Documentof The World Bank FOR OFFICIAL USEONLY ReportNo: 35512-MW PROJECTPAPER ONA PROPOSEDADDITIONAL FINANCING (GRANT) INTHEAMOUNT OF SDR 3.5 MILLION(US$5MILLIONEQUIVALENT) TO THE REPUBLIC OF MALAWI FOR THE HEALTH SECTOR SUPPORTPROJECT June 30,2006 HumanDevelopment1 CountryDepartment2 Africa Region This document has a restricteddistribution andmaybeusedbyrecipients only inthe performance o f their official duties. Its contents may not otherwise be disclosedwithout World Bankauthorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 16, 2006) Currency Unit = Malawi Kwacha (MWK) MWKI = US$O.Ol US$1.43783 = SDR 1 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS C H A M Christian HealthAssociation o f Malawi DFID Department for International Development (UK) D H O District Health Officer EHP EssentialHealthPackage EU EuropeanUnion GFATM The Global FundAgainst AIDS, TB and Malaria G o M Government o f Malawi GTZ Gesellschaft fur Technische Zusammenarbeit (Germany) HIVIAIDS Human Immunodeficiency VirudAcquired Immunodeficiency Syndrome HIS Health Information System HMIS Health Management Information System HSA Health Surveillance Assistant HSSP Health Sector Support Project I C B International Competitive Bidding IDA International Development Association I M C I Integrated Management o f Childhood Illnesses IPT Intermittent Presumptive Treatment ITN Insecticide Treated Net JICA Japan International Cooperation Agency M&E Monitoring and Evaluation MDGs MillenniumDevelopment Goals MOH Ministry o fHealth MOU Memorandum o f Understanding NMCP National Malaria Control Program PDO Project Development Objective POW Program o f Work SWAp Sector Wide Approach TWG Technical Working Group UNFPA UnitedNations Population Fund UNICEF UnitedNations Children Fund WHO World Health Organization 11 .. Table of Contents I. Introduction................................................................................................. 1 I1. Background and Rationale for Additional Financinginthe amount o f US$5 million............................................................................................... 1 Project Design............................................................................................. 3 I11. Proposed Changes to the Health Sector Support Project arising from the Additional Financing .................................................................................. 5 Implementationarrangements..................................................................... 5 Safeguard requirements .............................................................................. 6 Closing date ............................................................................................... 6 Partnership arrangements ............................................................................ 6 IV. 6 Appraisal o f Restructured or Scaled-up Project Activities ......................... Consistency with CAS ................................................................................ V. 7 Economic and financial analyses ................................................................ 7 Technical..................................................................................................... 7 Procurement ................................................................................................ 7 Financial management and disbursement arrangements............................. 8 Social........................................................................................................... 9 VI. ExpectedOutcomes .................................................................................... 9 VI1. Benefits and Risks..................................................................................... 10 Benefits ..................................................................................................... 10 Risks.......................................................................................................... 11 VI11. Financial Terms and Conditions for the Additional Financing ................11 Legal covenants ........................................................................................ 12 ... 111 REPUBLIC OF MALAWI Health Sector SupportProject Additiona1Financing(Grant) PROJECT PAPERDATA SHEET Date: June 30,2006 Team Leader: Alfred Chinva Country: Malawi Sector DirectodManager: Yaw Ansui Dzingai Project Name: Health Sector Support Mutumbuka Project Country Director: Michael Baxter Project ID: PO83401 (Original Grant) Environmental Category: C PO98792 (Additional Financing Grant) Recipient: Government o f Malawi Responsible agency: Ministry o f Health Does the restructuredor scaled-up project require any exceptions from Bank policies? oYes X No Have these been approved by Bank management? oYes X No I s approval for any policy exception sought from the Board? oYes X No The project development objective o f the Health Sector Support Project has not beenrevised and i s to improve the effectiveness, efficiency and quality o f the essential health care delivery systemprovided to the poor, women and children through: a. Improving human resources management and development. b. Ensuringthe provision o fthe EssentialHealthPackage. c. Strengtheningthe Essential Health Package support and referral. The specific objectives o f the Additional Grant are: a. Monitoring and evaluation systems strengthening by design and implementation of a robust and sustainable monitoring and evaluation system that provides regular information and feedback to managers andpolicy makers to improve results-based decision-making inthe Malawi Health Sector Wide Approach. b. Augmentation o f the existingphysical,financial, technical and human capacity at all levels of the health systemfor monitoring and evaluation o f malaria and health services deliveredthrough the Health Sector Wide Approach. Does the scaled-up or restructuredproject trigger any new safeguard policies? N o For Additional