Documentof The World Bank FOR OFFICIAL USE ONLY ReportNo: 26142-MA1 PROJECTAPPRAISALDOCUMENT ONA PROPOSEDIDA GRANT INTHEAMOUNT OF SDR25.4 MILLION (US$35.0 MILLIONEQUIVALENT) TO THE REPUBLICOF MALAWI FORA MULTI-SECTORALAIDS PROJECT(MAP) OperationalandQuality Services(AFTOS) Africa RegionalOffice This document has arestricteddistributionand maybeusedby recipientsonly inthe performanceof their officialduties. Its contentsmay not otherwise be disclosedwithout World Bankauthorization CURRENCY EQUIVALENTS (Exchange Rate Effective May 31,2003) Currency Unit = Malawi Kwacha (MKW) M K W 91.999 = USSl US$0.01087 = MKW 1 FISCAL YEAR July 1 -- June 30 ABBREVIATIONS AND ACRONYMS ADB African Development Bank ADMARC Agricultural Development and Marketing Corporation AIDS Acquired ImmuneDeficiency Syndrome ANC Antenatal clinic ART Anti-retroviral therapy ARV Anti-retroviral drug BCI Behavior Change Interventions CAS Country Assistance Strategy CBO Community-based organization CDC Centers for Disease Control C H A M Christian Health Association o f Malawi CHBC Community home-basedcare CIDA Canadian InternationalDevelopment Agency CMS Central Medical Stores cso Civil society organization DA District Assembly DACC District AIDS Coordinating Committee DfID Department for International Development EO1 Expressiono f Interest EP&D Ministryof EconomicPlanning and Development EU European Union FBO Faith-based organization F M A Financial Management Agent GFATM Global Fundfor AIDS, Malaria, and Tuberculosis GIPA Greater Involvement o f People Livingwith AIDS GOM Government o f Malawi HBC Home-based care H C W M Health care waste management HIV Human Immunodeficiency Virus HSG Health Sector goods ICB International Competitive Bidding ICR Implementation Completion Report IDA International Development Association IEC Information, Education, and Communication IPAA International Partnership Against AIDS I S Injection safety JICA Japanese International CooperationAgency KAP Knowledge, Attitude, Perception FOROFFICIAL USEONLY M&E Monitoring and Evaluation MANASO MalawiNetwork of AIDS Service Organizations MANET Malawi Network of PeopleLivingwith HIV/AIDS MAP Multi-CountryAIDS Program for Africa MDF Ministry of Defense (Malawi Defense Force) MDLG Ministry of District andLocal Government MGFCC Malawi Global Fund Coordinating Committee MIM Malawi Instituteof Management MNREA Ministry ofNatural Resources and Environmental Affairs MOEST Ministry of Education, Science and Technology MOGCS Ministry of Gender and Community Services MOHP Ministryof Health andPopulation MOL Ministryof Labour MOU Memorandum of Understanding MPRSP Malawi Poverty Reduction Strategy Paper MPSR Malawi Public Service Regulations NAC NationalAIDS Commission NAPHAM NationalAssociation of PeopleLivingwith HIV/AIDS inMalawi NGO Non-government organization NORAD NorwegianAgency for Development NSF National Strategic Framework 01 Opportunistic Infection OPC Office of the President and Cabinet ORT Other recurrent transactions ovc Orphansand other vulnerable children PHRD Population andHuman ResourceDevelopment Grant PLWA People Livingwith AIDS PMTCT Prevention of Mother to Child Transmission POW Programof work RFP Request for Proposal STI Sexually transmitted infection SWAP Sector wide approach TB Tuberculosis TOR Terms of Reference TWG NationalTechnical HIV/AIDS Working Group UNAIDS Joint UnitedNations Program on HIV/AIDS UNDP UnitedNations Development Program UNFPA UnitedNations Population Fund UNICEF UnitedNations Childrens Fund USAID UnitedStates Agency for International Development VCT Voluntary Counselling and Testing WHO World HealthOrganization Vice President: Callisto Madavo Country ManagedDirector: DunstanM.Wai Hartwig Schafer Sector ManagedDirector: John A. Roome Task Team Leader/Task Manager: Christine E.Kimes This document has a restricteddistributionandmay beused by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. MALAWI MULTI-SECTORAL AIDS PROJECT (MAP) CONTENTS A. Project Development Objective Page 1. Project development objective 1 2. Key performance indicators 1 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported bythe project 1 2. Mainsector issues and Government strategy 2 3. Sector issues to be addressed by the project and strategic choices 6 C. Project Description Summary 1. Project components 6 2. Key policy and institutional reforms supported by the project 9 3. Benefits and target population 9 4. Institutional and implementation arrangements 10 D.Project Rationale 1. Project altematives considered and reasons for rejection 16 2. Major related projects financed by the Bank and/or other development agencies 17 3. Lessons leamed and reflected inthe project design 18 4. Indications of recipient commitment and ownership 20 5. Value added o f Bank support inthis project 20 E. Summary Project Analysis 1. Economic 20 2. Financial 21 3. Technical 21 4. Institutional 21 5. Environmental 23 6. Social 25 7, Safeguard Policies 27 F. Sustainability and Risks 1. Sustainability 27 2. Critical risks 27 3. Possible controversial aspects 29 G. MainGrant Conditions 1. Effectiveness Condition 29 2. Otherconditions 29 H. Readiness for Implementation 29 I.CompliancewithBankPolicies 30 Annexes Annex 1: Project Design Summary 31 Annex 2: DetailedProject Description 34 Annex 3: Estimated Project Costs 39 Annex 4: Economic Summary 42 Annex 5: Financial Summary 43 Annex 6: (A) Procurement Arrangements 44 (B) Financial Management and Disbursement Arrangements 50 Annex 7: Project Processing Schedule 57 Annex 8: Documents inthe Project File 58 Annex 9: Statement o f Loans and Credits 59 Annex 10 Country at a Glance 61 Annex 11 Multi-Donor Memorandum o f Understanding 63 Annex 12 N A C Grants Facility 66 Annex 13: Monitoring and Evaluation Framework 76 Annex 14: District Government and HIV/AIDS 85 Annex 15: Health Care Waste Management Plan 89 Annex 16: Supervision Framework 94 MALAWI Multi-SectoralAIDS Project (MAP) Project AppraisalDocument Africa RegionalOffice AFTOS Date: July 9,2003 Team Leader: ChristineE. Kimes Sector Managermirector: JohnRoome Sector(s): Other social services (100%) Country Managermirector: DunstanM.Wai, Hartwig Theme(s): Fightingcommunicable diseases(P), Social Schafer riskmitigation(S) Project ID: PO73821 Lending Instrument: Specific Investment Loan (SIL) [ ]Loan [ ] Credit [XI Grant [ ]Guarantee [ ]Other: For LoanslCreditslOthers: Amount (US$m): $35.00 BORROWERRECIPIENT 10.00 0.00 10.oo AFRICAN DEVELOPMENT BANK 0.20 0.40 0.60 CANADA: CANADIANINTERNATIONAL DEVELOPMENT 7.50 2.50 10.00 AGENCY (CIDA) UK:BRITISHDEPARTMENTFORINTERNATIONAL 5 -40 1.80 7.20 DEVELOPMENT (DFID) THE GLOBAL FUND TO FIGHT AIDS, TUBERCULOSIS& 73.14 123.00 196.14 MALARIA US, GOV. OF 0.40 1.60 2.00 IDA GRANT FORHNIAIDS 23.50 11.50 35.00 NORWAY: NORWEGIANAGENCY FORDEV. COOP. 7.50 2.50 10.00 (NORAD) UNDEVELOPMENTPROGRAMME 1.90 1.90 3.80 Total: 129.54 I 145.20 I 274.74 BorrowerlRecipient: GOVERNMENT OF MALAWI Responsibleagency: NATIONALA I D S COMMISSION Address: P.O. Box 30622, Lilongwe 3, Malawi Contact Person: Dr.Biziwick Mwale Tel: (265) 1727 900 Fax: (265) 1727398 Email: bmwale@aidsmalawi.org Expectedeffectiveness date: 1013112003 Expectedclosing date: 1213112008 A. Project Development Objective 1. Project development objective: (see Annex 1) The development objective ofthe national HIV/AIDS program, which the proposed MAP will support, is to reduce the transmissiono f HIV,to improve the quality o f life o f those infected and affected by AIDS, and to mitigate the impact of HIV/AIDS in all sectors and at all levels o f Malawian society. 