Angola - Health Project

Document of FILE COPY The World Bank FOR OFFICLAL USE O0tLY Report No. P-5829-ANG MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 14.2 MILLION TO THE REPUBLIC OF ANGOLA FOR A HEALTH PROJECT APRIL 19, 1993 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.   ANGOLA HEALTH PROJECT Currency Equivalents Currency Unit = Kz US$1 K Kz 550 Kz 1,000 = US$ 1.8 Measures Metric British/US Equivalent 1 meter (m) = 3.28 feet 1 square meter (sq.m) = 10.76 square feet 1 kilometer (km) = 0.62 mile 1 square kilometer (sq. k) = 0.39 sq. mile Glossary and Abbreviations AfDB African Development Bank AIDS/STD Acquired Immuno Deficiency Syndrome/Sexually Transmitted Disease EEC European Economic Community FP Family Planning GOA Government of Angola MSF Physicians Without Borders (Medicos Sin Fronteras) MOH Ministry of Health NGO Non Governmental Organization PIU Project Implementation Unit PNPF National Program for Family Planning (Programa Nacional de Planificacao Familial) PNLS National AIDS Control Program (Programa Nacional de Luta Contra 0 SIDA) SIDA Swedish International Development Agency SSA Sub-Saharan Africa UNFPA United Nations Fund for Population Activities WHO World Health Organization Fiscal Year January 1 - December 31   FOR OFFICIAL USE ONLY ANGOLA HEALTH PROJECT CREDIT AND PROJECT SUMMARY Borrower: People's Republic of Angola Beneficiary: Ministry of Health (MOH) Amount: SDR 14.2 million (US$19.9 million) Terms: Standard with 40 years maturity On-Lendin Terms: Not applicable Financing Plan: -----------US$ million----------- Local Foreign Total IDA 1.1 18.8 19.9 Government 2.3* -- 2.3 TOTAL 3.4 18.8 22.2 Economic Rate of Return: Not applicable Staff Appraisal Report: Report No. 10750-ANG Map: IBRD No. 23931 * Excluding about US$500,000 for duties and taxes This document has a restricted distribution and my be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  IJ  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF ANGOLA FOR A HEALTH PROJECT 1. I submit for your approval the following report and recommendation on a proposed development credit to the Republic of Angola for SDR 14.2 million (US$ 19.9 million equivalent) on standard IDA terms with a maturity of 40 years, to help strengthen the Ministry of Health (MOH) capabilities in health policy, sector management, and services delivery in selected regions. No co- financing is anticipated under this credit. Country Background 2. While Angola is potentially one of the richest countries in Africa thanks to its endowment in natural resources (including petroleum, iron, manganese, diamonds and fertile soil), its economy is one of the most distorted in the continent. Since independence in 1975, the country grew increasingly dependent upon the petroleum sector which represents about half of GDP. The GDP per capita, estimated at US$620 in 1990, is closely linked to oil prices. In 1990, oil export earnings amounted to US$3 billion, equivalent to more than 90 percent of the country's total export earnings. On the other hand, the non-oil sectors' performance has been poor; it is estimated that their per capita growth has been negative since the early 1980s. The performance of agriculture is a case in point: an important net exporter of agricultural products before independence, Angola has in recent years been increasingly dependent on food imports and food aid to feed its urban population. The capacity utilization of existing manufacturing industries has been severely affected by the lack of inputs, spare parts and maintenance services, as well as by a distorted policy environment. 3. Angola's economic decline since independence is largely explained by three factors: (a) the civil war, which has made much of the countryside too insecure for agricultural production and transport, required heavy military expenditures (contributing to chronically large fiscal deficits, despite substantial revenues from oil), and destroyed a large part of the economic and social infrastructure; (b) unusually severe human resource constraints, aggravated by the massive exodus of Portuguese settlers at independence; and (c) misguided economic policies that have created a highly distorted system, with a formal urban economy (largely public) managed by administrative controls, and a large parallel economy. Several important political and economic steps have been taken since 1991, including the peace agreement in May 1991, significant devaluations of the local currency, and the holding of the first round of general elections in September 1992. But, the loss by the opposition of that first round led to renewal of major fighting in several areas of the country. Negotiations for a cease-fire are now underway, but it remains uncertain how quickly a new peace agreement can be put in place. In spite of those current political uncertainties, the proposed project, however, can be implemented because its main components, including institutional development, training and facilities rehabilitation, are located in safe areas, with easy access for project management and Bank supervision. 