Financing iv [ ] Loan [ ] Credit [XI Grant For LoanslCreditslGrants: Total Bank financing: US$5 million equivalent Proposed terms: Grant Source Local 1 Foreim I Total Note: *The Government o f Malawi i s contributing over 60% ofthe finances inthe Health SWAPpool. V I. Introduction This Project Paper seeks the approval o fthe Executive Directors for an Additional Grant to the Health Sector Support Project (HSSP -P083401) o f SDR 3.5 million(US$5 millionequivalent) for the scale-up o f activities inthe area of monitoring and evaluation, with a specific focus on malaria. The proposed Grant i s expected to scale up the project's impact and development effectiveness through an expansion o f activities for two o f the three components of the HSSP, namely: (a) ensuring the provision o fthe Essential Health Package (EHP), through monitoring and evaluation (M&E) systems strengthening, and (b) strengthening o f the support and referral systems, through M&E capacity building. Specifically, the proposed Additional Grant would improvemanagement and decision-making andbuild capacity for M&E inthe National Malaria Control Program (NMCP) and the Malawi Health Sector Wide Approach (SWAp). Although the project's resources are modest, it will complement the significant resources from other development partners withinthe SWAp. Onmalariaspecifically, this project will complement fundingapproved recently by the Global Fundagainst AIDS, TB and Malaria (GFATM), which will be included inthe pooled funding for the SWAp, in addition to funds for malaria from other SWAp partners providingpooled or discrete funds. The GFATM-approved proposal and the support provided by the SWAP partners address primarily the NMCP's service delivery requirements, whereas the Additional Grant will address specifically the program's monitoring and evaluation needs. 11. BackgroundandRationalefor Additional Financingin the amountof US$5 million The project development objective (PDO) o fthe HSSPis to improvethe effectiveness, efficiency and quality o f the essential health care services providedto the poor, women and children through: (a) improving human resources management and development; (b) ensuringthe provision o f the Essential Health Package (EHP); and (c) strengtheningthe EHP support and referral systems. The scope o f HSSP, as for the overall SWAPprogram, i s countrywide. The SWAP program i s designedaround six pillars that form the basis of thejoint Programof Work and focuses on the delivery o f the EHP. Thejoint program o fwork emphasizes institutional capacity building, essential health care delivery, humanresource development, resource mobilization and allocation, financial management, procurement andhealthmanagement and information systems. The original grant for HSSP, inthe amount o f SDR 10.1million (USSl5 million equivalent) was approved on December 14, 2004 and became effective on May 6,2005. According to the latest Implementation Status Report, the overall performance of the 1 HSSP has been satisfactory and it i s compliant with all legal covenants. This i s a major achievement considering that this i s the first-ever SWAPinMalawi inany sector, and the Ministryo fHealth (MOH) faced a steep learning curve. The project i s on course to meet the PDOs, as shown by several significant gains - establishment o f an effective SWAP secretariat within the Planning Department and strengthenedSWAPsupport systems and processes, both centrally and inthe zones; sector movement towards a broader programmatic approach; sector embrace o f the decentralization process, including increased support to the District Assemblies inimplementing the health SWAP and preparation o f effective District ImplementationPlans; and direct fundingto the districts and other decentralized cost centers. However, the ultimate and sustainable success o f the HSSP will hinge on the ownership o fthe process by the districts; addressing inequities and improving accountability; strengtheningthe link between health facilities and community level activities; reaching out further to the nonprofit and for-profit private sector actors; aggressively addressing the human resource, drug supply and infrastructure related issues; and ensuringeffective integration o f vertical programs (such as malaria) into the SWAP framework. Furthermore, while systemshave been strengthenedinthe short runwith the induction o f technical assistance, their sustainability will depend on effective capacity building within the government at the central and district levels. Efforts to address these factors are ongoing. Malaria i s the single most important public health problem inMalawi, accounting for 4 million cases annually. Since the entire population o f 11million i s at risk, every citizen - especially rural woman and children - i s a potentialbeneficiary o f a successful malaria control program. Malaria accounts for about 18 percent o f all hospital deaths and 40 percent o f the outpatient visits. Ifanemia - which i s often attributable to malaria - i s included, malaria and its complications account for 53 percent o f all hospital admissions. Malaria's direct and indirect economic costs borne by individuals, households and government are huge. It i s estimated that a large proportion o f the Malawi's workforce looses about 15-25 days a year due to malaria and that families spend about 28 percent o f their yearly income treating malaria. InMalawi, the accumulated loss (1980-1995) from reduced economic growth due to malaria endemicity was estimated at US$l.l billion. This translates to aper capita loss o fUS$110, or about 18 percent o f actual 1995 income. The Government o f Malawi (GoM) has a strong commitment to controlling malaria because o f the significant contribution it can make to achieving the aims o f the SWAP program and the Millennium Development Goals (MDGs). The 2001-2005 Malawi Malaria Strategic Plan made several advances inthe areas o fprevention and, based on its