2. Key performance indicators: (see Annex 1) The NationalAIDS Commission, incollaboration with local stakeholders, has developed a comprehensive logical framework for the national HIV/AIDS program as well as the supporting monitoring and evaluation system to collect and analyse data on the epidemic and the national response. The performance indicators shown inAnnex 1are extracted from the national logical framework and have been selected to track performance related to those variables which are central to IDA'Ssupport o f the national program: a) to scale upthe scope of the response, b) to promote amulti-sectoral, multi-stakeholder response, c) to accelerate financial flows to stakeholders and implementingpartners, and d) to use M&E information to guide the national response. The performance indicators inAnnex 1 therefore do not attempt to be comprehensive, inview o f the fact that N A C will be reporting annually on the basis o f a comprehensive logical framework. Programmilestones will be taken from the Strategic Management Plan. B. Strategic Context 1.Sector-relatedCountry Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: Report #25906 Date of latest CAS discussion: June 10,2003 The CAS for FY04-FY06 supports implementation o fthe MalawiPoverty Reduction Strategy Paper (MPRSP) which i s built upon four major pillars: sustainable economic growth and structural transformation; human capital development; protection o f the most vulnerable; and good governance. The MPRSP identifies HIVIAIDS, gender and environmental sustainability as priorities for mainstreaming inthe context o f poverty reduction programs. The CAS proposes to contribute to MPRSP goals o f improving service delivery for human capacity development and expanding safety nets for the vulnerable through the MAP supported national HIVIAIDS program. IDA support provided through the M A P will enable Malawians to achieve their overarching poverty reduction goals by slowing and eventually containing the deterioration inhuman development indices causedby AIDS. Malawi i s eligible as a recipient o f IDA Grants in the "Other Poor Countries" category as an IDA-only country with a Gross National Product equal to or less than US$360 per annum. This $35 million HIV AIDSproject is proposedto be funded inFY04 as an IDA grant. Two projects went forward as IDA grants inFY03, including a US$21.0 millionportion o f the Emergency Drought Recovery Project approved inNovember 2002, and a US$27.20 million portion o f the MASAF I11Project, approved in June 2003. The GOMrequestedto participate inthe MAP2 programinlate 2001, and provided evidence at that time that Malawi satisfies the M A P eligibility criteria: (i)nationalstrategicapproachtoHIVIAIDS:theNationalStrategicFramework2000-2004was developed with extensive civil society participation and emphasizes a multi-sectoral approach; (ii)existence of a high-level HIVIAIDS coordinating body: the National AIDS Commission was established inJuly 2001 and reports directly to the Office o f the President; the Board o f Commissioners - 2 - has broadrepresentation o f key sectors o f civil society, including people livingwith HIV/AIDS; (iii)Government agreement to use exceptional measures: the N A C sees its role as one o f coordination and welcomes out-sourcing o f selected functions as a way to enhance rapid start-up o f activities (eg, financial management o f the grants facility); the establishment o f a pooled basket arrangement among the donors i s another innovation intended to facilitate scaling up o f the program; (iv) Government agreement to utilize multiple implementation channels: grant funds for HIV/AIDS activities will be made available to communities, civil society (NGOdFBOs),the universities and teaching institutions, and the private sector, as well as to the public sector. 2. Main sector issues and Government strategy: Country context: The HIV/AIDS epidemic inMalawi i s among the more severe cases inthe region. It i s estimated that 15% o f adults aged 15-49 are infected, which translates to about 1,000,000 adults and children with HIV (2001). General awareness o f the disease i s fairly high, but so are misconceptions about how to avoid the disease. As a result, highriskbehavior among sexually active youth and adults continues. Most transmission in Malawi i s believed to be via heterosexual contact (90%), with mother-to-child transmission a distant second (8%). However, a recent medical waste management and injection safety assessment carried out inNovember / December 2002 indicates that transmission through unsterile injections and improper medical waste handling may be a larger problem than previously thought. The share attributable to health care transmission i s therefore currently under review, and may be revised infuture. Women are contracting AIDS younger than men and at higher prevalence rates (four to six times more inthe 15-29 age group); the very highrates o f HIV prevalence (24 percent on average) inwomen o f reproductive age, combined with high fertility, suggests that future mother-to-child transmission rates could increase significantly. The immediate impacts are staggering: 70% o f all admissions to hospital medical wards are AIDS related, and HIV/AIDS is now the leading cause o f death inthe most productive age group (20-49 years), resulting inan estimated 50,000 to 70,000 adult and child deaths annually. By the end o f last year, an estimated 1.2 million childrenunder 15 were without one or both parents (Malawi's total population is about 10 million). The medium and long term impacts are also sobering: the sharp rise in adult mortality rates i s driving down life expectancy at birth (now estimated at less than 39 years), and national productivity i s declining, undermining efforts to reduce poverty. National Strategic Framework: T o respond to this massive challenge, Malawi adopted a National HIV/AIDS Strategic Framework (NSF) inOctober 1999. Developed through a highly participatory process (involving private sector, public sector, NGOs, CBOs, faith communities and people livingwith HIV/AIDS), the NSF defines priorities for the national response and lays the foundation for enhanced partnerships. The overarching goal o f the NSF i s to reduce the incidence o f HIV and other sexually transmitted infections, improve the quality o f life o f those infected and affected by HIV/AIDS, and mitigate the impact o f HIVIAIDS in all sectors and at all levels o f Malawian society. Nine themes were identified as the main areas for attention: 1. facilitating changes in cultural valuednorms to reduce spread o f AIDS 2. strengthening dialogue with youth to promote responsible behavior 3. empowering vulnerable groups to resist behavior harmful to their health status 4. promoting love, care, and support for those infected by or living with HIV/AIDS 5. implementing effective, multi-sectoral mitigation plans inthe home, hospital, and work-place 6. caring for orphans, widows, and widowers 7. strengthening the effectiveness o f HIV prevention programs 8. establishing a comprehensive and effective IEC strategy to reduce the spread o f HIV - 3 - 9. increasing accessibility of VCT services