Nations Children's Fund (UNICEF) and by bilateral donors, have shown good results, taking into consideration the unusual security conditions with which they have to cope. 2.16 Numbers of health personnel active in Mozambique have generally increased since Independence, reflecting the higi priority accorded to health manpower training by the MOH. For example, doctors increased from 171 in 1975 to about 300 at present; nursing staff increased by 25 percent, from about 2,150 to 2,700, between 1980 and 1986; and midwives doubled during the same period to a current total of about 1,000. Health manpower training is  coordinated by the Directorate of Human Resources, which is also responsible for coordinating in-service training and maintaining records and statistics on personnel employed in the health system. Information on the specific categories of health manpower trained in Mozambique is given in Annex 2. The principal health manpower training centers include: the Faculty of Medicine in Maputo; three Health Sciences Training Institutes for nurse and paramedic training situated in Maputo, Beira and Nampula; a midwifery/nursing training center in Marracuene, funded largely by UNFPA; and a number of provincial training centers, usually located in provincial capitals, which are responsible for training elementary-and some basic-level health workers in accordance with provincial requirements and available budgets. Between 1976 and 1985, the total number of health workers trained annually (excluding doctors) rose from about 275 to slightly over 1,000. Since then, however, the economic crisis has forced a scaling back of the health labor force, which because of a policy guaranteeing employment within the MOH system to all trained health workers, is being implemented through lowering enrollment into training institutions. 2.17 Besides facilities and manpower, another key element of health services is the provision of pharmaceuticals and other medical supplies. In this regard, Mozambique has been one of the pioneers in establishing a national essential drugs program, whose goals are to control expenditures of foreign exchange on drugs, and to strengthen further the PHC system by supplying it with quality drugs at the lowest possible cost. A Technical Committee was set up soon after Independence which established a National Formulary, njw listing 107 vital drugs. Special permission is required to import any other drugs. As noted in para. 2.12, E.E. MEDIMOC, supervised by the MOH pharmaceuticals department, is responsible for the procurement of drugs in bulk through international competitive bidding procedures. They are then distributed to the public through health facilities or through pharmacies. Kits containing a three-month supply of 34 basic drugs are now shipped directly to health posts and centers. This kit system, which does not cover hospitals, was implemented in 1986 in the South and the MOH intends to expand it to the rest of the country by the end of 1988. Kits are currently largely funded by donors and procured and assembled abroad by UNICEF, ready for unpacking in the health facility. Unlike in many other African countries, drug procurement in Mozambique (carried out by E.E. MEDIMOC) is relatively efficient. However, significant improvements could still be made in drug storage, management and distribution. 2.18 Health Financing and Expenditures. Financing for the health sector in Mozambique derives from three main sources. In order of importance, they are general government revenues, donor contributions, and patient fees. In line with its commitment to developing social services, the Government allocated increasing financial resources to health in the first few years after Independence. Recurrent budget allocations to health rose from about 8.7 percent of total recurrent allocations (2 percent of GDP) in 1975 to 10',J percent (2.5 percent of GDP) in 1980. However, growing military needs and economic difficulties subsequently forced a teversal of this trend, with the health allocation dropping again to 7.1 percent (1.4 percent of GDP) by 1985, declining further to 4.4 percent in 1987, and 3.9 percent in 1988. Public sector investment in the health sector, however, was maintained until 1986,  -9- when a sharp drop occurred. The gap left by decreasing government allocations/expenditures has, to some extent, been filled by donor contributions (notably UNICEF and some bilateral donors), who in recent years, have increasingly supplemented government recurrent expenditures through provision of essential commodities, incremental staff and running costs of special programs. Moreover, as previously noted, several external agencies are providing support for the reconstruction/ rehabilitation and equipping of health facilities, both as part of their regular investment assistance programs and in response to a recent United Nations Development Programme (UNDP)-sponsored emergency appeal. The third source of health financing -- patient fees -- was equal to about 8 percent of total health expenditures in 1985. In 1987, in the face of growing financial difficulties, a new, more comprehensive, cost recovery scheme was introduced, consisting of: a flat one- time fee for outpatient consultations; payment for outpatient drugs; and a daily inpatient fee in urban hospitals. 2.19 The allocation of resources within the health system has been mostly consistent with stated government policies emphasizing PHC and preventive activities. Mozambique has done much better than other African countries in assuring consistency between resource use and policy objectives. For example, the common problem of excessive concentration on referral hospitals has been avoided, with nearly all investment directed to lower level facilities and over 64 percent of the recurrent budget devoted to PHC and rural health services versus about 36 percent allocated to the seven provincial, three central and two psychiatric hospitals. If anything, it is now apparent that the higher-tier facilities, notably the central hospitals, have been neglected and are now in need of urgent repair. With regard to the composition of health expenditures, there have been some important shifts in the past two years which are linked to the adjustment program. In particular, the reduced share of expenditure going to health and the substantial wage increases granted in 1987 and 1988 to partially offset devaluation-related inflation has meant that real expenditure on operating expenses and material inputs has been severely squeezed. Moreover, shortages of foreign exchange for basic supplies (including maintenance items) have meant that existing infrastructure and equipment have begun to deteriorate, even where local funds are available to replace or maintain them. As previously mentioned, donors are already providing some assistance in these areas. However, higher levels of assistance may be required in the future, perhaps even at the expense of reduced support for investments. Issues 2.20 Many of the key issues and constraints in the health sector have been alluded to in the preceding paragraphs as part of the sector description. in general, the main challenges facing Mozambique's health system concern the need to restore and maintain health services of adequate quality in an environment that in the medium-term at least is likely to be hostile from the standpoints both of security conditions and resource constraints. Specific issues, most of which are interlinked, are discussed below (including, where appropriate, brief descriptions of government initiatives in addressing them).  - 10 - (a) Rehabilitation of the Health Network. As previously noted, a significant proportion of Mozambique's health facilities has been damaged or destroyed as a result of armed bandit attacks, and others have deteriorated as a result of shrinking availability of the financial and material resources required for investment and maintenance. Although Government is strongly committed to rebuilding/restoring the health network and has allocated its own resources to the effort, external assistance will be critical to its ultimate success. To date, substantial financial support has been forthcoming from a number of external sources including the Dut-h, Italian and German Governments, UNICEF and a wide array of NGOs (see Annex 3). These agencies are largely focussing their efforts on restoring primary and secondary facilities, with NGOs concentrating on the lowest-tiers, namely health posts and some health centers, while bilaterals and UN agencies have pledged financial assistance for rebuilding rural, general and provincial hospitals as well as some health centers. However, needed physical improvements at the three main hospitals at Maputo, Beira and Nampula have been constrained by lack of funds, although there are extensive and serious unmet needs for services more complicated than can be provided at lower-level facilities (para. 2.07). A second constraint to effective implementation of the reconstruction program as a whole is the absence of adequate technical and managerial capacity within the MOH to adequately assess and cost physical reconstruction needs, prioritize among them, secure donor support in accordance with these priorities and initiate and oversee actual reconstruction efforts. At present there is only one full-time staff person (an architect) within the planning department focussing on these issues, while other staff are concerned with them only on a part- time basis. Finally, rehabilitation of facilities will be of little value if capacity to maintain them is lacking. Recognizing the importance of maintenance, the Government is attempting to strengthen its network of provincial maintenance centers (linked to the Maputo Maintenance Cernter). Its efforts have, however, been hampered by the lack of technical and managerial expertise in the maintenance area, lack of foreign exchange to purchase simple tools and supplies and inadequate storage facilities in some provinces. Limited assistance in these areas is now available from the Dutch and the Italian Governments in the form of technical expertise, training, spare parts for medical enuipment and improvements to storage facilities. In addition, UNICEF provides support for vehicle maintenance. (b) Resource Use and Mobilization. Given the prevailing economic environment in Mozambique, there is little likelihood that budgetary allocations for health will increase significantly in real terms over the next five or so years. In this context, it is essential to maximize resource use through appropriate efficiency measures throughout the system, but particularly within health facilities which are the major consumers of resources. For example, substantial cost reductions could be achieved in hospital operations (while positively affecting service quality) by improving patient admissions and management procedures in order to achieve overall declines in lengths of hospital stay,  - 11 - reductions in inappropriate admissions and reductions in readmission rates. Resources thus freed up could then be reallocated, either to other priority needs within the hospitals or to the operating costs of primary facilities and programs. While efficiencies at the primary level may be harder to