achievements to date, Malawi's NMCP has been acknowledged as one o f the strongest programs in Sub-Saharan Africa. The formerly vertically-run NMCP has been integrated into the Health SWAP since 2004 and systemic issues facing the NMCP are now being dealt with through the SWAP systems, using the same approach as for the ten other health interventions that are part o f the EHP. Inaddition, the new Malaria Strategic Plan (2005- 2010), which has been costed at US$78.6 million, builds on the achievements o f the previous five-year plan and, consistent with the Abuja Declaration and the Roll Back Malaria (RBM) targets, aims to halve the malaria mortality and morbidity by the year 2010. Apart from the Bank, co-financing for malaria i s assured by other development partners (DFID, UNFPA, and the Kingdoms o fNonvay/Sweden) that support the SWAP 2 bypoolingtheir resources alongwith those ofthe GoM. There is substantial additional financing providedby discrete partners such as the United States Government, JICA, GTZ, andthe EU. Inaddition, the GFATMhas recently committedUS$40 millionover 5 years for malaria to be channeled through the SWAPpoolingmechanism. However, the NMCP still faces several challenges andrisks, including, inter alia, the severe humanresource constraints that plague the entire health sector, increasing resistance o fmalaria parasites to Sulfaxodine Pyrimethamine (SP), the first line treatment for malaria inMalawi, problems inthe supply o f mosquito nets, inequities inaccess to malaria services andpersistent deficiencies inthe M&E o f the programmatic inputs, outputs and outcomes. Inaddition, the impact oftheintegration oftheNMCP into the HealthSWAPonhealth sector outcomes, ingeneral, and on malaria control inparticular, remains unclear. The capacity o f the health system to monitor and evaluate malaria-specific inputs, outputs and outcomes effectively needs to be improved. Under the original project, M&E focuses on a core set o f 42 indicators which are linked to the HealthManagement Information System (HMIS)data. The Health Sector Review Group monitors the performance o f the sector using these indicators. However, it i s currently difficult to assess either the optimal resource allocation for scaling up of the NMCP to meet the rather ambitious targets adopted by the GoM, or the efficiency and equity o f use o f the available resources. Furthermore, the report o f the first annual review o f the health SWAP identifiedseveral lingering weaknesses inthe M&E system, including incomplete data collection especially for key disease-control programs, variable data quality, delayed analyses/consolidation o f data, limiteddissemination, an inadequate impact-focus, and variable integration of the M&Eresults inthe planning cycle. The GoM and the SWAP partners have, therefore, requested the InternationalDevelopment Association (IDA) to provide technical and financial support for malaria control within the context o f the SWAp by strengtheningthe overall M&E system. Project Design The project i s designed within the context o f the original PDOs o f the HSSP (see above). Specifically, the Additional Grant will contribute to the implementation of the Malawi Malaria Strategic Plan 2005-10 by expanding specific activities o f the first and third components o f the HSSP, namely: 6) Supporting extension o f quality health care coverage by the provision o f the Essential Health Package (EHP) - through M&E systems strengthening by design and implementation of a robust and sustainable M&E systemthat provides regular information and feedback to managers andpolicy makers to improve results-based decision-making inthe NMCP and the Malawi Health SWAp; and (ii) StrengtheningEssentialHealthPackagesupportandreferralsystemsby augmentation o f the existingphysical,financial, technical and human capacity at all levels of the health systemfor monitoring and evaluation of malaria and health services deliveredthroughthe SWAp. 3 Component1-Design and implementation of a robust and sustainable monitoring and evaluation (M&E) system. This component will: (a) improve the management o f malaria control interventions; (b) use malaria outcomes as a `tracer' or proxy indicator for monitoring changes inthe quality and coverage o f the delivery o f the essential health package; and (c) strengthenthe monitoring, and hence the management, o f the Health SWAp, as a whole. It will include substantial support to the HMIS (and HMISUnit),so that it evolves from a systemthat concentrates on routine health data collection to one that coordinates data collection and analysis from all sources (including non-HIS data) for management decision making for all levels, identifies additional key indicators and their data sources, assesses the quality of services, manages the timeliness and quality of data, and uses data for decision-making to promote institutional strengthening. At the central level this work will involve: (a) (i) reorganizing the present HMISUnit into a Monitoringand Evaluation Unit (M&E Unit) with the ability to commission, coordinate, and supervise all monitoring, evaluation andresearchrelevant to the SWAp; and (ii) consolidating and disseminating the collected information and strengthening the ability o f the M O H and the districts to use M&E data for policy formulation, program planning and resource mobilization; (b) assuring that available resources are effectively usedto measure key outcomes o fthe malariaprogram andhealth outcomes o f other programs, for example IntegratedManagement o f Childhood Illnesses (IMCI) and Maternal and Neonatal Health; and (c) conduct selected studies and surveys, including impact evaluations, to assess key outcome indicators o f the NMCP and SWAp, which will beusedto informmanagement andpolicy decisions. At the district level, activities will strengthen community and facility level data collection, support district M&Eteams and the current zonal and district review system, and enable