for men, women, and youth The NSF is based on the premisethat effective action will require a multi-sectoral approach, implementedby a wide spectrum ofpartners encompassing the public andprivate sectors, civil society, and faith communities. Inthis spirit, existing partnerships are beingconsolidated and new ones established. A Government - Faith Communities Task Force was inaugurated inearly October 2001, and an annual stock-taking exercise took place inNovember 2002 to follow up on earlier initiatives. A National HIV/AIDS Best Practices Conference was held inApril 2002 to promote sharing o f information and establishment o f networks among national, district, and village level practitioners, and a first annual Joint Review o f NSF implementation progress was organized inMarch 2003. N A C is currently working with private sector leaders andthe Chambers o f Commerce to facilitate the formation of a Business Coalition Against AIDS. As the NSF is entering into its final year, the NAC and national stakeholders have developed a programmatic framework to guide interventions duringthe next five years o f the national response -the Strategic Management Plan (SMP). The SMP includes those interventions which are coordinated and directly fundedby the National AIDS Commission. N A C plans to initiate a participatory process to develop the next phaseNSF 2004-2009 inthe coming year, before the end of the current NSF. InstitutionalFramework: The Office of the President and Cabinet (OPC) is responsible for HIV/AIDS policy and HIV/AIDS program oversight inMalawi. A Minister for HIV/AIDS Programmes was appointedinApril 2003 within OPC to report to the President and Cabinet and to provide full time attention to the AIDS epidemic. A Cabinet Committee on HIV/AIDS and Healthconsiders policies and bills before they are submittedfor full Cabinet considerationand thereafter, to Parliament. The Cabinet Committee i s chaired by the Vice President, and the secretariat i s providedby the Executive Director o f the NationalAIDS Commission (NAC). A national HIV/AIDS Policy is at an advanced stage of preparation, havingbeendevelopedwith stakeholder input and consultation over the past six months. It i s expected to be submittedto the Cabinet Committee for HIV/AIDS inJuly/August 2003, prior to full Cabinet consideration thereafter. The national policy framework will be completed inthe coming year through the preparation o f an HN/AIDS law, which will formalize the institutional andpolicy framework for the HN/AIDS response. The NationalAIDS Commission was established inJuly 2001 to coordinate and facilitate the national response. To performthis function, it provides technical and financial support to implementingagencies, mobilizes resources to support HIV/AIDS interventions, and monitors the trajectory o f the epidemic and the progress o fthe national response. NAC does not have animplementationrole. Administratively, the National AIDS Commission reports to the President o f Malawi, through the Minister for HIV/AIDS Programmes. The N A C i s composed o f a Board o f Commissioners and a Secretariat. The Board's 19 commissioners are drawn from civil society (including faith communities) and the public and private sectors. The Board has final approval authority for N A C Secretariat policies and procedures, the annual work program, and hiringo f Secretariat executive staff. N A C i s currently operating under a Trust Deed which gives it legal personality and institutional autonomy. It i s expected that this Trust Deedwill be supersededwithin the nextyear by an act o f Parliament establishing the National AIDS Commission underthe same conditions o foperational and institutional autonomy andmulti-stakeholder representation inthe Boardo fTrustees as exists underthe TrustDeed. Inearly 2002, the MalawiGlobal FundCoordinating Committee (MGFCC) was established as per GF requirementsto review country funding requests prior to submissionto the GlobalFund. The MGFCC is responsible for reviewingrequests for malaria and tuberculosis as well as HIV/AIDS. It i s chaired by the - 4 - Principal Secretary o f the Ministry o f Health, the Secretariat i s provided by the Executive Director o f NAC, and its membership i s drawn from the same stakeholders who sit on the NAC Board o f Commissioners and on the national Technical HIV/AIDS Working Group. With respect to the AIDS portion o f its mandate, the MGFCC does not have policy-making responsibilities or powers. A Technical HIV/AIDS Working Group (TWG),chairedbythe N A C and composed o f government, NGOs and donors, is active at the national level. Various TWG sub-groups have been formed to address selected technical issues, develop protocols to guide action, and promote effective coordination o f interventions. These sub-groups participated actively inthe development o f the Global Fundnational proposal approved in 2002, and contributed to thematic assessments o f NSF implementation progress in their respective areas, as input to the first annual joint review which took place inMarch 2003. District AIDS Coordinating Committees (DACCs) were formed inthe mid-1990s in Malawi's rural and urban districts to coordinate and monitor local HIV/AIDS initiatives. These committees (composed o f government staff, community representatives, NGO representatives) developed District HIV/AIDS plans for implementation by community-based groups and public-private partnerships. The District Health Officer coordinated D A C C activities, in addition to hidher regular work program. Following Malawi's first district level elections inNovember 2000 and establishment o f district local governments in 2001, the DACCs were not included inthe formal committee structure at the district level. This oversight i s being addressed as part o f the on-going decentralization reform process, linked to decisions on how HIV/AIDS planning and monitoring will be integrated within the local government structures. Constraints to the National Response: Implementation o f the national response to the HIV/AIDS epidemic i s currently constrained by a wide range o f factors which reflects the multi-sectoral nature o f the response. Summary information on some o f the most inhibitingfactors i s providedbelow: 1. Social stigma -the implicit and explicit message from the community and from some important social leaders i s that HIV/AIDS i s a punishment for immoral living; acknowledgement o f HIV sero-positive status may lead to expulsion from the household, refusal to accept orphans into the extended family for care, drop in social status incommunity, etc. This atmosphere inhibits voluntary testing and counseling. Village headmen/women, and religious leaders are important partners to engage inchanging the stigma currently associatedwith HIVIAIDS inMalawi. The 2002 World AIDS Day explicitly targeted issues o f stigma and discrimination inevents held inthree major venues throughout the country. 