implement given the much larger number of these facilities and of individuals managing them, some improvement is likely to be possible through appropriate in-service training efforts (see (c) below). Thus far, the Government, beyond sending a few individuals on health management fellowships, has not taken any steps to address these efficiency issues systematically -- at least in part because of the lack of domestic expertise in the area. There is, however, considerable interest within the MOH to begin tackling these issues in a comprehensive manner. The issue of mobilizing additional resources for the health sector is one that the Government has begun to tackle in three ways: (a) by soliciting additional external support for the sector (e.g., through emergency appeals); (b) promoting greater community responsibility for health -- particularly in the context of its special programs on immunization, child survival etc. (para. 2.15); and (c) through the introduction of a comprehensive cost recovery system (para. 2.18). Of the three initiatives, the last is probably the most problematic. Although in many countries cost recovery has proven to be one of the best ways to mobilize resources for the sector, its introduction in Mozambique may need to proceed much more cautiously given the need to protect access to health services for the poorest segments of the population and those hardest hit by the transitional costs of the ERP measures. While the cost recovery regulatory framework does contain provisions to protect the ir.cerests of these vulnerable groups and to ensure that preventive measures are available free, there are some indications that these provisions are not being implemented adequately, so that utilization rates at health facilities are beginning to decline. Moreover, the MOH is experiencing considerable difficulties in revenue accounting and, in some instances, collection, particularly from enterprises that are responsible for paying their employees' health care fees. In this connection, it should be noted that there is a need for better financial accounting and management within the health system as a whole, including development of a simple financial management information system to allow MOH decision-makers to better relate health outcomes to resource utilization. Such a system would complement the WHO-supported health information system, now being developed within the MOH. (c) Effectiveness of Manpower Training and Health Personnel. A crucial factor in the provision of health services is the health worker, who, if sufficiently motivated, well-trained and adaptable, could do much at the level of the facility to overcome the obstacles posed by Mozambique's uncertain security and economic situation. At present, however, few systematic steps have been taken to review the changing role (and, hence, skill requirements) of the various categories of health workers or to better equip them to function adequately within the realities of working under difficult conditions. Moreover, training in  - 12 _ even the basic technical skills has been seriously hampered by shortages of trained teachers, lack of textbooks and other written materials in Portuguese and shortages of transportation and equipment required for practical training. These factors, combined with inadequate prior academic preparation in the sciences and extremely poor boarding and lodging conditions have contributed to high drop-out rates, particularly from paramedical courses. Upon graduation and subsequent employment in the health system, health workers continue to be hampered in the performance of their duties by lack of up-to-date job descriptions, limited supervision and few opportunities to upgrade their skills through relevant in-service training. Appropriate in-service training could also do much to improve the effic4'ncv of lower-level facilities, which are often headed by paramedics wi , little or no prior exposure to management requirements. Another issue concerning manpower development, relates to the absence of an up-to-date, realistic plan relating manpower needs by category of health worker to affordable training and, ultimately, employment scenarios. The existing 10-year MOH manpower training plan (prepared in 1981) has become obsolete in the current constrained environment, with the result that sharp cuts in training are being made without adequate analysis of their implications for health system functioning or determination of the optimal skill-mix required under present conditions. The latter problem is exacerbated by the absence of adequate information on the numbers and types of staff presently employed within the system, in turn caused by the incomplete data forwarded by provincial authorities to the Directorate of Human Resources (DHR), as well as by the latter's weak capacity for systematizing and analyzing such data as are available. (d) Pharmaceutical Storage and Management. Although Mozambique, through adoption of the Essential Drugs Program (para. 2.17), has been relatively successful in improving the procurement and supply of drugs, further efficiencies are possible which could be achieved through improved storage and management practices at central and regional distribution points. For example, in Maputo, E.E. MEDIMOC's drugs and medical supplies are scattered in over twelve storage facilities in as many locations, and many are short of the shelving, handling and cooling equipment essential to proper drug storage and distribution. As a result of these physical constraints, management and inventory control of the stores is unnecessarily complicated and leads to extensive losses of drugs from the system due to spoilage and other leakages -- while many secondary and tertiary health facilities (not covered under the kit system) remain severely undersupplied. Similarly, spoilage of drugs is high at the regional stores in Beira, where the main warehouse has insufficient air-conditioning for drug storage. Furthermore, improvements in established systems for management and inventory control and appropriate training for staff are also necessary to increase efficiency of Mozambique's drug supply.  - 13 - C. Nutrition and Food Security: Policies, Programs and Issues Sector Description 2.21 Nutrition Institutions. Responsibility for nutrition and food security issues is shared among: (a) the Ministry of Agriculture (MOA), which is responsible for food production; (b) various departments of the Ministries of Commerce (MOC) and International Cooperation, which are responsible for food distribution; and (c) the MOH Nutrition Section, which is responsible for nutrition interventions through the health system. In addition, the Government has recently set up a Commission to evaluate the impact of the ERP on welfare, which has a working group focussing on food security and nutrition. A summary of the current status of agricultural production is given in Annex 4. More detailed information on the agriculture sector in Mozambique is available in the Mozambique Agricultural Sector Survey, 1988, Report No. 7094-MOZ. 2.22 The main nutrition and food security programs can be classified into two categories: (a) the food distribution and ration schemes; and (b) interventions through the health sector. 2.23 The Food Distribution and Ration Schemes. Government provision of food staples to consumers through a ration scheme (effective in Maputo and now being extended to Beira) and a free food distribution scheme (in rural areas, for displaced persons and others seriously affected by the bandit activities) is substantial, accounting for a large share of some families' total food consumption. A response to the current food supply crisis, these schemes depend almost entirely on imported food aid, since the state of emergency, scarcity of foreign exchange, and other aspects of the economic situation have made commercial imports infeasible. Needs for donated food for an estimated 6.5 million persons (mainly 1.6 million displaced persons, nearly 3 million urban and peri-urban dwellers and about 20 percent of the 9 million rural population) requiring assistance are calculated on the basis of a daily ration agreed with the World Food program and composed of: 350 grams (g) cereal, 10 g oil, 40 g pulses, 35 g sugar, and 5 g salt. This diet's caloric value is about 1,600, compared with a daily requirement of about 2,300 per capita. Donated food supplies are meant to be (but cannot always be) supplemented in urban areas and camps by horticulture in family allotments within "zonas verdes" ("green belts"). 2.24 Chief responsibility for food distribution is borne by the Ministries of Commerce and International Cooperation. Attached to the latter is the main executive department in this domain, the Departamento de Prevencao e Combate as Calamidades Naturais (DPCCN). The MOC is responsible for the overall availability of food, and for the distribution of the quantities that are for sale. It analyzes surveillance data and plans the food distribution system in its Department of Food Security. The DPCCN is responsible for implementing the free distribution of food for emergency relief. The instrument of coordination is a committee, chaired by the Vice-Minister of Commerce and including representatives from concerned minist ies and donor agencies. Below the central level, affected provinces each have a provincial committee chaired by the Governor and program executive authority rests with  - 14 - the Provincial Directors of Commerce and DPCCN. There are analogous committe('5 in affected districts. A current assessment of needs is maintained through radio contact with the districts, and available food supplies are disttib1met.d accordingly, often by army convoy. The administration of the ratioi5:g system in 4laputo and Beira is separate, being the responsibility of the MOC, xzurking throagh the Gabinete de Organizacao do Abastecimento a Cidade de Maplot, (GOAM) and in Beira, through the Direccao Provincial do Comercio de Sofala (Wl)';C). The rations are distributed to retailers (mostly private) with whom rationi card holders are registered. Actual warehousing and distribution is dor3r b,y parai;tatals created for the purpose -- the Empresa de Abastecimento a Cidade de Maputo (EACM) and the Empresa de Abastecimento a Cidade de Beira (EACB). 2.25 Some 25-40 percent of donated food is distributed free for emerg(e-icy relief, to displaced persons in towns and camps, hospitals, health centrns, :,ocial centers, and training and other institutions. This food is allocated to provincial governors and thence by them to district adminisirfitors, who arrange distribution to families through community leader<.. rhe leading criterion of need employed is the family food stock needei tro last till the next harvest. 2.26 The remaining more than 60 percent of donated food is sold through the rationing stem operating in Maputo (since 1981) and in Beira (since 1986), known as the NSA or Novo Sistema de Abastecimento. Ration supplies are distributed to registered retailers, who then sell to consumers who are registered with them. All consumers who wish to participate in the scheme must register, and are then entitled to purchase food at the ration prices up to the I-iij:its established, depending upon actual food availability. However, the aim is to supply, per month, for each family member: 4 to 5 kilograms (kg) of cereals (rice, maize, flour, pasta); 1 kg sugar; 1 liter oil; salt. This rationi would supply some 1,100 calories per day, which is around half normal r-equirements. The balance of requirements must be met by means such as cultivating a garden or "green zone" plot, barter arrangement with rural dwellers or purchase on the free market. 