supportive supervision for M&E,placing emphasis on integrated data analysis for management decisions. Component2 Augmentation of the existingphysical,financial, technical and human - capacityfor M&E. This component i s dividedinto two subcomponents: Central operations - strengthen institutional capacity for implementation o f an effective M&Esystemfor SWAPusingkeymalariaoutcome indicators as tracers. This includes a comprehensive analysis o f HMISresource gaps (physical, financial, technical and human), extension of technical support, piloting o f information technology tools, planningand phasedbuildingo f staff capacity. The logistics management information system (LMIS), Health Facility Assessments and other Quality Assurance procedures will be supported underthis subcomponent. Furthermore, the capacity o fthe M O Hto conduct impact evaluation will be strengthened. District operations - strengthendistrict and zonal capacity for an effective integrated decentralized M&Eresponse for malaria through the SWAp. It will include preparation of effective district M&E technical leadership, comprehensive staff training at all levels (including Village Health Committees and Health Surveillance Assistants), adaptation, distribution and use o f appropriate data management tools, provision o f additional equipment for operational support and harmonization o fdata collection activities o f HMIS, Integrated Disease Surveillance and Response (IDSR), human resources for health, reproductive and child health and disease programs. 4 For further details on the components, see the Results Framework inAnnex 1. Table 1 shows the project cost by component: Table 1: ProjectCosts by Component Components Local Foreign Total US $million US $million US $million Component 1: Design and implementation of a 2.50 0.60 3.10 robust and sustainableM&Esystem Component2: Augmentation of the existing 1S O 0.40 1.90 physical, financial, technical andhuman capacity at all levels of the health system for M&E. Total BaselineCost 4.00 1.oo 5.OO Physical Contingencies PriceContingencies TotalProjectCosts 4.00 1.oo 5-00 TotalFinancingRequired 4.00 1.oo 5.OO 111. Proposed Changes to the HealthSector Support Projectarisingfrom the Additional Financing Implementationarrangements The Additional Grant will be governed by the same implementation arrangements agreed for the HSSP (Le. the governance, institutional, financial management, procurement, partnership arrangements, etc. stipulated inthe Memorandum o f Understanding signedby the development partners inOctober 2004). The Additional Grant will not earmark funds to M&E or malaria, but rather contribute to the SWAP basket funding arrangements. The planningfor and the monitoring o fthe implementationo f activities under the additional financing will be ensured through the annual workplan reviews for the SWAP. Programmatic issues will be the responsibility o f the relevant directorates at central level, especially the M&EUnit and the NMCP. The M&EUnit,which i s expected to be located within the Planning Department o f the MOH, will have the overall coordination responsibility. The M&EUnit will be established and appropriately staffedby July 1, 2007. The current HMISUnit will be responsible for coordination o f the Grant untilthat date. At the zonal and district levels andbelow, the zonal and district health officers will have the overall coordination and oversight responsibility. The District Health Management Team i s responsible for detailed M&Ematters - and this would include the implementationo f this project. The government intendsto recruit and train a district health M&Eofficer for each district to work closely with the existing multisectoral M&E Officers at the District Assemblies. After posting, the new district health M&E officers will be responsible for district level implementation andbelow o fthis project. 5 Safeguardrequirements The safeguard requirements underthe original HSSP have beenfulfilled. The proposed activities do not trigger any new safeguard policies or raise the environmental category o f the project. Additionally, the Additional Grant will only support monitoring and evaluation and will not finance any additional malaria control or other interventions that would require specific safeguard measures. Closingdate The proposed closing date o fthe Additional Grant is the same as that o fthe original HSSP grant, namely September 15,2008. Partnership arrangements Inaddition to the GoM, IDA and four other development partners (DFID, UNFPA and the Kingdoms o fNonvay/Sweden) are supporting the health sector SWAPthrough basket funding. These organizations worked under Government ofMalawi leadership to negotiate and agree on an M O Uto govern their partnershipwithin the SWAP. This M O Uwas formally signed by the original pooling partners on October 29,2004. Since then, other partners such as UNICEF, GTZ, GFATM and WHO have signedthe M O Uas discrete partners. The MOUrefers to the program o fwork, overall resource envelope, financing arrangements, coordination and monitoring arrangements includingjoint annual reviews, and a code o f conduct for partners. The GoM and the SWAPpartners have agreed on a financing plan and a governance structure. This has given the government confidence about donor funding commitments, and given the funders confidence that spendingwill be for agreed purposes and within the agreed timetable. Disbursements are linked to milestones determined as part o f the regular consultation process. IV. Consistencywith CAS The Bank's 2003 Malawi Country Assistance Strategy (CAS), building on the Poverty Reduction Strategy Paper, makes improved health status inMalawi a priority for poverty reduction. Inorder to achieve this, malaria control i s essential as it i s a major public health problem inMalawi, and the single most important cause o f morbidity and mortality inchildren under five years o f age and inpregnant women. The project will also contribute towards achieving the MDGs o freducing infant and child mortality, maternal mortality and control o f communicable diseases. Inaddition, the CAS identifiedthe need for a continuous engagement o f IDAinthe health sector, taking into consideration changes inthe environment and emerging priorities. Accordingly, the proposed project supports stronger implementation and increased effectiveness of the HSSP. The information from the M&E system and studies i s expected to provide input for improving or refocusing the present sectoral activities, including malaria control, for better impact. The proposedproject i s also an important contribution to the focus on results o f IDA-14 as well as o fthe Africa Action Plan. Specifically, it supports the two objectives emphasized inthe Africa Action Plan o f measuring and reporting on progress inprograms andprojects and scalingup ofhuman development. 