2. Culture of silence - awareness o f the disease is widespread, but open discussion (of what behavior causes the disease, o f what to do to avoid infection, o f who i s infected) causes discomfort among family, neighbors, and colleagues and i s therefore avoided. Gender roles also play their part in shaping what men and women feel they can and can't say to each other, particularly between spouses, where open discussion i s equated with lack o f trust and suspicion o f infidelity. The stigma mentioned above contributes to this behavior, and perpetuates the culture of silence. Some courageous Malawians have begun to speak out and identify themselves as HIV positive or to announce that their families have lost loved ones to the epidemic. These are small but critical steps for the long term. 3. Accessibility of reliable information -there are six major language groups used inMalawi, and within each, there are culturally appropriate and inappropriate ways to communicate information about HIV/AIDS. Development o f culturally appropriate messages targeted to key social groups intheir mother tongue has now begun, and use o f the schools and the media to communicate to the youth, key social groups, and the population at large has also been initiated. - 5 - 4. Weakeningof family and community safety nets -the increasednumbers o f sick family members and orphans are placing ever heavier burdens on families and communities as they endeavor to care for their loved ones; as income-earners fall illor take on the role o f care-giver, income available to the family shrinks,resources put aside for the future are raided, and eventually assets are sold to pay for food and treatment. Erosion o f these economic safety nets is limitingthe extended family's ability to absorb the demands being placed on it, and the incidence o f sibling-headed households and street children appears to be increasing. The Government o f Malawi i s puttinginplace publicly-funded safety net programs to reach these most vulnerable groups. 5. Weak implementation capacity -the capacity to carry out AIDS-related programs and to expand services, whether at the local, district or national level, i s constrained by limited numbers o f trained staff and volunteers, weak financial and management skills, and poor access to information about good practices to replicate; the stretched economic resources available at the community level (mentioned previously) also plays a role in constraining the local levelresponse. The GOM recognizes the challenges posed by weak implementation capacity, and i s therefore supportive o f developing and implementing a capacity buildingstrategy for different partnership groupings and for individual agencies, 6. Weakcoordination capacity at the district level, the DACCs have not been formally integratedinto - the District Assembly (DA) committee structure, and DAs suffer from a lack o f trained staff, financial management systems, monitoring systems, equipment, and operating funds. The GOM i s taking steps to progressively strengthen capacity at the district level, beginning with qualified planning directors and finance directors. At the national level, the N A C i s a new institution and has had to deal with basic institutional issues - role,internal management systems, optimal organizational structure, external partnership arrangements - at the same time that it i s seeking to scale up the national response and mobilize financial resources. N A C has made an excellent start inits first 24 months o f existence, and i s inthe process of making some internal organizationaland staffing changes to strengthen its multi-sectoral coordination capacity. Investments in executive capacity buildingare also planned to assist N A C increase its efficiency and effectiveness inachieving performance-based results. The administrative shift from the Ministry o f Health to the Office o f the President and Cabinet inAugust 2002, i s facilitating NAC's transition to a national, multi-sectoral institution. 7. Incompletepolicy framework and guidelines -untilrecently, the National Strategic Framework was the primary reference point for the national response to HIV/AIDS, as the supporting policy framework was not yet inplace. This picture has changed substantially over the past six months, as the draft National AIDS Policy has been substantially completed, and technical guidelines for PMTCT, ART, VCT, H B C are well advanced. A national Behavior Change Interventions (BCI) strategy has been finalized, and pilot tests for key social groups have been conducted. The substantial progress made by N A C and partners over the past six months incompleting and filling the gaps inthe policy framework i s commended and should be pursued, so that NGO and donor partners are able to scale up their support (eg, some aspects o f VCT). 8. Uneven mainstreaming ofHIV/AIDS in thepublic sector - At present, there is no provisionwithin the functional reviews carried out for the Malawi public sector for the establishment o f H N / A I D S coordinating units or for full-time HIV/AIDS Coordinators to spearhead HIV/AIDS mainstreaming efforts. As a result, mainstreaming within public institutions reflects commitment on the part o f individual leadership teams rather than a translation o f agreed public policy into action. A few institutions have made significant strides (eg, ADMARC, Ministry o f Labour, Ministryo f Agriculture and Irrigation, Malawi Police Services and Malawi Defence Force), but such examples are not widespread. The Department o f HumanResource Management and Development (DHRMD), responsible for civil service management, has proposed an action plan for establishing ministerial focal - 6 - points and a highlevel steering committee to monitor mainstreaming inthe public sector. This action plan i s currently under Cabinet Committee consideration. 9. Financingfor HIVAIDS interventions inadequate: The Government o f Malawi hosted a Roundtable meeting inMarch 2000 to raise funds for NSF implementation, and some US$110million equivalent were pledged at that time. N o t all funds pledged, however, were intended for interventions at the community level or through civil society organizations (eg, about halfwere targeted for health sector interventions related to blood safety and sexual/reproductive health). Inother cases, funds pledged for community interventions arrived with delays. Consequently, implementation o f activities identifiedat the district and community levels has been impeded by shortage o f resources. This situation i s now changing with the substantial commitment made by the Global Fund,the proposed M A P support, and additional new expressions o f interest on the part o f development partners. 10. Health system overwhelmed-the health system i s inundated with patients suffering from AIDS-related OIs, and i s suffering from the strain. Among the most serious constraints limiting the ability o f the health system to respondeffectively to this increased demand are: widespread vacancies and shortages o f medical personnel at all levels; inadequately equipped and staffed laboratory facilities; stock outages for STI/OI drugs, due to a weak procurement and distribution system for health sector goods; and a weak financial accountability system inthe sector. Policies, procedures, and funding for safe medical waste disposal are not inplace, puttinghealthcare workers, care-givers, patients, sanitation workers, and the general public at considerable risk o f exposure to infectiodcontamination. The MinistryofHealth and Population(MOHP) is at an advanced stage o fpreparinga sector-wide Essential Health Package program, which will address a number o f the constraints alluded to above. With respect to HIV/AIDS, the Ministryi s establishing an HIV/AIDS coordinating unit to provide leadership for the health sector response, and has recently completed preparation o f an action plan to reduce nosocomial infections caused by unsafe injections and poor medical waste management. 