2.27 There is quite a high financial cost for donated food through the operation of the PL 480 agreement covering the large contribution of the United States (US$70 million pledged in 1987), and similar arrangements in operati.(o for the European Community (EC) contribution. According to these arrangements, the Government must pay the stated market value of all food sold into a local currency (metical) account which can only be drawn upon with donor consent, and is supposed to be devoted to agricultural development. Any difference between the amount paid into the metical account and the receipts from sale at the official ration prices represent a kind of subsidy, which would have to be met from the budget. It was with the aim of reducing these subsidy costs to the Government, in harmony with the current ERP, that official ration prices were raised on April 1, 1988. (For example, the price of maize per kilogram was raised from Mt 27 to 112.5 and of rice from Mt 40 to 271 - see Annex 5). Additional objectives are to reduce incentives for the population to move into Maputo, Beira and other towns; make official prices as consi-J( f is possible with the long-term liberalization of agricultural pricin l,es, and thereby stimulate agricultural investment and  - 15 - production, reducing Mozambique's dependency on food aid in the longer term. The NSA ration scheme itself is in the process of being converted from a means of providing an indiscriminate food subsidy to urban populations in Maputo and Beira to a means of ensuring them a basic minimum availability of food. 2.28 Using the new schedule of much higher ration prices, the monthly cost of the ration amounts to just over Mt 1,900 per capita, or around Mt 13,000 for the average family of seven persons. The purchase of 35 kg of tubers to bring calories up to requirements would add another Mt 5,000 or so (using the cheaper kinds) per month; the substitution of vegetables, fruit, meat or fish would increase this amount considerably. Thus total monthly family food costs would add up to at least Mt 18,000, compared with a minimum wage of Mt 12,900. Families at such wage levels try to have two wage-earners per family, but this possibility is reduced at present by the transitional unemployment associated with the reorganization of industry, commerce and government organizations. Even at higher income levels, for example a middle- level civil servant earning about Mt 40,000 per month, the cost of an adequate diet would be a significant drain on family budgets. In the circumstances, it is imperative that the Government develop mechanisms to buffer the most vulnerable population groups from the negative effects of the huge price increases. The Government C3mmission on the Social Impact of the ERP is undertaking a preliminary assessment of the effects of price increases and developing guidelines for appropriate targeted interventions. In the interim, the ration scheme has been amended to enable customers to buy their rations in small quantities (rather than on a bi-weekly or monthly basis) and to substitute among the various starch staples in the diet to achieve a more affordable mix. Moreover, efforts are being made to develop supplemental subsidized feeding programs targeted to specific groups such as school children and workers. 2.29 Nutrition Interventions Through Health Services. Within the context of currently available food supplies and basic diets, much can and is being done to reduce the levels and impact of malnutrition. Main responsibility in this area rests with the MOH Nutrition Section which has one assistant-level and two professional-level posts. The Nutrition Section's program of action for 1987 is organized around the following activities: training; nutrition education; collection and publication of information; research; supervision of dietetic services; emergency program; intersectoral coordination; and administration. Many of these activities are supposed to be directed and supervised at provincial level, as well as carried out at the center. There is also a nutrition assistant (para-professional) in some of the provincial Governors' offices. Currently, the most important nutrition and nutrition-related interventions being carried out through health services are as follows: (a) oral rehydration therapy which reduces mortality from severe bouts of diarrhea and shortens their duration, thus lessening nutrition losses; (b) growth monitoring of children through MCH clinics which detects faltering growth through monthly weighing; (c) immunization which reduces or eliminates the incidence of childhood diseases - consequently also the deterioration of nutritional intake and status during illness; (d) rehabilitation of severe cases of malnutrition is provided in pediatric wards of hospitals and in health centers; and (e) nutrition education and promotion  - 16 - of breast-feeding is included as a normal part of broader health education efforts. 2.30 Nutrition/Food Secur'ty Surveillance and Measurement. The Government of Mozambique is well aware of the importance of nutrition/food security information, and has made many attempts to build up a solid data base. -These efforts have sometimes been frustrated by economic problems and the security situation. However, over the past two years, the MOH Nutrition Section has developed a new system to monitor the nutritional status of children through weight data at MCH centers. A failure to gain any weight is classified and recorded as a case of malnutrition, requiring follow-up action by MCH personnel. Results are now regularly available from most districts, though sometimes only for district capitals due to security problems. This is nevertheless a remarkable achievement in the circumstances, and bulletins publishing the data should prove useful in monitoring levels and trends in nutrition and living standards. Monitoring of agricultural production is done by the MOA. With assistance from Food and Agricultural Organization (FAO), it has established an Early Warning System, with sentinel posts located throughout the country, to reasonably predict domestic food production. AGRICOM, a parastatal linked to the MOA and MOC, also manages an information system to track actual sales of domestically produced food (and other agricultural products). Finally, the MOO maintains information on food stocks and offtake in the emergency relief and urban rationing systems, for which it has supervisory responsibility. In addition, it attempts to make assessments of food requirements, focuss:ng particularly on urban needs, and gathers information on domestic food prices. Issues 2.31 There is little doubt that the long-term solution to Mozambique's nutrition/food security problems lies in revitalized domestic agricultural (and food) production coupled with equitable economic growth. And, indeed, the Government, assisted by a number of external aid agencies, including IDA, is giving highest priority to agricultural investments (within the supportive framework of the ERP) that will help put the country back on a growth track. The impact of these investments will, however, be limited in the short to medium term, particularly in light of the continuing uncertainty of the security situation and the ravages of drought and flooding in recent years. As such, Mozambique is likely, over the medium term, to remain largely dependent on meeting food requirements through food imports (both commercial imports and aid grants), the efficiency of whose distribution will be critical to achieving a minimum level of individual and household food security. The main issues pertaining to this latter concern are discussed below. (a) Food Pricing Policy. While there is as yet no ccGiprehensive empirical data on the effects on food consumption of the recent increases in official food ration prices.(para. 2.27), available information suggests that their negative impact on urban family food security has been considerable -- an issue causing Government considarable concern given its commitment to the ERP program of reducing (and eventually elininating) all subsidies. In this context, there is an urgent need to better analyze the components of present food prices  - 17 - to determine whether family food requirements can be met at lower cost through alternative means. Taking into account that consumer prices for the main food staples are currently in excess of import parity prices, there may be some scope for consumer price reduction without resorting to increases in subsidies. This need not necessarily affect producer price incentives given that the margin between average producer and consumer prices is large -- e.g., maize is Mt 65/kg to the producer and Mt 112.5/kg to the consumer. Specific issues requiring analysis in this regard include inter alia: (i) the mark-ups made at each intermediate level between producer and consumer -- i.e., port/warehouse to district distribution, district to local retailer -- and possibilities for lowering these; (ii) the cumulative effects of sales taxes imposed at each intermediate level and potential for adjustments; (iii) possibililies for lowering transport costs, which are high at Mt 7-8/kg due to bad roads, lack of transport (see (b) below) and poor security conditions; and (iv) improvements to current methods of determining the metical value of donaied food. In addition, potential for introduction of lower cost foods on the market should be explored. The Government is keenly interested in studying these issues and modifying policies as appropriate, but has been constrained by lack of the technical expertise and operating funds required to do so. (b) Transport for Food Distribution. Apart from the question of the affordability of the family food basket given present higher prices, the consumer's access to food supplies is also limited by the shortage of vehicles to transport food from the ports/warehouses to areas where food is needed. This is particularly true for the commercial urban ration system, whose transport capabilities are extremely limited but which has been overlooked as donor agencies and the government itself have focussed on providing vehicles for emergency relief programs. At the same time, given the limited administrative and maintenance capacity of the public sector and parastatals to efficiently utilize a large fleet of vehicles, it is essential to expand the role of the private sector in food transport. In particular, owners of ration shops could be encouraged to assume greater responsibility for transporting food from the warehouses to their businesses. Thus far, however, efforts to encourage greater private sector responsibility for food transport have been hampered at least partially because of its limited access to the foreign exchange required to purchase vehicles. (c) Ration Program