4. Social Indicators. The total population is estimated at 10 million, with an annual growth rate of 2.8 percent. With 45% of the population under 15 years of age, the demographic momentum is high. The social conditions are poor as compared to other Sub-Saharan African (SSA) countries. This is the combined result of the civil war, inappropriate social policies, rural-urban migrations, and emigration of skilled manpower. The infant mortality rate is 172 per thousand, (the SSA average is 157); life expectancy at birth is estimated at 46 years (51 years for SSA); less than 30 percent of the population has access to health services and safe water; the gross enrollment rate in the first year of  -2- basic education is estimated at only 50 percent. Regional disparities in social conditions are substantial as a result, in particular, of war-induced destruction. Poverty in rural areas is acute as revealed by high malnutrition rates among under-fives and pregnant women. In addition to the stagnation in economic activity, the main factors contributing to rural poverty are the interruption of normal links to the cities. Sector Background and Issues 5. The health sector is faced with three major inter-related issues: (i) the weakness of MOH planning and management capacity; (ii) the limited coverage and quality of health services; and (iii) the weakness of priority public health programs such as AIDS control and family planning services. Until recently, the government has failed to establish a specific national health policy and has used as a substitute the concept of health for all through primary health care, without translating it into operational strategies and resource allocations. There is an almost complete absence of health services in rural areas. The war situation has led to direct destruction of health facilities and massive migrations of health personnel to urban areas, particularly Luanda; as a consequence 70 percent of the population do not have access to modern health care. The health personnel's lack of qualifications for both service delivery and administration has led to poor quality of care at all levels of the health system and major inefficiencies in the use of resources. The donor community and NGOs have attempted to address these issues within the constraints created by the war and the lack of government commitment. The European Economic Community (EEC) and Swedish International Development Agency (SIDA) provide the largest support to the sector, including: major rehabilitation of health facilities in Luanda; long-term support for health manpower training; supplies of essential drugs; and technical assistance to MOH's coordination of donor activities. The United Nations Fund for Population Activities (UNFPA) and World Health Organization (WHO) are supporting the family planning program and AIDS control programs, respectively. The African Development Bank (AfDB) is financing an essential drugs project and sectoral studies. The Catholic Church runs several facilities in the country and several NGOs are also active in the sector. All these efforts have been successful in avoiding a collapse of the health system but are insufficient for rebuilding an efficient health structure. Reconstruction requires a good sectoral strategy and incremental resources. The demobilization of military health personnel, if well managed, would greatly improve health service delivery. It would double the number of health workers and physicians available to the population. Sector Strategy 6. The government has prepared a Policy Statement for the health sector based on a three- pronged strategy to improve health care in the country: (a) immediate large-scale operational support to basic medical care, with a focus on maternal and child health; (b) rehabilitation of the health infrastructure, starting with the most dilapidated facilities; and (c) restructuring of the health system to improve its coverage and efficiency. Part (a) of the strategy is aimed at addressing the most urgent medical needs of the most vulnerable population groups through the provision of medical supplies in adequate quantities for priority public health programs such as malaria control, immunizations, treatment of communicable diseases, AIDS prevention and family planning. The health personnel in charge of delivering these services will benefit from in-service training and technical assistance to improve their performance. Part (b) of the strategy will complement and enhance the operational support previously described. The rehabilitation program will be balanced between primary health care facilities and hospital structures on the basis of the National Health Plan being prepared by the  - 3 - MOH. Part (c) of the strategy will have a long term impact by addressing imbalances and structural inefficiencies of the current health system. 