3. Sector issues to be addressed by the project and strategic choices: The proposed Malawi M A P would support activities to address the constraints impeding an effective HIV/AIDS national response as highlighted above, with the exception o f the last issue (# 10) which is related to health system overload and capacity constraints. M A P support for the N A C coordinated program o f work will contribute to improvements inHIV/AIDS related health services, but it cannot resolve the system-wide issues affecting the health sector. Satisfactory attention to buildingthe capacity o f the health system to deliver essential health services, procure cost-effectively and manage drug logistics, etc., requires a separate, sector-specific operation. The CAS for FY04-06 includes Bank support for strengthening the health care delivery system through participation inthe SWAp, which will complement the support to be provided through the M A P for HIV/AIDS related programs. C. Project Description Summary 1. Projectcomponents (see Annex 2 for a detaileddescription and Annex 3 for adetailedcost breakdown): The Government o f Malawi, through the National AIDS Commission (NAC), i s puttinginplace management systems and funding mechanisms that will enable the public sector, private businesses, and civil society to mobilize and implement a multi-sectoral response at the national, district, and community level. The overarching principles guiding the national response are contained inthe National Strategic Framework 2000-04 (NSF), which was adopted following a participatory consultation process in 1998-99. The objectives o f the NSF are to reduce the transmission o f HIV,improve the quality o f life o f those infectedand affected by HIVIAIDS, and mitigate the impact o f HIV/AIDS in all sectors and at all - 7 - levels o f Malawian society. As the NSF i s enteringinto its final year, the N A C and national stakeholders have developed a programmatic framework to guide interventions during the next five years o f the national response -the Strategic Management Plan (SMP). The SMP includes those interventions which are coordinated and directly fundedby the National AIDS Commission. An updated NSF 2004-2009 will be formulated before the end of the current NSF. The NAC has invitedits external development partners to provide their financial assistanceinsupport of the SMP, on the basis of ajoint annual work plan, usingjoint financial, procurement, and reporting mechanisms, rather than funding multiple HIV/AIDSprojects each requiringparallel systems for tracking and reporting on individual donor's funds. The SMP i s composed of seven major subprograms: i) prevention and advocacy; ii)treatment, care and support; iii)impact mitigation; iv) sectoral mainstreaming; v) capacity buildingand partnerships; vi) monitoringevaluation and research; and vii) national leadership and coordination. The SMP includes those activities for which the N A C acts either as financier (through the HIV/AIDS grants facility) or as a direct manager o f coordination/ leadership activities. The first six subprograms enumerated above cover those activities which will be implemented by organizations who have received grants from the NAC, while the seventh subprogram will beNAC managed and implemented. The estimated cost o f the five year, first phase SMP program i s estimated at $274.7 million. In addition to the Government of Malawi itself, the external development partners who will contribute financially to the implementation of the joint program of work are: the Global Fund for AIDS, Tuberculosis and Malaria (GF), UNDP, AfDB, Centers for Disease Control, CIDA, DfID, IDA, NORAD, and SIDA. "Rules of engagement" betweenNAC andthe development partners have beendiscussed extensively, and are captured in a multi-donor Memorandum o f Understanding (MOU) and supporting Operational Guidelines. Within the M O U framework, pooling of funds in a common basket will be one o f the financing modalities available to development partners. Inaddition to the GOM, the partners who plan to participate in the basket pooling arrangement are: CIDA, DflD, IDA, NORAD, and SIDA. Distribution o f basket funding among the subprograms will be agreed each year on the basis o f rolling annual work plans and stakeholder decisions. IDA support will be disbursed into the common hard currency basket account on the basis of quarterly program monitoring reports (PMRs), to fund those elements o f the SMP which are not being funded by ear-marked contributions from the GF, UNDP, AfDB or CDC. The IDA allocations per subprogram shown below are indicative, for the reasons explained above, and are proportionate to IDA'Sshare in the basket (48%). For basket fund allocations, please see the table inSection D.2. and in Annex 11. I 1. Prevention & Advocacy 46.48 16.9 14.55 41.6 2. Treatment, Care and Support 144.90 52.7 4.00 11.4 3. Impact Mitigation 12.24 4.5 0.95 2.7 4. Sectoral Mainstreaming 8.97 3.3 4.85 13.9 5. Capacity Building& Partnerships 29.71 10.8 3.40 9.7 6. Monitoring, Evaluation and Research 9.59 3.5 2.90 8.3 7. National Leadership and Coordination 22.85 8.3 4.35 12.4 Total Project Costs 274.74 100.0 35.00 100.0 TotalFinancingRequired I 274.74 I 100.0 I 35.00 1 100.0 I - 8 - 1. Prevention andAdvocacy: This subprogram covers abroadrange ofactivities and services aimedat changing behavior and preventingtransmission of HIV. Activity clusters include: Behavior Change Interventions and IEC for target populations, promotiono f safe sex (including condoms), voluntary counselling and testing (VCT), prevention o f mother to childtransmission (PMTCT), and preventiono f infections causedby improper handling o f blood, injections, and health care wastes. Public, private, and civil society organizations (MOHP, CHAM, NGOs, FBOs, CBOs, local governments, etc.) will implement interventions. 2. Treatment, Care and Support: This subprogram covers a range of health based interventions aimed at reducingthe morbidity and mortality associated with HIV/AIDS. The subprogram comprises two main activity clusters: a) clinical care and treatment, and b) community I home-based care. The clinical cluster includes treatment interventions for Opportunistic Infections (01s) and other HIV-relatedillnesses ina clinical setting, includingtheprovisionofanti retroviral drugs (ARVs). The Community Home Based Care cluster will include interventions such as delivery o f nursingcare, basic treatment o f opportunistic infections, palliative care and nutrition to patients intheir homes. Public, private, and civil society organizations will implement activities inthis sub-program, with MOHP taking the lead in coordinating the health sector response. 3. Impact Mitigation: This subprogram aims to mitigate the impact o f the HIV/AIDSepidemic on particularly vulnerable members o f society: orphans and other vulnerable children (OVCs), widows and widowers, and the dependent elderly. Activities within this category would include educational support and training activities for OVCs, income generation activities for vulnerable households (those with chronically illfamily members, orphans, dependent elderly), community-basedand institutional care for orphans, and psycho-social support (including inheritance planning)for affected families. Public, private, and civil society organizations (Ministryo f Gender and Community Services, Ministryo f Youth, Sports, and Culture, MOF, EP&D, international and national NGOs, FBOs, CBOs, local governments, etc.) will implement interventions. 