Management. An important element of both the need to lower food prices and to ensure timely distribution of available food in urbar. areas is efficient management of the NSA in both Maputo arid Beira -- particularly in the context of recent changes to the NSA (to allow consumers greater freedom in the quantities and types of commodities purchased) which are likely to increase the complexity of program administration. At present, however, management of the NSA suffers from inadequate skills of staff, absence of basic office equipment and supplies and inadequate procedures for maintaining and updating records of ration system clients. Moreover, information on food stocks, expected deliveries and offtake is maintained only in an ad hoc manner and long delays occur in invoicing of retailers and in  - 18 - collection of monies owed. Improvements in these areas could substantially reduce administrative costs of the NSA and improve distribution, thereby helping to improve the access of consumers to food supplies. (d) Food and Nutrition laformation Systems. While Mozambique's efforts to maintain food supplies in the current emergency situation have, in mary ways, been remarkably successful, a key constraint to efficient program planning has been the absence of an effective information system relating food requirements by geographic area to availability of food supplies. As .iscussed in para.. 2.30, considerable information on many aspects of the food situation is now being collected, but it is being done by a number of discrete agencies in their respective areas of interest, is insufficiently analyzed and is virtually never juxtaposed to provide a more complete picture of the national nutrition and food security situation and needs. In this context, and given the seriousness of Mozambique's present food security crisis, there is a need for an integrated system to provide systematic information and analyzes to policy-makers and program managers. The Government has not, however, yet taken steps to develop such a system, principally because of the difficulties involved in achieving cooperation between a number of agencies and lack of technical expertise in developing the system itself. However, with the formation of the intersectoral Committee on the Social Impact of the ERP, coordination is likely to be considerably easier in the future, thereby enhancing potertial for establishing a workable system. (e) Protecting Vulnerable Groups during Economic Transition. Given that the food security situation in Mozambique is at best precarious, vulnerable groups require special protection to avert possible severe malnutrition. As previously noted, with the rise in food prices under the rationing system, low income households, those with high dependency ratios, and those having one or less formal sector incomes, are having severe difficulties in procuring family food supplies. This has potenitially serious implications for the productivity of the labor force, capability of children to learn at scMlool, and increased morbidity/mortality amongst small children and pregnant women. The Government has formulated a number of measures to mitigate some of the adverse nutritional and income effects on school children and workers, including development of small, targeted subsidized feeding programs in urban areas. If appropriately strengthened, the programs could significantly alleviate some of the adverse transitional cost for these groups, while at the same time helping to maintain human capital and socio-political support for the ERP. In addition to the programs already initiated, there is a need to develop low-cost, targeted supplemental feeding programs aimed at pregnant and lactating women, pre-school-aged children and the poorest urban households -- the groups worst off from a nutritional standpoint. Progress in designing such interventions, has, however, been hindered by lack of policy consensus within the Government principally on the practicability of effective targeting in a context where: (i) data on  - 19 - income, particularly from informal sector activities, is thought to be iniadequate for targeting on the basis of a means test; (ii) targeting on Fl geographic basis -- is perceived to be culturally and politically sensitive, given the imperfections inherent in the approach; and (iii) targeting on the basis of child growth information (collected at health centers for nutrition surveillance) is seen as encompassing too-high potential for abuse in the absence of an effective administrative machinery to supervise/monitor the actions of health staff or to conduct follow-up family nutrition assessments. Experience in a number of countries in Africa and elsewhere shows, however, that effective nutrition interventions can be developed despite similar difficulties. This suggests that further study of the issues, including pilot-testing of various approaches, could lead to the design of programs (and related policies and institutions) appropriate to the Mozambican context. UNICEF is currently providing some technical and financial support for suchi policy/program development, although much more remains to be done. D. Bank Group Role 2.32 The International Development Association (IDA) has been working closely with the Government of Mozambique in developing and implementing its ERP, for which two IDA multisector rehabilitation credits have been approved, with a third now under preparation. In support of these initiatives, IDA is also developing a program of project-based credits to support improvements in production and the delivery of services. The proposed project is an integral part of this process in that it would prevent further deterioration of key aspects of the health system, assist in the preparation for long-term sectoral development, and help reduce some of the social costs encountered in the transitional phase of adjustment through health and nutrition interventions. These activities would complement existing and proposed Bank interventions in other sectors, including education, urban development, industry, transport and agriculture. 2.33 IDA's involvement in the health and nutrition sectors in Mozamb:'que began with a sector mission to the country in mid-1987. The mission reviewed policies and strategies in the two ;ectors and began a dialogue on short- and medium-term needs. Preliminary recommendations of the resulting sector report (Report No. 7422-MOZ) were discussed with the Govprnment in December 1987 and led to the identification of the proposed project, which would be the first lending operation in the sector. Section III below provides details of the specific activities included in the project. Based on discussions of the sector report, the MOH also began to prepare a letter of health policy development. The letter is attached as Annex 6. Subsequent to the proposed project, two additional activities in health and nutrition/food security have been envisaged for continued IDA-Government collaboratioii over the next three years. The first, a food security study -- to be undertaken during the latter part of this fiscal year -- would build on agriculture sector work (Report No. 7094-MOZ), the above-mentioned health and nutrition sector review and analyzes undertaken in preparing the proposed project, to assist the Government to arrive at a comprehensive national food security stvategy. The study would examine issues of food production,  - 20 - pricing, marketing and consumer access, including serving as a vehicle for continued dialogue with Government on the possibilities for developing supplemental feeding programs for the poorest households and for mothers and children (para.. 2.31 (e)). Implementation of the resulting strategy (or a significant proportion of it) would be supported through future IDA-financed operations, including a proposed second health and nutrition project. The latter project would also include population/family planning interventions in the context of maternal and child health iiid a number of activities aimed at strengthening provincial health services, provided security conditions permit. III. THE PROJECT A. Objectives and Summary Description 3.01 To help improve health and nutrition status, the project has four main objectives: (a) strengthening capacity in policy formulation and management on health and food security issues, with special attention to resource mobilization, institutional development, information systems, and planning and analysis; (b) improving efficiency, to enhance the impact of services within the tightly constrained budget; (c) improving service quality, to enhance the provision of basic needs to the population; and (d) helping to mitigate some of the social costs of adjustment, to help sustain the ERP. 3.02 In order to meet these objectives within the context of building a firmer basis for longer-term development and institution-building, the project would involve the following. (a) For the objective of strengthening capacity in policy formulation and management, the project would: (i) facilitate development of improved health policies in the areas of cost-recovery, manpower development, and facility management through studies and assistance in implementation of the studies' recommendations; (ii) strengthen the MOH through reorganizing the central ministry, developing a better financial management information system and increasing central capacity to manage and supervise investment programs; and (iii) contribute to improving food security policies and information, by aiding in policy analyzes bn food pricing and distribution and improvements to the food security information system. (b) For the two objectives of improving quality and increasing efficiency of services, the project would: (i) support the health facilities reconstruction program, through renovating and equipping selected health facilities; (ii) improve hospital efficiency through establishing better management procedures; (iii) strengthen health facility maintenance at the provincial and central levels through facility improvements and the provision of initial stocks of basic materials; (iv) improve pharmaceuticals supply, through construction/renovation of drugs storage facilities with a view to strengthening inventory control, reducing spoilage and upgrading overall management; (v) improve  - 21 - health manpower training, through enhancement of teaching quality, curriculum development, and capacity for in-service training, and through upgrading of training centers and teaching materials; and (vi) increase the efficiency of the urban food distribution system through streamlining food supply management and information in the ration system, easing the transport shortage for moving food supplies from central and regional depots to areas where the food is needed, and strengthening supplemental feeding programs targeted to school children and factory workers. These activities would, in addition to their other benefits, also contribute ,.o the fourth objective of helping to mitigate the social costs of adjustment. In particular, the supplemental feeding programs would directly help vulnerable groups in dealing with the ERP's transitional costs. Additionally, improvements to the rationing system would help ensure regular availability of essential cereals and other commodities to the urban public. B. Detailed Description 3.03 The project would have two main components. Component I: Policy Formulation and Management Strengthening (US$ 3.8 million) 3.04 This component would have three subcomponents pertaining to (a) health sector policy studies and their implementation; (b) management strengthening of the MOH; and (c) food security policies and information. Details of each subcomponent are given in paras. 