6 V. AppraisalofRestructuredor Scaled-up ProjectActivities Economicand financialanalyses The economic justification of the HSSP was made on three grounds: (i)the need to reduce the management burdenarising from a multiplicity o fprojectized donor activities; (ii) needtoreducebudgetarydistortioncausedbytheproliferationof"off-budget" the individual donor activities; and (iii)the needto improve allocative efficiency and equity through focusing on the deliveryo f the essential health package. The Additional Grant aims to improve the management and decision makinginthe Malawi Health SWAPand to strengthen the capacity at all levels o f the health systemto monitor the delivery of qualitymalaria control and health services through the SWAp. The economicjustification o fthe Additional Grant is therefore inline with the economic justification o f the Health Sector Support Project. Additionally, the economic justification for the focus on malaria i s made on the following grounds: malaria i s the single most important public healthproblem inMalawi, andhas a profound economic impact on the macro economy and on individual households- especially poor households -inadditiontoaccountingforalargeshareofpublicandprivatehealthexpenditures, Technical The overall progradproject designbuildson the identifiedhealth sector needs o fthe country, the lessons learned from previous projects and from other countries. It responds to the leading causes o f morbidity and mortality inMalawi. The health policy and strategies are inline with current international thinking and conform to international standards for pro-poor essential health care. Specifically, the designaims to accelerate the achievement o f the MDGsby focusing on malaria, the single most important public healthproblem inMalawi. Malaria, one o f the priority interventions identified inthe EHP, has received intensive support from both local and international partners. Malawi has also been a recipient o f assistance from several global initiatives including Roll Back Malaria (RBM), I M C I and the GFATM. While Malawi has done well inimproving the overall coverage and the deliveryo f some keyhealth services, the provision o f quality health services is constrained by dilapidated infrastructure, shortage o f skilled staff, and limited management capacity. Overall, Malawi's health statistics show an overwhelming need for strengthenedhealth service delivery, supportedby adequate monitoring and evaluation systems. Procurement Procurement arrangements under the proposed project will be exactly the same as the arrangementsunder the HSSP, which provides IDA financing as part o f the pooled donors' support for the Malawi Health SWAp. Inline with the M O U for the Health SWAp, procurement under the Additional Grant would be carried out inaccordance with the World Bank's "Guidelines: Procurement under IBRDLoans and IDA Credits" dated May2004; and "Guidelines: Selection and Employmentof Consultants by World Bank 7 Borrowers" dated May 2004, and the provisions stipulated inthe Grant Agreement. Procurement for non-International Competitive Bidding(ICB) procurement and selection o f consultants which does not involve internationalconsultants will be carried out in accordance with the Malawi Public Procurement Act (No. 8 o f 2003) and its accompanying regulations and desk instructions. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the needfor pre-qualification, estimated costs, prior review requirements, and time frame are agreed betweenthe Recipient and the Bank inthe Procurement Plan. The procurementplan for the project will be integratedinto the overall procurement plan for the Malawi Health SWAPandtherefore a separateprocurement planwill not beprepared for the project. The overall Procurement Plan for the Malawi Health SWAPwill be updated at least annually, or as required, to reflect the actual project implementationneeds and improvements ininstitutional capacity. Financialmanagementand disbursementarrangements The Additional Grant will use the same financial management arrangements as the HSSP. The M O U specifies the agreed financial management arrangements. Mechanisms for disbursement, flow of funds (Annex 2) and FinancialMonitoringReports (FMRs)were agreed indetail betweenthe government and partners - andhave beenimplemented satisfactorily. Weaknesses identified inthe preparation o f the HSSP were included as action points to focus on inthe early stages o f the HSSP through a financial improvement plan. This plan was included as an appendix to the MOU. Since signingo f the MOU, the MOH and the Financial Management and Procurement Technical Working Group have implemented most o f the action points. Although the financial management systemi s not perfect, it i s much improved. The main concern now i s that the improvements made may not be sustainable ifMOH does not strengthentheir personnel. This i s because the strengthened financial management relies on the technical assistance that has been recruited for two years. Dueto the lack o f counterparts and o f capacity building o f M