4. Sectoral Mainstreaming: This subprogram will enable public institutions, private companies, and civil society organizations to mainstreamHIV/AIDS intheir workplace and intheir core business, thereby mitigatingthe epidemic's impact on labor productivityand service delivery. At the national level, interventions could include revisiono f national labor legislation and public service regulations and employee benefits to address HIV/AIDS impacts. At the institutional level, interventions would range from baseline KAPB surveys and sero-prevalence testing, to establishment o f institutional focal points, formation o f support groups, HIViAIDS awareness training, sector-based impact assessments, revision o f core business practices / programs to address HIVIAIDSimpacts, human resource management strategies to manage HIV/AIDS induced attrition, etc. Interventions would be carried out by public, private, and civil society organizations, with assistance from specialized NGOs, PLWA associations, GIPA volunteers, andpartner institutions. 5. Capacity-building & Partnerships: This subprogram aims to buildthe capacity o f public, private, and civil society organizations to implement a multi-sectoral response to the epidemic. Interventions will assist NGOs, FBOs, CBOs, sector institutions, local governments, and private companies to develop long term visions, operational frameworks, and technical skills to address the epidemic. Specific activities will dependon needs o f the target organizations, but are likely to include programme design; training in HIV/AIDS; planning, financial management, procurement, and management skills; support in leadership and governance; and coordination skills at district and community levels. Inaddition, coalitions among organizations involved inthe expansion o f HIVIAIDSprogrammes will be strengthened (eg, business - 9 - coalition, faith task force, national AIDS associations, etc.) to improve outreach to their respective constituencies. 6. Monitoring, Evaluation, and Research: This subprogram will cover the range o f interventions needed to track the epidemic and national response and to understand which interventions are proving most effective under different local and cultural conditions. A comprehensive logical framework has been developed with stakeholder input, and NAC's monitoring and evaluation system i s structured to capture data at four levels: impact assessment, outcome assessment, programme monitoring (financial and activity), and country capacity. Activities included inthe M & E work plan will include biological and behavioral surveillance, poverty analysis (to measure socio-economic impacts o f the epidemic), programme activity monitoring, and specialized studies. Priority studies inthe national HIV/AIDS research strategy would also be covered inthis program category. Activities inthe M&E and research programs will be carried out by specialized institutions such as MOHP, MOEST, Ministry o f Gender, Ministryo f Labor, NSO, CSR, andEP&D. Programactivity/financial data onthe national responsewill be providedby N A C grant recipients and consolidated by the FMA for analysis by NAC. 7. National Leadership and Coordination: This subprogram consists of two main activity clusters: a) national leadership and coordination, and b) program management. Activities within the leadership and coordination cluster would include policy development and monitoring, advocacy and resource mobilization, strategic planning and annual review exercises, development and operation of information tools (database, web site, etc.), and animation o f national level coordination mechanisms (ie, State-Faith Task Force, Technical Working Group and sub-groups) and special ad hoc task forces. Program management activities include the operations of: the Board o f Commissioners, the MGFCC, the National AIDS Secretariat, and the Financial Management Agent. Procurement and financial audits are also covered. Activities inthis sub-program will be implemented by the NAC directly, in collaboration with technical experts and local stakeholders. 2. Key policy and institutionalreforms supportedby the project: Development and enactment o f a national HIV/AIDS policy, including revision o f Malawi Public Service Regulations (MPSR) establishing HIV/AIDS workplace standards and mainstreaming requirements for the civil service and public sector institutions. Revisions to the legal framework establishing the N A C and adjustment o f NAC's internal organization structure and staffing deployment, to enhance its effectiveness incoordinating, facilitating, and tracking the national HIV/AIDS response. Following consultations with district and national level stakeholders, integration o f HIV/AIDS coordination and monitoring functions into the evolving decentralized district level structures, and development o f guidelines for mainstreaming HIV/AIDS-related activities into district level plans. 3. Benefitsand target population: 3.1 BeneJts (overall): The proposed project would contribute to slowing the spread o f the HIV/AIDS epidemic and to alleviating the burden on individuals and households. Ultimately, it would have a positive demographic and socio-economic impact on society. The project would also contribute to strengthened institutional capacity. -10- Social Benefits: * Extendedproductive life o f people living with HIV/AIDS: by improving prevention and treatment of opportunistic infections, providing improved care and support at the household level. * Improved prospects of orphans and households affectedby AIDS: by destigmatizing AIDS, supporting access to income generating activities, health, and education services, and enhancing the legal and human rights o f those infectedand affected by AIDS. * Reduced impact o f AIDS on society: through lower levels o f opportunistic infections, active adults will be able to care for their children, participate inthe workforce, and contribute to social cohesion inthe community. Economic Benefits: * Direct cost savings: lower treatment costs resulting from increased reliance on (cheaper) home based care, earlier treatment o f STIs/OIs, smaller sero-positive population over mediudlong-term. * Indirectcost savings: higherproductivity of adult cohort, lower consumption o f savings and investments for non-productive purposes; smaller number o f orphans. Institutional Benefits: * Strengthened capacity at national, district, and community levels to manage and implement activities aimed at preventing HIV transmission and to cope with the impact o f AIDS. * Improved resource allocation and targeting to effective program interventions: through strengthenedcapacity to coordinate and monitor the national response. 