3.05-3.07 below. 3.05 Health Policy Studies and Implementation (US$ 0.8 million). This subcomponent would provide support for the analysis of key policy issues in the health sector as follows. (a) The cost-recovery scheme introduced in 1987 is causing Government considerable concern, particularly with regard to its equity implications and its implementation given existing (inadequate) procedures/institutional capacity for revenue collection, accounting and use (para. 2.20 (b)). IDA, through its Project Preparation Facility (PPF) advance, is already assisting the MOH to undertake a rigorous evaluation of the cost-recovery scheme with a view to identifying needed policy modifications and institutional requirements for effective implementation. The project would provide about six person-months of technical assistance to the MOH to finalize the conclusions of the evaluation and to develop and begin implementation of policy and operational recommendations. The project would also provide basic office equipment, materials such as receipt books, recording forms etc. and funds for training and on-the-job supervision of health facility workers to facilitate implementation of the revised cost-recovery policy. These latter activities would be closely coordinated with project activities aimed at improving overall accounting and financial management procedures (described in para. 3.06 below). During negotiations assurances were obtained that: (i) the Government would  _ 22 - complete the PP?-financed evaluation, review it internally and furnish to IDA the report with MOH comments as a condition of credit effectiveness; (ii) a joint MOH-IDA review of the report recommendations would be held no later than October 31, 1989; and (iii) implementation of an action plan for instituting the recommendations of the study, taking into account Government and IDA comments, would commence no later than April 30, 1990. (b) As discussed in para. 2.20 (c), the MOH's existing ten-year plan for health manpower development has been rendered inadequate by the drastic shifts that have occurred in the country's security and economic environment. In this context there is a need for a revised, realistic plan relating manpower needs by category of health worker (including nutrition workers) to affordable training and employment scenarios. The project would assist in the development of such a plan through provision of about eight person-months of services of a manpower planr.er, whose responsibilities would also include assisting in the conduct of an inventory of existing health personnel, and providing assistance to the DRH in analyzing training enrollment and employment information forwarded by the health sciences training institutions and by provincial authorities. Terms of reference for the manpower planner were reviewed and finalized at credit negotiations. In addition, funds would be provided for travel and per diems of DRH staff involved in the personnel data gathering effort, and for office equipment and personal computers, essential furniture, office and computing supplies and short-term training of staff for the DRH planning and record-keeping sections. During negotiations assurances were obtained that: (i) the manpower development plan would be completed, reviewed internally and forwarded to IDA with MOH comments no later than July 31, 1990; (ii) a joint Government-IDA review of the plan would be held not later than October 31, 1990; and (iii) training programs included in the plan would be implemented immediately thereafter, taking into account Government and IDA comments. (c) As noted in para. 2.20 (b), there is a need for systematic policy measures designed to increase the operational efficiency of health facilities. To assist in this area, the project would provide two complementary consultancies (12 person-months each) to advise MOH officials on: (i) appropriate cost containment measures for each level of facility, taking into account trade-offs between coverage, equity, cost-effectiveness and quality of care; and (ii) the development of simple mechanisms/procedures to increase accountability and allow for routine monitoring of cost containment effort. Terms of reference for each of these consultancies were agreed and finalized at credit negotiations. Funds would also be provided for implementation of agreed measures, including costs of training health facility staff, travel and per diem costs for MOH staff helping to assemble/evaluate local experiences, and basic supplies and equipment. 3.06 Management Strengthening of tl- MOH (US$ 2.3 million). The main aims of this subcomponent are:-(a) to rationalize the present, unnecessarily complex institutional structure of the central MOH to reduce fragmentation and  - 23 - duplication of functions among units and improve coordination among them; (b) as a complement to efforts to improve cost control and revenue collection at the facility level, to strengthen central accounting and financial management procedures, including development of a simple financial management information system; and (c) to develop the capacity of the Directorate of Planning to manage and supervise sectoral investment programs, particularly the large and dispersed facilities reconstruction program which is critical to maintenance and development of health services. Corresponding to these objectives, three sets of activities are included under this subcomponent as described below. (a) With assistance from a PPF-financed consultant, a detailed analysis of the MOH organizational structure is already being undertaken, with the intention of identifying ways in which the Ministry's functional efficiency might be improved. The project would provide a further 12 person-months of assistance from a management expert to help operationalize the recommendations of this organizational analysis. In addition, he/she would be responsible for assisting the MOH to develop new standard operating procedures (SOPs) to conform with the new structure, where these are now deficient, and assist in organizing on-the-job training for staff in adapting to the procedures. The project would provide funds for such training and for MOH groups working with the expert to develop SOPs as well as proviae basic equipment and supplies necessary to ensure the Ministry's smooth functioning. During negotiations, assurances were obtained that: (i) the organizational analysis would be completed, reviewed internally and furnished to IDA with MOH comments not later than October 31, 1989; (ii) a joint Government-IDA review of the recommendations would be held no later than January 31, 1990; and (iii) implementation of the recommendations satisfactory to IDA, on terms and within a timetable agreed between the Government and IDA, would commence promptly thereafter. (b) Given the project's overall emphasis on improving resource mobilization and use, a key project activity would be the strengthening of MOH financial management, particularly streamlining of existing accounting and budgeting procedures within the MOH and developing a simple financial information system for use by MOH managers. To assist in this area, the project would provide 12 person-months of technical assistance and operating and travel/per diem funds for MOH staff working with the consultant on the issue. Funds would also be provided for training staff in implementation of the newly-developed system and for computing and office equipment, limited office furniture, computer software, paper supplies and other materials. It is anticipated that the financial information system would be closely integrated with the WHO-supported health information system (para. 2.20(b)) which will focus on collection and analysis of epidemiological data and health outputs information. As such, health managers in the MOH would be able to relate health outcomes to resource utilization more effectively, thereby improving day-to-day management and budget/financial control. (c) To help further the objective of strengthening MOH capacity for managing and supervising the implementation of its investment programs,  - 24 - particularly the reconstruction program which is being funded by a number of donors, the project would establish a program implementation unit (Gahinete de Coordenacao de Projectos de Investimento -- GACOPI) within the, MOH Directorate of Planning. The Unit would be staffed by 3 professional field engineer architects, 1 civil engineer, 2 draftsmen, 3 quantify surVeyor, I financial controller and 1 procurement officer in addit'-on to support staff. The Unit would be headed by the Director of Planning in his capacity of Project Director, assisted by a Program Coordinator, responsible for the day-to-day operation of the Unit, who would report directly to him. Annex 8 provides an organogram of the Unit. Three professional staff for the Unit and all the support staff are expected to be recruited from within the Government. Others would be new recruits. Costs of salary supplements for internally-recruited staff and salary costs for new staff would be provided under the project. Of the new staff positions, two would initially be filled by expatriate consultants including the posts of senior architect and civil engineer (18 person-months each). In addition, local consultants would be recruited for the posts of project coordinator, financial controller, procurement officer and one architect post. Funding for these consultancies would also be provided by the project. Detailed terms of reference for each of these positions have been prepared by the MOH and were finalized at credit negotiations. A summary of these is included 4n Annex 8. In addition to staffing, the project would also provide effice and computing equipment, furniture, vehicles and supplies to assist in the establishment and operation of the Unit. A small fund for recruitment of local consultants as needed for specialized reconstruction works would also be included. Enactment of the legal instruments establishing the program implementation unit within the MOH and appointment of the Program Director (the Director of Planning) and the Program Coordinator were undertaken prior to credit negotiations. 