7. The restructuring of the health system will be guided by a reform agenda defining the respective roles of the State and the non-governmental sector in health care. The basic principles of such a restructuring have been enunciated in the Health Policy Statement which stresses the responsibilities of the State for financing and monitoring health programs with large externalities and for ensuring equity in the access to health care. IDA will support the implementation of the national health sector strategy, in close collaboration with other donors already involved in this sector. Project Objective and Description 8. The main objective of the project is to assist the government increase access to basic health services as quickly and as efficiently as possible. This requires immediate strengthening of the government's policy making and sector management capacity. The project objective is coherent with and complementary to other donor-supported activities in the areas of health, population and nutrition. By focusing on specific areas of the country and limiting the interventions to selected programs, the project will permit to test certain approaches and assess their replicability on a national scale. 9. The project would support the above objectives through two components: Strengthening Health Sector Policy and Management -- would assist MOH in making the national health system more efficient through: (a) a technical assistance program aimed at improving (i) health policy formulation, with a focus on delineating the specific roles of the public and private sectors, defining a core package of health services for which the government would guarantee universal access, and fine tuning health sector legislation and its translation into effective programs; (ii) investment planning and donor coordination in the health sector; and (iii) financial management and monitoring of expenditures; (b) a short-term in-service training program in health planning and health economics for key staff of MOH and other agencies involved in the restructuration of the health sector; and (c) prospective studies in the areas of infrastructure rehabilitation, human resource development and health sector financing. Support to Selected Programs -- aims to: (a) strengthen the on-going priority National AIDS Control Program (PNLS, executed by WHO) and the National Family Planning Program (PNPF, executed by UNFPA) by providing technical assistance, training, equipment and contraceptives; (ii) rehabilitation of selected health posts in the Huila Province in collaboration with Physicians Without Borders (MSF - Spain); (iii) relocation, rehabilitation and upgrading of the Health Professional School and its health center, two health posts, and the pediatric center in Lubango; and (iv) rehabilitation of the Porto Amboim Hospital (the only facility in the area able to provide primary and secondary health care) and two health posts which will be implemented by the Catholic Church. 10. The estimated total project cost is about US$22.2 million, with a foreign exchange component of US$18.8 million (approximately 85 percent). Schedule A contains the project cost summary and financing plan and Schedule B contains the amounts and methods of procurement and disbursements, as well as a disbursement schedule. A timetable of key project processing events and the status of IDA operations in Angola are given in Schedule C and D respectively. A map showing the locations  - 4 - of the project facilities is attached. The Staff Appraisal Report No. 10750-ANG is being distributed separately. Project Implementation 11. MOH's Planning Department will be responsible for the implementation of this project. A project implementation unit (PIU) has been put in place within this Department for financial management and overall project coordination. The PIU is responsible for: (i) coordinating the implementation of all components and monitoring progress in project implementation; (ii) facilitating the liaison with the various technical departments of MOH; and (iii) reporting on procurement, disbursement and auditing. Some field activities will be implemented through implementation agreement with a foreign institution and by experienced agencies, including WHO, UNFPA, the Catholic Church and MSF-Spain. These entities will submit quarterly and annual reports to the PIU on the status of their activities. In addition, progress will be assessed on the basis of specific project performance indicators set forth for this project. Soon after credit effectiveness there will be a project launch workshop during which an implementation manual including sample bidding documents and