3.2 Targetpopulation. Project benefits and the associated target populatiodgroups may be summarized as follows: Benefits Target Population Reduction inthe spread o f HIV/AIDS General population, especially youth, women, and vulnerable mourn Improvement o f care and support for PLWHA The 1millionpeople currently infected with HIV/AIDS, the 1.2 millionorphans, and their associated family members Increased capacity to deal with the HIV/AIDS Rural and urban communities, vulnerable crisis groups, civil society groups, managers and staff invarious sectors, health care workers Increased capacity for program coordination and HIV/AIDS committees at national, district and monitoring & evaluation community levels + implementingpartners Streamlinedprocedures for transfer o f Rural and urban communities, civil society resources to communities groups, saving and credit organizations, financial institutions - 11 - 4. Institutionaland implementationarrangements: Implementationperiod The estimated periodo f implementation i s 5 years, although this couldbe shorter ifN A C i s successful in facilitating the national response and effective demand i s able to absorb M A P and other external resources more quickly. Implementation Approach: The program will be implementedby public, private, and civil society organizations, coordinatedby the National AIDS Commission/Secretariat, using streamlined procedures. Itwill support institutions at national and sub-national levels. Partnerships with NGOs and the private sector will be encouraged and supported. Inmobilizingthe nationalresponse, the NACwill be guidedby four principal implementation approaches: i)expanding people's knowledge about the nature o f HIVIAIDS and its impact on individuals, families, communities and national development; ii)strengthening the capacities o f individuals, families, communities and institutions to respond to the epidemic ina sustained and effective manner; iii)stimulating interactionbetween individuals and available programmes and services as a basis for collective action; andiv) developing and sustaining a dynamic institutionalframework for planning, delivery and evaluation o f HIVIAIDS programmes. Executing Agencies. National AIDS Commission, supported by: (i) ministriesand line ministries central o f Health and Population; Agriculture; Education; Gender and Community Services; Youth, Sports, and Culture; Local Government Development; Medical services o f Ministryo f Defense; Ministryo f Information; and others; (ii) civil society organizations including PLWA associations, NGOs, faith-based organizations, and community groups; (iii) private firms, business associations, labor organizations; and (iv) the National Statistical Office, universitydepartments, social research groups, and other firms and organizations specialized indata collection. Program Oversight and Policy guidance. The Office o f the President and Cabinet (OPC) i s responsible for HIVIAIDS policy and HIV/AIDS program oversight inMalawi. A Ministerfor HIV/AIDS Programmes was appointed in April 2003 within OPC to report to the President and Cabinet and to provide full time attention to the AIDS epidemic. A Cabinet Committee on HIVIAIDS and Health considers policies and bills before they are submittedfor full Cabinet consideration and thereafter, to Parliament. The Cabinet Committee i s chairedby the Vice President, and the secretariat i s provided by the Executive Director o fthe NationalAIDS Commission (NAC). The National AIDS Commission reports to the President o f Malawi, through the Ministerfor HIVIAIDS Programmes. The N A C Board o f Commissioners has final approval authority for N A C Secretariat policies and procedures, the annual work program, and hiringo f Secretariat executive staff. The MGFCC clears country funding requests to the GlobalFund,buthas no policy-making mandate. Management of the National Responseand MAP-supported Activities. The N A C Secretariat will be responsible for annual work program planning, coordination o fprogram implementation, and reporting on program results. These functions will be carried out usingthe Secretariat's institutional structure -- there will not be a separate Project Management Office -- as facilitating, coordinating, and monitoring the national response are all line activities ofthe NAC Secretariat. The NAC is currently engagedin a review o fits internal staffing and structure, with the aim of strengthening its ability to facilitate and promote a multi-sectoral response. This i s a normal and welcome process, as the institutional structure and staffing needs of the N A C will change over time, as the nature o f the national response evolves and matures, and changes will needto be made from time to time. - 12- Annual work planning will be carried out as part o f an integratedexercise covering assistance from all development partners who channel their assistance through the NAC. The work planninghudget cycle will follow the July-June fiscal year to ensure that requests for domestic fiscal contributions are submittedina timelyway to the Ministryof Finance. Draft annual work plans (AWPs) will be prepared by end-February each year at the latest, inorder to allow sufficient time for development partner feedback prior to N A C Boardo f Commissioners approval inApril, and finalization o f the GOM budget inMay. Annual work plans will include specific milestones and output targets, consistent with achievement o f overall SMP goals. N A C and its financiers will review AWP progress on a quarterly basis, with more in-depthassessments every six months (September and February). The September review will coincide with thejoint annual review exercise, involving external partners and local stakeholders. The February reviewwill coincide with review o f the interimaudit and review o f the draft AWP (see section on ProgramReporting below). Grants Facility. The N A C Secretariat will retainpolicy and overall management responsibility for the grants facility which will make grants to public, private, and civil society organizations and local communities for HN/AIDSrelated activities. A Steering Committee will be established byN A C to ensure transparency indecision-making and to validate grant approvals made by the Secretariat. Financialadministration o f the grants facility will be out-sourced to a Financial Management Agent (FMA) which will be responsible for facilitating the proposal screening process, conducting organizational capacity pre-appraisals, disbursingfunds to approved applicants, receiving monthly activity sheets and quarterly progress reports, monitoring for compliance with procedures, and providing regular data to the N A C on financial and program activity through the grants facility. The FMA will be housedinthe same premises as the N A C Secretariat inorder to facilitate communications and business transactions relatedto the grants facility. The firm to provide FMA services i s to be selected by the end o f June 2003, following an international recruitment process; contracting and mobilizationo f the best qualified firm i s a conditiono f M A P grant effectiveness. The N A C Secretariat will be responsible for approval o f grant proposals that are multi-district, regional, or national inscope. For smaller proposals (eg, from CBOs) at the community level or within a single district, N A C will operate through umbrella organizations who will be responsible for mobilizing CBOs intheir definedareaofintervention, reviewingand approving eligible proposals, on-granting to approved applicants at the community level, monitoring CBO finances and reporting back to the FMA/NAC at the central level on a regular basis. The umbrella organizations