O H systems, the concern i s that, when the technical assistance i s complete, M O H financial management will returnto square one. Efforts are currently ongoing to ensure that the requirements for the technical assistance to strengthen local capacities are properly implemented and monitored. An important activity underway within the SWAP financial management i s linkingthe budget, annual work plan, procurement plan and M&E framework. Currently, these documents are largely independent. Measures are beingimplemented to establish these connections including aligning the chart o f accounts and annual work plan outputs. Based on the agreements reached on the HSSP, the audit for the Additional Grant will also be conducted by a firm o f chartered accountants under the overall control o f the National Audit Office by September 30 each year. Disbursementarrangements. The funds from the grant will go directly into a pooled foreign denominated holding account and will not be earmarked. Fromthe pooled holding account, funds will be transferred into a Malawi Government account (MG Account '1) before beingtransferred into a Malawi Kwacha holding account from where 8 disbursements to various stakeholders accounts will take place. These arrangements are the same as those for the HSSP. Table 2 below specifies the categories o f Eligible Expendituresthat may be financed out of the proceeds o f the grant, the allocations o f amounts o f the grant to each Category and the percentage o f expenditures to be financed for Eligible Expenditures ineach Category. Table 2: Categoriesof EligibleExpenditure Category 1 Amount of the I Percentageof Expenditures I Grant Allocated to b e Financed US$ millions I Subprograms I 5.0 I Suchpercentage o f Eligible ! Expenditures as the 1 Association may deternine foreach Fiscal Year Total Amount 5.O Social The social aspects and likely social implications o f the HSSP were carefully analyzed duringpreparation andhavebeenpursuedthrough a series o f analytical studies during implementation. Most o f this work was done under the auspices o f the Access to Health Services and Equity Working Group. The various reviews o f the SWAP have consistently reported favorably on the attentionbeingpaid to social aspects. The Additional Grant will have an important, albeit indirect, social impact. The much strengthened M&E systemwill produce more socially relevant data faster and to a higher standard, andwill ensure that it i s readily available and properly analyzed andreported. Within this, the collection and analysis o f data on the equity aspects o fhealth service provision (including gender aspects) -which will feed directly into policy formation - and probably equity related impact evaluation studies will be important. There will also be strengthened information and analysis on civil society involvement with health services and on health service beneficiaries and accountability. VI. ExpectedOutcomes Through its strengthening o f M&E systems and emphasis on improved results-based decision making, it i s anticipated that the Additional Grant, inaddition to strengthening the deliveryo f malaria and health services, will contribute to achieving the three MDGs of reducing child mortality, improving maternal health, and contribute to the reduction o f poverty by protecting the poorest and the vulnerable from economic loss due to illhealth and disability. Outcome indicators agreed within the SWAP for assessing the long-term impact o f the NMCP are as follows: 9 0 Reduction o fmortality from all causes among children under 5 years (MDG 4) 0 Improvement o f maternal health (MDG 5) 0 Reduction o f malaria specific mortality and morbidity (MDG 6) 0 Reduction o fproductivity losses attributable to malaria (MDG6) The following output indicators, for which baselines will be provided, are proposedto monitor IDA'Soverall project and its components: Overall indicators: proportion o f mortality attributable to malaria; proportion o f morbidity attributable to malaria; and mortality from all causes among children under five years. Indicators for strengtheningthe capacity o f the M&E system: Number o f staff trained inM&E; andproportiono f facilities that compile M&Edata andreport as per M&E guidelines. Indicators to assess performance and impact: (a) proportiono f children under five and pregnant women diagnosed with severe malaria at health facilities who received correct anti-malarial and supportive treatment according to national guidelines; (b) proportion o f febrile children under five accessing treatment with an effective anti- malarial within 24 hours o f onset o f symptoms; (c) percentage o f households having at least one insecticidetreated bed net (ITN); (d) percentage o fmosquito nets that have been treated at least once inthe last year; (e) percentage o f under five children sleepingunder ITNs duringthe precedingnight; (0percentage o fpregnant women sleeping under ITNs duringthe precedingnight; and (g) percentage o fpregnant women attending antenatal care receiving intermittentpreventivetreatment (IPT) in accordance with the national malariapolicy. VII. Benefitsand Risks Benefits The project will make an important contribution to the strengthening o fthe overall effectiveness o f the SWAP through the harmonization o f different monitoring and evaluation systems and data flows and the use o f data to support planning and forecasting processes. This will strengthen evidence-based decision making to address effectively important public health issues like malaria inMalawi. The focus on capacity buildingo f district health teams will further strengthen the decentralizationprocess o f the health sector. It will increase the capacity o f district managers to monitor and evaluate outcomes and link information flows with the planning of health interventions, with a particular focus on malaria interventions. The project will also generate important lessons for the improved management o f all former