3.07 Strengthening Food Security Policies and Information (US$ 0.7 million). The principal aims of this subcomponent are: (a) to assist the MOC to develop appropriate policies related to pricing of food in the ration system, taking into account issues such as the existing large differentials between producer and consumer prices, the suitability of current marketing margins and possibilities for adjusting pricing policies or designing other suitable interventions to ensure minimum food intake by the poorest families; and (b) to strengthen the MOC's capacity to oversee the national food security situat on. (a) With regard to the first objective of improving food pricing policy, the project would support ongoing MOC efforts in the area by providing a food pricing specialist (for 24 person-months) to assist in analyzing key issues and making appropriate policy recommendations. Detailed terms of reference for the specialist were prepared arnd were agreed at negotiations. A summary of these is included in Annex 7. In addition, the project would provide one four-wheel drive vehicle, computing equipment and other supplies for use in carrying out the policy analyzes. It should be noted that the MOC, with assistance from the PPF, is presently undertaking a preliminary study on food needs, supply and access, a draft version of which was completed prior to  - 25 - credit negotiations. The report would be revised in light of Government and IDA comments prior to credit effectiveness and be the starting point for the strategic work to be undertaken during the project period. (b) With regard to improving MOC oversight of the national food security situation, the project's principal goal would be to assist in the integration of food security information systems. Such a system would link three related information systems -- namely, the MOC's system (to be strengthened under this project - para. 3.15 below), the Ministry of Agriculture's Early Warning and the MOH's Nutrition Surveillance systems (para. 2.30) -- to ensure regular availability of comprehensive food security information and enable better program responsiveness to existing needs. Development of the integrated system would be supported through provision Df 12 person-months of technical assistance as well as computers, supplie:s and a four-wheel drive vehicle to the MOC. The recruited consultant would also be responsible for assisting with staff training in implementation of the integrated system and for helping with the planning and utilization of food aid, given expected domestic production. Training funds and a small amount of office equipment and supplies would also be included in the project to strengthen the MOC's Food Security Department. Component II: Improving Efficiency and Quality of Services (US$ 31.3 million) 3.08 This component of the project would focus on improving the overall functioning of the health facilities network, addressing priority needs in the areas of physical infrastructure,-maintenance, pharmaceuticals and health manpower. In addition, it would address key issues of program management and transport constraints in the urban food rationing systems in Maputo and Beira and support supplemental feeding programs targeted to selected population groups. A detailed description of the activities included is given in paras. 3.09-3.15 below. 3.09 Rehabilitation of Health Facilities. (US$ 9.6 million). As discussed in para.. 2.20 (a), one of the major initiatives of the Guvernment in the health sector has been the establishment of a substantial program of health facilities reconstruction/rehabilitation in secure areas. Funding for much of the program has been derived from a number of sources, including Government allocations, bilateral and multi-lateral agencies and NGOs. One key constraint to effective implementation of the program has been the lack of technical and managerial capacity within the MOH to prioritize program activities and oversee their implementation, an issue which is being addressed in Component I (para. 3.06). A second constraint is the shortage of funding for needed rehabilitation at a number of primary and secondary facilities and at the main hospitals at Maputo, Beira and Nampula. In this context, and taking into account donor pledges of support to the reconstruction effort, the project would finance reconstruction/rehabilitation of the, entire network of health posts, centers and rural hospitals in secure areas of the three provinces of Tete and Manica. A precise inventory of the actual reconstruction needs is now being undertaken by UNICEF (which is expected to finance this activity) with assistance from PPF-supported consultants.  - 26 - 3.10 Given that the effective functioning of the main hospitals is critical to overall health system credibility and to the provision of services for which there are extensive unmet needs in the present security crisis, the project would also provide funding for rehabilitation activities at the Maputo, Nampula and Beira hospitals, which because of the relatively large amounts involved, have not been (and are not likely to be) covered by other donor or Government funds. Rehabilitation activities at all three hospitals would involve both building and engineering projects including (but not limited to) improvement of operating theater, intensive care, physiotherapy and X-ray facilities, refurbishing of wards, laboratories, kitchen and laundry facilities and improvements in water/electricity supplies and in waste disposal systems. The project would also provide priority equipment items for use at the hospitals such as sterilization, X-ray and laboratory equipment. A complete list of the civil works activities and equipment items to be supported under the project is available in the project file. The rehabilitation work under the project would proceed in two phases. The first phase would include the highest priority activities (about 40 percent of the total cost of the subcomponent) and would proceed immediately after credit effectiveness. Credit disbursements for the second set of activities would be contingent upon IDA approval, after an exchange of views with the MOH, of the satisfactory implementation of specified efficiency improvement measures at the hospitals. Assistance in achieving these efficiency targets would be provided through the project (see 3.11 below). Final agreement on the specific, monitorable efficiency measures to be undertaken at the hospitals was reached at credit negotiations. In addition, the list of specific rehabilitation activities to be included in each disbursement phase was finalized at negotiations. An indicative list of the specific civil works activities to be included in each phase together with information on the efficiency targets to be monitored are given in Annex 9. 3.11 Hospital Efficiency (US$ 1.5 million). Both the Government and IDA attach high priority to achieving efficiencies in health facilities operation, particularly at the hospital level, where the smaller number of facilities, the presence of better-skilled staff and the relatively larger amount of resources consumed per facility make efficiency improvements both implementable and highly desirable. To help achieve efficiency improvements, the project would provide funding for equipment, supplies and recruitment of a long-term hospital administration specialist (24 person-months) to assist with general reorganization of the three hospitals, beginning with the Maputo hospital, and help hospital directors and staff to implement management improvements in areas such as admissions and discharge procedures, cost accounting and control, clinical coding and materials and manpower productivity control. The consultant, sometimes with assistance from specialized short-term consultants (also to be provided under the project), would be responsible for on-the-job training of hospital staff in the new procedures and systems introduced. It is expected that one hospital would be developed as a "center of excellence" for management improvements to facilitate dissemination of management measures to staff of other hospitals and health facilities through a program of study visits. Special seminars and short-training courses would also be organized for this purpose,.for which the project would provide funds. Terms of reference for the long-s.erm consultant have been agreed.  - 27 _ 3.12 Health Facility iMaintenance (US$ 4.2 million). As discussed in para. 2.20(a), MOH plans to establish a national network of health facility/equipment maintenance centers have been hampered by inadequate managerial and technical expertise and severe shortages of basic tools and maintenance materials. To relieve these constraints, the project would provide 72 person-months of technical assistance -- a technical administrator to be based at the central maintenance center in Maputo (24 person-months) and two hospital engineers (24 person-months each) to be based one in Maputo and the other in Nampula and Beira to assist with management of provincial maintenance centers and maintenance needs of all facilities in the region. As with other technical assistance included in the project, a key responsibility of the maintenance consultants would be to train local staff in their areas of expertise. Detailed terms of reference for these consultants were finalized at negotiations. In addition to personnel expertise the project would provide maintenance "kits" including basic tools, limited building materials and other assorted items such as wire, light bulbs, etc. to maintenance centers in each of the country's nine provinces. (One kit was procured under the PPF to ensure the appropriateness of the mix of items and adequacy of control procedures.) A complete list of the items included .n the kits is available on the project file. Inventory control procedures for the maintenance materials were agreed during project appraisal and issuance of an MOH "Ordem de Servico" approving the procedures is expected shortly. Funding would also be provided for replenishment of the kits. Finally, funds would be provided for about six four-wheel drive vehicles and about 32 motorcycles to be used by maintenance center staff in the provinces. 3.13 Pharmaceutical Supply System (US$ 5.2 million). At present the major bottlenecks to efficient pharmaceutical supply are: (a) the inadequate storage facilities which lead to spoilage and other losses of drugs; and (b) the inadequacy of current procedures for inventory control and management (para.. 2.20(d)). To address these problems, the project would provide for construction of a new central pharmaceuticals warehouse (including air- conditioned and cold storage rooms) and inflammables store for E.E. MEDIMOC in Maputo, furnishing it with needed shelves and racks and handling equipment. Detailed designs for the warehouse are currently being prepared and will take into consideration the physical requirements for inventory control. Technical assistance (24 person-months) would also be provided to develop effective drug management procedures and provide on-the-job training to E.E. MEDIMOC staff. The regional pharmaceutical storage facilities at Beira would also be renovated under the project, with particular emphasis on improving ventilation and air-conditioning requirements and meeting equipment needs. The proposed site for the Maputo pharmaceutical warehouse was legally transferred to the MOH by Maputo City authorities prior to credit negotiations. There are presently about 60 families living on the Maputo warehouse site. A plan for resettlement of the families on alternative sites (including costs implementation and financing) has been developed and was agreed and finalized at credit negotiations. Costs of resettlement have been included in the project. 