progress reports will be finalized. There will be annual project reviews and a mid-term review is planned after two and a half years of project implementation. Proiect Sustainability 12. Annual incremental recurrent costs implications of the project are minimal and represent less than 1 % of the total budget in the sector. The operational sustainability of the project will be achieved by relying on qualified technical assistance, experienced NGOs and other decentralized entities with field experience to implement the various project components at the periphery. The sustainability of each of the project components will be reviewed during the mid-term review. Lessons Learned from Previous IDA Involvement 13. The proposed project is the first health sector operation supported by the Bank group in Angola. However, certain weaknesses have been taken into consideration on the basis of the findings of the sector work currently being prepared by IDA, other donors' experience in the sector, and consultant's work who assisted the government in the preparation of the project. In particular, the lack of experienced managerial and technical staff has led to the establishment of a strong managerial structure within MOH's Planning Department and the implementation of a comprehensive capacity building program including training and technical assistance. In addition, NGOs active in the sector have been selected for implementation of specific components. Rationale for IDA Involvement 14. The proposed operation is an important element of IDA's country strategy which was discussed by the Board in January 1992 and aims at promoting economic growth, improving the poor social conditions and ensuring that the country's environment is protected. In close cooperation with other external aid agencies, IDA will provide resources needed to improve the dismal health situation which constitutes a severe impediment to the country's rehabilitation. The project will complement the education sector credit (approved in FY92) in a coherent approach aimed at promptly responding to basic needs. In addition, this operation will assist the government in better fulfilling its  - 5 - institutional role in the health sector. It will set in motion a momentum which will lead to a better investment strategy for health care development and to a more efficient use of financial and human resources. It is anticipated that, if project implementation is satisfactory, a second operation will be promptly prepared to speed up the recovery process and achieve major improvements in the health status of the population. Agreements Reached 15. During negotiations, the Government gave assurances that: (i) the Policy Statement will be updated during the mid-term review; (ii) each year of project implementation, the PIU will make available to IDA the necessary documents related to project implementation and the status of the works financed under the project; (iii) every calendar year, the MOH will present to the Association for comments the draft annual recurrent health budget for the following calendar year, and by October 31, 1994, the MOH will submit to the Association for comments a draft investment plan for the period 1995-1999; (iv) no later than June 30, 1993, MOH will provide IDA with a document defining the potential involvement of demobilized health personnel in the health sector; and (iv) IDA's standard bidding documents for goods and works and IDA's standard letter of invitation for consultants will be used by the PIU and NGOs for project implementation. 16. For credit effectiveness, the Government will: (i) open a project account in a commercial bank acceptable to IDA and make an initial deposit of US$200,000; and (ii) sign a contract with an independent auditor responsible for auditing project accounts in accordance with technical and contractual terms satisfactory to the Association. A satisfactory implementation agreement with relevant implementation agencies is a condition of disbursement for each rehabilitation subcomponent. Environmental Aspects 17. The project is assigned environmental category "C". The project's support for improved and expanded coverage of family planning services will help slow environmental degradation related to population growth. The project is not expected to have any significant environmental impact with regards to the rehabilitation of the proposed sites due to the small size of the works to be undertaken. Program Obiectives Categories 18. The project is expected to have a positive impact on health sector development (80%), women in development (10%) and poverty alleviation (10%). Benefits 19. The main benefits of the project include: (i) improvement of MOH's policy making and managerial capabilities that would contribute to a better planned and more focused development of the health sector; (ii) contribution to the establishment of an effective and sustainable health care system geared towards providing basic health care; (iii) improvement of human resource qualifications needed to provide quality health services; (iv) reinforcement of the efficiency and management of current expenditures as well as the relevance of investment expenditures within the sector and relative to the macro-economic framework; (v) increased health care coverage in the areas which will benefit from project support; and (vi) expansion of the AIDS and family planning programs.  -6 - Risks 20. The main risks of this project are: (i) the weakness of MOH in planning and management and the scarcity of qualified personnel with experience in IDA's implementation and procurement procedures; (ii) the difficulties related to the execution of works because of a weak local administration; and (iii) the political uncertainty. In order to minimize the first risk, the project will strengthen MOH's planning, programming and implementation capacities through human resources rationalization and training and the provision of equipment to the central as well as peripheral levels. In addition, a project implementation unit staffed with technical assistance experienced in IDA's procurement procedures will provide management training to nationals. Regarding the second risk, the project will rely on NGOs that are experienced in implementing projects on the ground such as the Catholic Church, and MSF - Spain to undertake the various activities and provide them with the necessary funding for equipment, training and technical assistance. The third risk should be minimized by the fact that all political parties agree on the urgent need for improving health care and that the objectives and components of the project are not sensitive to policy changes. Recommendation 21. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Lewis T. Preston President By Sven Sandstrom Acting Preisdent Attachments Washington D.C. April 19, 1993  Schedule A Page 1 of 1 ANGOLA HEALTH PROJECT ESTIMATED COSTS AND FINANCING PLAN PROJECT COST SUMMARY (US$million) $us ____ _ l _________________________________ _ | LOCAL FOREIGN TOTAL A. INSTITUTIONAL DEVELOPMENT 1136 3377 4513 B. NATL. HEALTH PROGRAMS __ 1. AIDS and Family Planning 151 1099 1249 2. HeaLth Centers Huita 68 682 750 3. Lubango Health School 1041 7690 8731 4. Porto Amboim Hospital 560 2353 2913 Sub TotaL 1820 11824 13644 C. PPF 0 1209 1209 TOTAL BASELINE COSTS 2956 16409 19365 Physical Contingencies 196 1034 1231 Price Contingencies 293 1318 1611 TOTAL PROJECT COSTS 3445 18762 22207 VaLues scaled by 1000.0 Financing Plan (US$million) Local Foreign Total IDA 1.1 18.8 19.9 Government 2.3 2.3 TOTAL 3.4 18.8 22.2  I  Schedule B Page 1 of 2 ANGOLA HEALTH PROJECT AMOUNTS AND METHODS OF PROCUREMENT (US$million equivalent) Procurement Method Project Etement ICB LCB OTHFR TOTAL COSTS 1. Works 1.1 Construction 6.7 -- 6.7 (6.2) (6.2) 1.1 Rehabilitation 0.9 0.9 ___________________________________ ___________ (0.8) (0.8) 2. Goods 2.1 Equipments/Vehicles 3.0 0.7a 3.7 (3.0) (0.7) (3.7) 3. Consultancies 3.1 Design/Supervision 0.3b 0.3 (0.3) (0.3) 3.2 TechnicaL Assistance/ 7.7b 7.7 Training/Studies (7.4) (7.4) i) TechnicaL Assistance 6.0 ii) Training Studies 0.8 iii) NGO's 0.9 4.1 Operating Costs --- .. 1.7 1.7 (0.3) (0.3) 4.2 Refinancing PPF . 1.2 1.2 (1.2) (1.2) 9.7 0.9 11.6 22.2 TOTAL (9.2) (0.8) (9.9) (19.9) Note: Figures in parenthesis are the respective amounts financed by IDA (a) internationaL or local shopping (b) should be processed in accordance with WorLd Bank GuideLines, use of consultants by WorLd Bank borrowers and by the World Bank as Executing Agency (Washington D.C. August 1981).  Scbedule B Page 2 of 2 ANGOLA HEALTH PROJECT DISBURSEMENTS (US$ million) Category of Expenditure Amount of the Percentage of Expenditure Credit Allocated to be financed by IDA 1. Civil Works 6.0 100 percent foreign 80 percent local 2. Equipment, vehicles, furniture 3.2 100 percent and materials 3. Training and studies and technical assistance 7.2 100 percent 4. Incremental operating costs 0.3 20 percent 5. PPF 1.2 Amount due 6. Non-allocated 2.0 _ _ TOTAL 19.9 ESTIMATED IDA DISBURSEMENTS (US$ million) FY94 FY95 FY96 FY97 FY98 FY99 Annual 2.0 3.8 7.1 5.3 1.3 0.4 Cumulative 2.0 5.8 12.9 18.2 19.5 19.9  Schedule C Page 1 of 1 ANGOLA HEALTH PROJECT TIMETABLE AND KEY PROCESSING EVENTS (a) Time taken to prepare: Two years (b) Prepared by: Government with IDA's assistance (c) IDA Identification Mission: November 1990 (d) Pre-appraisal Mission: November 1991 (e) Appraisal Mission: April 1992 (f) Negotiations: November 16 - 19, 1992 (g) Planned Date of Effectiveness: August 1993 Task Manager Mr. Pierre Mersier Lead Advisor Mr. Salim Habayeb Department Director : Mr. Francisco Aguirre-Sacasa Division Chief : Mr. Alain Colliou  I  Schedule D Page 1 of 2 ANGOLA HEALTH PROJECT STATUS OF BANK GROUP OPERATIONS IN ANGOLA A. STATEMENT OF IDA CREDITS March 31, 1993 Loan or Amount in USS million Credit Fiscal (less canceUation) Number Year Borrower Purpose IDA Undisbursed Cr. 2274 91 Angola Economic Mgmt.Cap. Bldg. 23.00 22.35 Cr. 2289 92 Angola Infrastructure Rehab.Eng. 37.70 34.84 Cr. 2326 92 Angola Lobito Benguela Urb.Env.Rehab. 