vertical disease control programs that are now integrated into the SWAP. 10 Risks Macro economic environment. There i s a risk that the GoM may not be able to sustain its budget allocations to the health sector and that, therefore, short-term efforts on malaria control become unsustainable inthe long-run. Furthermore, cutbacks on the allocations to the health sector may lead to proportionately greater cutbacks inthe fiduciary areas, such as M&E. Risk mitigation: Despite its fiscal constraints, GoM has shown a strong commitment to the health sector bynearly doubling its allocations during the past decade. Also, the SWAp itself, by definition, improves program sustainability. Furthermore, financing plans are reviewed as part o f the SWAPannual reviews to ensure adequate, balanced and affordable allocations. The EHP-based program i s also expected to help the GoM inimproving the effectiveness and efficiency o f health care services. The GoM, including the Ministries o f Finance and Economic Planning, strongly supports the SWAp. Humanresourceshortages. Lack o fhumanresources inthe health sector, ingeneral, and the fiduciary areas inparticular, limits the ability o f the health system to carry out M&E activities. The highHIV/AIDS infectionrate poses an additional burdenon the already existing human resource shortages. Risk mitigation: The health sector human resource issue i s receiving a lot o f attentionwithin the development community in Malawi, and there have been large infusions o f funding to support human resource development and management within the sector, including a US$lOO million grant by DFID. Throughthe HSSP, IDAis contributing to the efforts ofthe GoM andthe development partnersto mitigate this risk by supporting innovative incentive schemes for health workers at all levels o f government, including inthe fiduciary areas. IDA has also provided technical support through its analytical work on human resources. IDA support to the National HIV/AIDS Response i s specifically addressing the impact o f HIV/AIDS on the health sector, including human resource implications. Institutionalandimplementationcapacityconstraints. Past experience inMalawi has highlightedthe limitations inimplementationcapacity, especially since the Health SWAp i s the first SWAP in any sector within Malawi. Inparticular, the M&E implementation capacity i s weak, which i s especially evident at the district level due to inadequate past investmentdespitethe pushtowards fiscal and administrative decentralization o f service delivery, Risk mitigation: The project will finance capacity strengthening inM&E through training and support inthe development o f systems and procedures at all levels o f the health system. Ongoing support andpolicy dialogue through the SWAP addresses the wider SWAP issues. VIII. FinancialTerms andConditionsfor the Additional Financing The Additional Grant will be an IDA Grant. A commitment charge on apredetermined rate will be calculated and levied on the undisbursedamount once the Grant becomes effective. 11 Legal covenants 1. Inclusion o f activities defined by the Additional Grant inthe annual SWAP implementationplan throughout the period o f the grant. These activities would be reflected in each "annual Subprogram" submittedto the Association for its approval. 2. Restructuringo f the HMISUnit into the Monitoring and EvaluationUnit (M&E Unit) by July 1,2007. 2. Increase inthe staff allocation for the M&EUnit fromtwo to four professional staff, 3. Continuation of internationally recruited technical assistance to the M&E Unit for the next two years. 12 . ANNEX 1:RESULTSFRAMEWORK -_ Component 1:M&E systems strengtheningby design and implementation of a robust and sustainable M&E system that provides regular informationand feedback to managersand policy 1 1makers to improve results-baseddecision-makingin the Malawi SWAP I I Observations 1 I ~~ Need Potential Activities Indicators (a) Strengthen1 Current H M I S unit Establishment o f a At the Central M&EUnitestablished ~ I * expand the present limited to HIS with central entity [ level with leadership role in HMISUnit into a little prominence in responsible for: o Support the planto 1 M&Eagenda and 1Monitoringand M O H Collecting and 1 elevate and staff the 1 clear budget Evaluation Unit There i s no other coordinating the H M I S unit to the RevisedM&E (M&E Unit) that structure that various data 1 level o f M & E Unit Framework and ~ 3 providesoverall coordinates the streams within the Planning Strategic Plan that guidance inthese definition, collection, 0 Monitoring quality Lnit. includes all key areas and analysis o f all and timeliness o f M&EUnitto malaria and SWAP data for decision- information and coordinate across 1 indicators with data I making and providing oversight 1 M O H inidentifying sources and data management at the o f institutional l opportunities for 1 flows developed and I 1. central level strengthening for impact evaluation implemented Integrated Disease M&EandResearch ~o Prioritize and Surveillance and at all levels execute integrated Response (IDSR) Over time, research agenda set working identifying critical by technical independently data needs and working groups I ensuring that the 10 Create concrete 1 data collected meet reporting those needs, are 1 mechanisms for timely, and are SWAP programs ~ comparable 1 and POWprogram 0 Integrating IDSR areas to report to I I into broader M&E 1 the M&EUnit Unit 1 including I 101 integrating IDSR Assess need for further information 11 and refinement o f 1 theM&Eand 1 Research framework and 1 ~ strategic plans I (b) Assure effective , Data from programs MOHability to Coordinate data % o f indicators from use of available (incl. malaria, target resources for collection and 1 the POWpillars 1 resourcesto IMCI, RH) not I interventions based analysis for disaggregated by measurethe impact collected, integrated on M&E data decision-making ' District for Annual/ ~ of the malaria