3.14 Health Manpower Training/Effectiveness (US$ 2.1 million). The project's main aims in the manpower area are: (a) to improve the efficiency  -28- and quality of pre-service medical, nurse, paramedical and nutrition worker training; and (b) to develop a relevant program of in-service training for health (including nutrition) personnel to improve their managerial and technical skills in line with current economic and security realities. (a) In support of improved pre-service training, the project would: upgrade physical facilities and furniture of the 3 principal health sciences training institutes, particularly lodging and boarding facilities whose poor condition has contributed to high student drop-out rates; provide support for curriculum development through provision of short-term technical assistance (about 4 person-months), incentives for teacher's working groups, costs of workshops and suppliF3; provide office and teaching equipment, vehicles for practical training, textbooks and teachingilearning materials (e.g., wall charts, slides, films and anatomical models) for the institutes; and support a course of teacher training intended to produce about 65 new teachers and provide refresher training to an additional 80 over a period of three years. Limited support would also be provided to the University of Mozambique's Faculty of Medicine, principally through provision of Portuguese language medical textbooks and laboratory materials, of which there is presently a severe shortage. (b) To provide a sound basis for developing a relevant in-service training program, the MOH plans to undertake an analysis of the present (sometimes drastically changed) functions of a selection of rural facilities and the suitability of staff skills to cope with expected workload. Based on this analysis, a program of in-service training would be designed, including definition of the categories and numbers of staff to be trained, an action plan for imp'lementation of the training and production of course materials to be used in the training. The initial functional analysis would also form the basis for development of revised job descriptions for distribution to all health personnel. The project would support these efforts through provision of 3 short-term consultancies (about 12 person-months in total) to assist in the initial functional analysis, development of the in-service training program and revision of the job descriptions. In addition, funds would be provided for travel and per diem costs of MOH staff working with the consultants, incentives and workshop costs for local teachers working on the training program design, and printing and distribution of job description booklets. It is expected that support for the actual in-service training would be available from other external agencies, specifically WHO and bilateral donors. 3.15 Urban Food Distribution System (US$8.7 million). This subcomponent of the project comprises three parts: the first would focus on improving the management of the urban rationing systems in Maputo and Beira; the second would address the transport shortage for distribution of urban food supplies; and the third would strengthen ongoing subsidized feeding programs targeted to urban school children and factory workers. Details of each part are given below.  - 29 - (a) As previously discussed (para. 2.27), the urban food rationing scheme (NSA) has a key role to play in ensuring urban food security in Mozambique's current and foreseeable economic environment. In order to implement its changed objectives, which would provide consumers greater freedom of choice in the types and quantities of foods they purchase and reducing program operating costs, the government aims to improve the management of the ration scheme, principally by streamlining systems for: issuing ration cards (which are reviewed every six months); maintaining up-to-date information on food stocks, expected deliveries and offtake; improving food procurement; issuing monthly collection vouchers and bills to retailers; following up unpaid accounts; and preparing financial statements for the system. To assist in realizing these objectives the project would provide six person-months of technical assistance in program management, small mainframe computers (one each for Maputo's GOAM and Beira's DPCS) for data processing and analysis, and funds for training of GOAM and DPCS staff in management procedures and computer use. In addition, a small amount of office storage and handling equipment and furniture would be provided to GOAM, DPCS, EACM and EACB to improve the efficiency of routine management activities. (b) In order to alleviate the -transport shortage for the distribution of food supplies in urban areas (para. 2.31(b)), the project would provide ten 5-8 ton trucks, eight 10-12 ton trucks and 102 3-5 ton trucks for Beira and Maputo. Of the latter, and taking into account government objectives of supporting the private sector, about 100 vehicles would be transferred to private retailers, mainly small traders in the ration scheme to enable them to pick up their supplies on a regular basis. The remaining 20 vehicles would be transferred to EACB and EACM to facilitate the transport of food from the ports to the wholesale warehouses. A small number of motorbikes and light vehicles would be provided for communication purposes. The operating costs of all vehicles would be the responsibility of the private individual or enterprise concerned. However, the MOC would monitor the use of the vehicles in order to ensure that project objectives are achieved. Terms of transfer of vehicles to the private retailers and to the parastatal and municipal agencies were reviewed and finalized at credit negotiations (see Annex 10). In addition, assurances were obtained at -negotiations that the transfer of trucks including the procedures and terms for transfer and use of proceeds from sales, would be carried out in a manner satisfactory to IDA. (c) In order to enhance the nutritional status of the. school-age population, the Government aims to expand the school feeding program to all primary and secondary school students in Maputo. This would be undertaken through provision of a nutritionally fortified bun made by private bakeries. Assuming that each student would be fed for about 180 days a year, it is anticipated that about 200,O00 students would be beneficiaries of the program. The project would provide annual food requirements of 1,440 tons of wheat flour, 360 tons of maize flour, 720 tons of milk powder, 360 tons of sugar and 180 L$.ons of oil for production of the enriched buns (to be provided by the WFP from its  _ 30 - regular food aid program); six 3-5 ton trucks for delivery of the buns, and a small amount of funds for drivers' salaries and incidental operating expenses. To improve worlers' nutritional intake, thereby helping to raise output and reduce absenteeism, the project would support improvement of worker's canteens at a small number of enterprises, on a pilot basis. The selected enterprises would themselves be responsible for purchase and preparation of canteen food and for minor civil works entailed in improving canteen dining and kitchen facilities. The project would provide kitchen equipment including, inter alia ranges, ovens, pots and pans to be sold by the MOC to the concerned enterprises. IV. F-OJECT COSTS AND FINANCING A. Cost Estimates 4.01 The total cost of the project is estimated at MT 46.2 billion or US$42.5 million equivalent, net of customs duties and taxes on civil works and locally-procured goods and services (approximately US$1.0 million equivalent). Items imported directly for the project would be exempt from import duties and taxes. The foreign exchange component of the project is estimated at US$36.4 million or 86 percent of total project costs. Detailed costs are presented in Annex 11 and are summarized in Tables IV.1 and IV.2 below.  - 31 - Table IV.1: Project Cost Summary by Project Component (US$ Million) 2 Total Base Local Foreign Total Z F.E. Costs A. STRENGTHENING POLICY FORMULATION AND MANAGEMENT 1. Health Policy Studies and Implementation 0.2 0.6 0.8 78 2 2. Management Strengthening of the MOH 0.2 2.1 2.3 89 7 3. Strengthening Food Security Policies and Information 0.1 0.6 0.7 90 2 Subtotal 0.5 3.3 3.8 87 11 B. IMPROVING EFFICIENCY AND QUALITY OF SERVICES 1. Rehabilitation of Health Facilities 2.1 7.5 9.6 78 26 2. Hospital Efficiency 0.2 1.3 1.5 87 4 3. Health Facility Maintenance 0.2 4.0 5.2 95 12 4. Pharmaceutical Supply System 1.2 4.0 5.2 78 14 5. Health Manpower Training/ Effectiveness 0.4 1.7 2.1 80 6 6. Urban Food Distribution System 0.9 7.8 8.7 90 25 Subtotal 5.0 26.3 31.3 84 87 C. PROJECT PREPARATION FACILITY 0.0* 0.7 0.7 95 2 Total BASELINE COSTS 5.5 30.3 35.8 85 100 Physical Contingencies 0.3 2.2 2.5 88 7 Price Contingencies 0.3 3.9 4.2 93 12 Total PROJECT COSTS 6.1 36.4 42.5 86 119 *US$35,000, which rounds to US$ 0.0 million.  - 32 - Table IV.2: Cost Summary by Summary Account (US$ Million) Local Foreign Total I. INVESTMENT COSTS A. CIVIL WORKS 1. Building Projects 2.0 7.4 9.4 2. Rngineering Projects 0.4 1.4 1.8 Sub-total 2.4 8.8 11.2 B. FUILNITURE 0.2 0.1 0.3 C. EQUIPMENT 0.2 4.1 4.3 D. SUPPLIES 0.4 7.9 8.3 E. VEHICLES 0.2 2.8 3.0 F. TECHNICAL ASSISTANCE 0.2 4.0 4.2 G. PROJECT MANAGEMENT - 0.1 0.1 H. LOCAL SALARIES & INCENTIVES 0.3 - 0.3 I. TRAVEL & PER DIEM 0.2 - 0.2 J. TRAINING & WORKSHOPS 0.2 0.1 0.3 K. PROJECT PREPARATION FACILITY 0.1 0.7 0.8 Total INVESTMENT COSTS 4.3 28.6 32.9 II. RECURRENT COSTS A. VEHICLE OPERATIONS & MAINTENANCE 0.1 0.5 0.6 B. EQUIPMENT OPERATIONS & MAINTENANCE 0.3 0.6 0.9 C. BUILDING OPERATIONS & MAINTENANCE 0.8 0.6 1.4 Total RECURRENT COSIS 1.2 1.7 2.9 Total BASELINE COSTS 5.5 30.3 35.8 Physical Contingencies 0.3 2.2 2.5 Price Contingencies 0.3 3.9 4.2 Total PROJECT COST 6.1 36.4 42.5  - 33 - 4.02 The project's base costs are in November 1988 prices. They were calculated in US dollars and then converted to Meticais at the prevailing exchange rate of Mt 620/US$l. Purchasing power parity exchange rates were used for the project's implementation period. Construction costs (for both building and engineering works) are based on estimates prepared by the MOH and HOC, with assistance from a PPF-financed consultancy firm. The estimates were reviewed and found satisfactory during appraisal. As most civil works included in the project involve rehabilitation of existing facilities, unit costs vary widely, but generally range from US$80 per square meter (sq m) to US$170 per sq m The unit cost for the major new construction activity proposed, namely the Maputo pharmaceutical stores, is about US$345 per sq m This is comparable to construction prices for similar facilities in other southern and eastern African countries. Unit costs for vehicles were based on international c.i.f. prices. Costs of furniture, equipment, and supplies include 15 percent in-country handling costs and are based on lists prepared by the MOH and MOC, in mrst instances with assistance from PPF-financed consultants. During appraisal the cost estimates included in the lists were checked against price quotations given in international catalogs (including the UNIPAC catalog 4/) and found to be satisfactory. Technical assistance costs for foreign consultants include salaries, allowances and airfares. Other investment costs, e.g., travel, per diems and local salaries were based on prevailing local raLes. 