45.58 46.64 Cr. 2375 92 Angola Education I 27.10 26.50 Cr. 2385 93 Angola Angola Power Sector Rehab. 33.50 33.87 Cr. 2420 93 Angola Transport Recovery (1) 41.00 41.64 Cr. 2421 93 Angola Financial Institutions Modernization 21.00 19.16 Sub-Total active projects: 228.88 225.00 Total less cancellations: 228.88 of which has been repaid 0.00 Total held by Bank and IDA: 228.88 Total undisbursed: 225.00 (1) Not yet effective B. STATEMENT OF IFC INVESTMENTS No IFC investments to date.  Schedule D Page 2 of 2 C. IMPLEMENTATION EXPERIENCE 1. Angola joined the Bank, IFC and MIGA in September 1989. The Bank's initial approach has been to nurture trust between Angola and the Bank so as to develop the type of mature partnership that the Bank has with other Borrowers; to help strengthen the country's weak institutions; to assist in the rehabilitation and reconstruction of infrastructure; and to initiate a dialogue on policy reform priorities and reconstruction needs. Concurrently, the Bank began an active economic and sector work program to build knowledge of the economy and identify the main policy reform priorities. 2. In June 1991, the Board approved the first Credit to Angola for Economic Management and Capacity Building (EMCB). In FY92-93, it approved six credits for infrastructure rehabilitation engineering, urban environment, education, power and transport rehabilitation, and financial institutions modernization. Six credits are effective and disbursements have picked up in FY93, despite the difficult country security situation. Disbursements are accelerating and, as of March 31, 1993, stood at US$8.7 million. The credit for the Transport Recovery Project, approved by the Board in September 1992, is not yet effective because of the absence of security in main project areas. Several projects are at an advanced preparation stage, but their final processing depends on the evolution of the political and security situation and the government's ability to implement the existing portfolio. 3. EMCB became effective in December 1992. It was off to a slow start, partly because of inexperience and lack of familiarity with Bank procedures and partly because of objective difficulties in the working environment and logistical supports. The project is now staffed with a good team of competent and dedicated professionals; the office is reasonably well organized; satisfactory work procedures have been established; and implementation is underway. Some key components, notably human resource development, are on. target, while others, such as the studies on economic liberalization, are just starting. Credit disbursements continue to be behind appraisal projections, but are expected to accelerate because commitments have increased. The Infrastructure Rehabilitation Engineering Credit became effective in February 1992, and implementation has been satisfactory though disbursements are about three months behind schedule because of delays in processing payments and disbursement applications. The Financial Institutions and Modernization Project is on schedule but other projects that include part of their activities in areas affected by hostilities will continue to face delays until peace is reestablished. 4. Project implementation is receiving the attention that the Borrower's relative inexperience and institutional weakness require. Consequently, in order to compensate for the weak implementation capacity, unfamiliarity with Bank procedures, and to help ensure that operations get off on the right foot, the Bank has allocated about 21 percent of its Angola resources for supervision in FY94-96, although the portfolio is young and still relatively small. The Bank has introduced the practice of preparing draft implementation manuals for newly approved projects and finalizing these manuals during project launch workshops. This was done for the Financial Institutions Modernization Credit, approved by the Board in September 1992, which became effective in a record five weeks. A country procurement assessment has been initiated, and procurement training is being carried out under all three technical assistance projects financed by the Bank. The first Country Implementation Review (CIR) is planned for FY94. As part of the CIR preparation, an Action Plan for improving project implementation is being drawn. The new Bank's Resident Mission, established in August 1992, is expected to make a major contribution to project implementation and supervision.  IBRD 23931 GARON KNEA ANGOLA CONJGOJ RURUNDIU '''''"