and analyzed in a Linkingmalaria from all sources Zonal Reviews and program and effect 1 timely fashion 1 data with other and levels (IMCI, preparationo f 1 on other health Indicators being programmatic RH,etc) District outcomes and collected not outcomes, support formal Implementation Plans activities (e.g. sufficient for timely especially IMCI mechanisms (e.g. (DIPS) IMCI, maternal and longitudinal and RH TWG) for linkage % o f indicators for ~ health, laboratory program monitoring Include between malaria 1 EHP, includlng from 13 Component 1:M&E systems strengtheningby design and implementation of a robust and sustainable M&E system that provides regular informationand feedback to managers and policy 1 makers to improve results-based decision-making inthe Malawi SWAP Objective Observations ' Need 1 Potential Activities 1 Indicators ~~ services) at all and analysis for representatives (and other vertical NMCP, MCH, SM, levels;monitoring management from vertical EHP program etc. available from non-HISessential decision-making, e.g. programs in TWG areas) and SWAP the M&E Unit at data neglect of: Resolve M&E Annual Review o Demandside inconsistencies Expandoutcome % o fmalaria output indicators (care- between SWAP indicators to and impact indicators seeking) framework and HIS include socio- disaggregated . o Outcomes (net indicators economic and available during coverage) Inclusion o f equity standard o f living annual review and o Impact evaluations and accountability outcomes for which targets are Indicators from the 6 indicators inSWAP LinkHIS, non-HIS reached . POWpillars (HR, framework and demand side Proportion o f pharmaceuticals, data ~ proposed equity equipment etc.) indicators collected, collected, but neither analyzed and integratednor included in annual combined with other report indicators (c) Conduct 0 Current sources Identifying 0 Broaden the scope selected studies and (DHS, MICS, MIS) additional data o f the Zonal and Number o f impact surveysto improve others are not needs (surveys, District Reviews to evaluation studies malaria consistent, not special studies, etc.) include wider commissioned and ~ management and sufficiently frequent ~ Survey-baseddata analysis for completed informpolicy for monitoring and are needed that are decision making % o f districts using decisions. At the not comparable more: Establishpriorities data from M&E district level, 0 Collection often o timely and frequent for impact framework for activitieswill adequate, but (annual) evaluation and decisionmaking to strengthen analysis and o longitudinally operations research, elaborate the DIPS communitylevel incorporation into comparable and and commission % o fVHCs that are data collection,and program consistent studies using registries to district M&E management o directed to the Explore options for collect community teams. decision-making is needs o f program data sources: level data weak monitoring rather introduce new data No emphasis on use than commissioned sources (e.g. o f data analysis for by others community management registries, expanded and more frequent MISIMICS) Conduct impact evaluation studies 14 11 COMPONENT 2: Augmentation of the existingphysical,financial, technical and human capacity at all levels of the health systemfor M&E of malariaand healthservices deliveredthrough the Health SWAP Observations Potential Activities Indicators Existing Support analysis o f Percent o f SWAP 1! physical, H M I S resource gaps indicators included financial, (physical, financial inAnnual Work technical and at all levels technical, human) Plan and budget human Expansionand Strengthen spent on M&E support capacity capacity o f institutional activities implementation of inadequate CentraliZonal staff capacities to Proportion o f a n effective M&E at all levels to train and support ' undertake M&E (e.g. 1 districts reporting system for the Over- District teams I Community Health 1 HMISindicators in SWAP using reliance on Transfer o f skills Science Unit,Malawi 1 a complete and malaria as a tracer. TA from TAs to local Equity& Justice 1 timely fashion each counterparts Network, College o f quarter %ofoutcome Develop data indicators measured collection tools; pilot at least every two years using longitudinally comparable methodology 2.2. District Extension o f operations - technical support to Strengthen zonal, districts for teams (training and appropriately district and sub- Districts have planning and supervision) staffed and district capacity for almost no , phased buildingo f o Provide equipment equipped a n effective, dedicated iocal staff capacity for operational % districts with ~ integrated and M&E staff. Quality assurance support as N M C P indicators decentralized M&E Health Community Level: necessary disaggregated and response for facilities even o Support planned o Refresher training available at time o f Malaria through less strengthening o f o f facility level Zonal Reviews and SWAP 1 KOquality VHCs and HSAs staff inI M C I and preparationo f DIPS assurance o Harmonization o f RHto improve the Proportion o f process for data collection accuracy o f Districts with data data collection activities o f malaria diagnosis that i s deemed to be and analysis HMIS, IDRS and o f adequate quality I N o agreement disease programs during the Zonal on data and District reviews collection tools at community level 15 ANNEX 2: Flow of Fundsfor SWAPdonors Donors Contribute Quarterly DONOR PARTNERS HELDINRESERVE BANK OFMALAWI POOLED DONORS v Tiansfers through Ministry y transfers inproportion to the On advice from Ministry o fHealth amount required to finance the Programo f work GOMACCOUNT NO. 1 GOMMK ACCOUNT Ministry of Financeowns the I account but it is in the name of the Ministry of Health MALA& KWACHA HOLDINGACCOUNT . ' MALAWI KWACHA OPERATING ACCOUNT MONT ILY CASH F SCCA - Through Ministry of Finance on MOH advice 4 TRA USFERS v CHAM+NGOs MINISTRYOF HEALTH DISTRICTS+ OTHERCOST CENTERS DHO ACCOUNT 16