4.03 The project's foreign exchange component of US$36.4 million was calculated on the basis of the following estimates: civil works - 80?; furniture - 402; equipment, vehicles and supplies - 95Z; studies - 702, training workshops - 202; technical assistance - 95?; and local salaries, travel and per diems - OX. In addition, foreign exchange estimates for incremental recurrent costs were as follows: for equipment operation and maintenance - 70?; for vehicle operation and maintenance - 85Z; and for building operation and maintenance - 202. Physical contingencies of 10 Z were added to civil works, equipment, vehicles and supplies. Price contingencies assume the following expected annual rates of increase: 1988 1989 1990 1991 1992 1993 1994 Local 30.0 30.0 20.0 15.0 15.0 15.0 15.0 Foreign 8.0 3.0 4.0 4.0 4.0 4.0 4.0 4.04 Post-Project Incremental Recurrent Costs. In current prices, the annual incremental recurrent costs generated by the project (for both the health and nutrition/food security aspects) amount to about US$869,000, including about US$16,000 for salaries, US$157,000 for the operation and maintenance of vehicles, US$276,000 for equipment operation and maintenance and US$420,000 for building maintenance. Of this total, about US$670,000 is associated with the health sub-components, representing less than 3 percent of the 1988 health sector recurrent budget of US$24.5 million. The MOH has assured IDA that these funds would be made available in the post-project period. Moreover, it should be borne in mind that a number of project 4/ Catalog produced by UNICEF's procurement wing.  - 34 - activities will contribute directly to better utilization of recurrent allocations in the health sector -- e.g., improvements to hospital efficiency, improved financial control in the MOH and reduced drug spoilage and loss through improvements in pharmaceutical storage -- thus enabling provision of better quality services within given budgetary ceilings. Annual incremental recurrent costs generated by the nutrition/food security sub-components would amount to about US$190,000, of which about US$175,000 would, in fact, be borne by parastatals which operate on a commercial basis. The remaining US$15,000 represents only an insignificant fraction of the MOC budget and could easily be sustained. B. Financing Plan 4.05 Of the total project costs of US$42.5 million, US$3.7 million (8.7Z) would be financed by the Government, US$27.0 million by the proposed IDA credit, and US$11.8 million by cofinanciers on gr&nt terms. The Government of Switzerland would provide US$5.3 million equivalent for most of the pharmaceutical sub-component; the Norwegian Development Cooperation Agency (NORAD' would allocate US$0.2 million in technical assistance for drug supplies management; the World Food Program (WFP) would provide food supplies amounting to US$4.4 million for the urban school lunch program; and UNICEF would finance rehabilitation of health facilities in Tete and Manica, estimated at US$1.9 million. 4.06 Thus, IDA and the cofinanciers would finance US$38.8 million or 91.3? of total project costs, covering the entire foreign exchange requirement plus about 40? of local costs. The Government, through its contribution, would finance about 2X of civil works costs; 100? of local salaries and travel/per diem; and 100? of incremental recurrent costs except equipment operation and maintenance, of which it would finance 402 of total expected costs.  - 35- Table IV.3: Financing Plan (US$ million equivalent) a/ Project Element Government IDA Switz NORAD WFP UNICEF Total A. INVESTMENT COSTS 1. Civil Works 0.3 7.0 4.4 - - 1.9 13.6 2. Furniture - 0.3 - _ _ - 0.3 3. Equipment - 4.4 0.9 - - - 5.3 4. Supplies - 5.4 - - 4.4 - 9.8 5. Vehicles - 3.7 - - - - 3-7 6. Technical Asst. - 4.4 - 0.2 - - 4.6 7. Project Manag. - 0.1 - - - - 0.1 8. Salaries 0.4 - - - - - 0.4 9. TrAvel/per diem 0.2 - - - - - 0.2 10. Training - 0.3 - - - - 0.3 11. PPF - 0.8 - - - - 0.8 B. RECURRENT COSTS 1. Vehicle O&M 0.7 - - - - - 0.7 2. Equipment O&M 0.4 0.6 - - - - 1.0 3. Building O&M 1.7 - - - - - 1.7 TOTALS 3.7 27.0 5.3 0.2 4.4 1.9 42.5 a/ Includes physical and price contingencies. V. PROJECT MANAGEMENT AND IMPLEMENTATION A. Project Management 5.01 The main responsibility for project management would rest with two ministries: (a) the MOH, for all aspects of the project pertaining to the health sector; and (b) the MOC, for all nutrition/food security-related aspects. More specifically, the MOC would be responsible for the two subcomponents concerned with strengthening food security policies and information (para. 3.07) and increasing efficiency of the urban food distribution system (para. 3.15), respectively. The MOH would be responsible for all other project subcomponents. For those project activities which involve parastatals or municipal agencies -- i.e., the pharmaceuticals subcomponent (para. 3.13) and the urban food subcomponent (para. 3.15) -- the ministry concerned would enter into a legal agreement with the relevant institution specifying the mutual obligations of each in project implementation, including issues of ownership and financial responsibility vis-a-vis IDA. The ministries would be responsible for overseeing implementation of project activities by the parastatal and municipal agencies. Legal agreements between the MOH and E.E. MEDIMOC, the MOC and GOAM and EACM  - 36 - and the HOC and DPCS and EACB were executed prior to credit negotiations. The government agreed during negotiations to take all the necessary steps to ensure the provision of housing to all long-term resident consultants. 5.02 Within the MOH, it is anticipated that overall responsibility for management of the project would rest with the Director of Planning (who would also be appointed the Project Director). The Director would chair an advisory steering committee comprised of the heads of all the technical Lnits concerned with the project. The steering committee would meet at least bi-monthly, to monitor overall project progress, approve plans and budgets for all project health components, and resolve any issues affecting project goals and implementation. For day-to-day coordination of the project, the Director would be assisted by staff of the investment program implementation unit to be supported under the project (para. 3.05(c)), particularly the proposed Program Coordinator, Procurement Officer and Financial Controller, who would spend about half of their time focussing on the implementation of this project. The technical units concerned with the project, principally the Directorate of Administration and Finance, the Directorate of Planning, the Directorate of National Health Services, the Maintenance Center, the Pharmaceuticals and Medical Supplies Department and the Directorate of Human Resources would have primary responsibility for implementation of the subcomponents pertaining to them. The proposed program implementation unit, as part of its regular fun-ction of support to all MOH investment programs, will assist the technical departments in implementing civil works and procurement of equipment, supplies and vehicles. The implementation arrangements are outlined in Annex '. 5.03 Within the MOC, the Director of the Food Security Department was designated as Project Director and has overall responsibility for project management. Responsibility for day-to-day management of project activities -- including selection of staff and consultants for project implementation, liaising with relevant MOO units and parastatals and preparation of progress reports -- would rest with a designated Project Coordinator. In addition, a full-time Administrative Officer, would be appointed to help coordinate and oversee adequate fulfillment of all project requirements, including reporting, accounting, procurement and disbursement. The Government appointed the Project Director, Project Coordinator and Administrative Officer prior to credit negotiations. The implementation arrangements are outlined in Annex 7. B. Proiect Preparation and Implementation Schedule 5.04 Status of Project Preparation. The project was prepared by designated teams in the MOH and MOC, headed respectively by the MOH Director of Planning and by the MOC Director of Food Security. Subsequently, a PPF was approved by IDA to finalize preparatory activities and ensure prompt project start-up, including: (a) consultant services for assessment and evaluation of the existing cost-recovery scheme (para. 3.05(a)); (b) operating costs and technical assistance for functional analysis of the organizational structure of the central MOH (para. 3.06(a));  _ 37 - (c) technical assistance, vehicles, computing equipment and operating costs for a study on food needs, supply and access (para. 3.07(a)); (d) surveys of rehabilitation and equipment needs at central, provincial and rural hospitals, health sciences training institutes and pharmaceutical storage facilities (para. 3.09); (e) preparation of preliminary drawings for the Maputo pharmaceutical stores (para. 3.13); and (f) procurement of one provincial maintenance kit (para. 3.12). 5.05 Despite provisions included in the PPF and extensive project preparation, there remain two obstacles to the prompt initiation of project activities: (a) about 60 families are currencly living on the site proposed for the Maputo pharmaceutical warehouse, and the Government needs to resettle these families before construction can begin; and (b) housing for long-term project consultaiits is not readily available in Maputo and might delay the arrival of proposed consultants. 5.06 In response to the first obstacle, the Government has identified alternative sites based on a survey of households currently occupying the warehouse site. Recommendations of the survey and an action plan for its implementation, including timing and costs of compensating, moving and reconstructing houses for the families were reviewed and agreed at negotiations (para. 3.13). Funding for implementation of the resettlement plan is included in the project. To overcome the second obstacle, Government intends to construct an eight-unit apartment block to house project expatriate consultants. Foreign exchange costs of the construction (amounting to under US$0.3 million) have been included in the project. During negotiations it was agreed that funds for the apartment block would not be disbursed until the Government has: (i) provided evidence satisfactory to IDA that the necessary site has been legally attributpd to the MOH; and (ii) furnished to IDA satisfactory designs, architectural plans, financial terms and timetable for construction of the apartment block. 5.07 Implementation Schedule. Project implementation is expected to take five years beginning in April, 1989. The project would be completed by March 30, 1994 and it would be closed by December 31, 1994. An implementation schedule is shown in Annex 12. C. Procurement 5.08 Project procuresent arrangements are summarized in Table V.1 below:  _ 38 - Table V.1l Procurement a/ (in US$ million) Procurement Method LCB and Int./Local ICB Shopping Other b/ Total Cost Investment Costs: A. Civil Works 4.4 2.7 6.5 13.6 (4.4) (2.4) (0.2) (7.0) B. Furniture 0.3 - 0.3 (-) ~(0.3)