will also be responsible for working with the district assemblies and HIVIAIDS coordinating committees intheir areas o f intervention, to buildtheir capacity to take over local level coordination and monitoring functions. N A C has managed an open information exchange and briefingprocess for NGOs interested in servingas umbrella organizations. As a result o f this invitationand briefing process, N A C has identified8 NGOs with the capacity to play the role o f umbrella organization at a sub-national level, and has invitedproposals within agreed geographic areas. NAC's target i s to sign grant agreements with the umbrella organizations by the time that the FMA is hiredand on board. Execution of Program Activities: Programexecution will primarily be the responsibility o f public, private, and civil society organizations, who will operate within the framework o f agreed grant agreements with the N A C or umbrella organizations, specifying respective responsibilities (eg, flow o f funds, fundsmanagement, reporting, etc). The NAC Secretariat will be responsible for executing activities includedwithin subprogram 7 (national leadership and coordination). o Prevention and Advocacy: Prevention activities and programs will be implementedby a combination o f public, private, and civil society organizations (MOHP, CHAM, NGOs, FBOs, CBOs, - 1 3 - local govemments, private sector, etc.). Program officers inthe N A C Secretariat will facilitate and coordinate activities under this subprogram. o Treatment, Care and Support: The main implementers for clinical care interventions are MoHP through its hospitals and facilities at all levels, inclose collaboration with C H A M hospitals and facilities. Other implementers include NGOs, private clinics, and teachinghraining institutions. The main implementersfor CHBC activities will beNGOs, CBOs, andFBOswith the active involvement o f community and family members. MOHP will take the lead incoordinatingthe bio-medical response, within the framework of the multi-sectoralresponse coordinated byNAC. o Impact Mitigation: Public, private, and civil society organizations (Ministryo f Gender and Community Services; Youth, Sports, and Culture; MOF; EP&D; international and national NGOs, FBOs, CBOs, local govemments, etc.) will implement impact mitigationinterventions. Liaison officers inthe N A C Secretariat will facilitate and coordinate activities under this subprogram. o Sectoral mainstreaming: Interventions will be carried out by public, private, and civil society organizations, with technical support from expert individuals, specialized NGOs, PLWA associations, PLWA volunteers, etc. Liaison officers inthe N A C Secretariat will facilitate and coordinate activities under this subprogram. o Capacity building and Partnerships: Public, private, and civil society organizations will be responsible for implementingtheir institutional capacity strategy with support from expert individuals and organizations (NGOs, specialised firms, training institutes, etc.). In some cases, specialized capacity buildingstrategies for aparticular purpose (eg, procurement training) or for aparticular target group (eg, DACCs/DAs) may be contracted out by NAC. A capacity-building officer inthe N A C Secretariat will facilitate and coordinate activities under this subprogram. o Monitoring, Evaluation and Research: Execution o f the different elements o f the M&E systemwill be out-sourced to specialised institutions, within their domain o f expertise (eg, MOHP, MOEST, MOGCS, MOL, NSO, EP&D, etc.). Grant Agreements betweenN A C and these institutions will spell out respective responsibilities and the budget requiredto performthe activity inquestion and deliver the agreed datahtudy. Programactivitybinancialdata on the national response will be submittedby grant recipients to the FMA, who will consolidate it for analysis by NAC. An operational M&E manual has beenprepared which defines roles, responsibilities, data sources, frequency of data collection and analysis, and mechanisms for informationhest practices dissemination; user guides for M&Epartners have also beenprepared to facilitate collection and reporting o f data. The N A C M&E officer and Research officer will take the lead in coordinating activities under this subprogram and generating the annual M&E and annual research report. N A C will shareprogress reports and M&E data with EP&D, in its capacity o f monitor o f the Public Sector InvestmentProgram (PSIP) and the Malawi PRSP. o NationalLeadership and Coordination: The National HIV/AIDS Secretariat will be responsible for promotingthe multi-sectoral response and overall program coordination. To this end, the Secretariat will be directly involvedinpolicy development, resource mobilization, partnership outreach, and strategic planning. Managing the monitoring, evaluation and research program will also be a core function for the Secretariat, both to provide data for strategic planning and fine-tuningthe national response and to facilitate informationdissemination and lesson exchange among cooperatingpartners. The Secretariat will also be responsible for contracting specialized expertise required for sound program management and monitoring: the FMA for the grants facility, the financial auditors, the procurement auditors, multi-disciplinary monitoring teams, and institutional development/capacity-buildingadvisors. - 1 4 - Fiduciary arrangements: The proposedHIV/AIDS programdescribedinthis document will be implementedwithin an integratedwork programmingframework, andwill use harmonizedprocurement, financial management(includingpooledfunding),reporting,andauditingarrangements,consistent with the SWAP guidelinesissuedinNovember2002. Procurement Management. Procurementprocedureshavebeendevelopedto apply to all goods and servicespurchasedbyNAC, as well as to goods and servicespurchasedby NAC grant recipients, within the frameworkof the SMP. The NAC ProcurementManual was reviewedduringnegotiations and its provisionsare consistent with the Bank'sProcurementGuidelines and Consultants Guidelines. The Bank's StandardBiddingDocuments(SBD)will be usedfor all ICB andwith appropriateamendments for all NCB. The Bank's StandardRequest for Proposals(SRFP) wouldbeusedfor all consulting assignments. The NACprocurementmanualincludes guidelines specificallydeveloped for grant recipients,includingsimple formats and"how-to" helps. These guidelinesare consistentwithparagraph 3.15 of the Bank ProcurementGuidelineson community participationinprocurement.Thresholdlevels havebeendefined, andNACandbasketpartnershave agreedthat the World Bankwill exerciseprior reviewonbehalfo fthe fundingpartnersfor procurementsover agreedthresholds. The NAC ProcurementManual hasbeenendorsedby the GovernmentContracting-OutUnit (GCU) andapproved by the NAC Boardof Commissioners. Procurementwill be carriedout at two levels: bythe NAC(for NACmanagedactivities)andby grant recipients(for sub-programsfundedthrough the NACgrants facility). As part of the annualwork planningexercise, NACwill preparea detailed annual procurementplanfor NACmanagedactivities, while the procurementplanfor the grants facility will only show an indicativebudgetper year. Grant recipientswill be responsiblefor preparingprocurement plans for their programs, inlinewith the formats andguidelines containedinthe NACprocurement manual. Grant recipientsmay chooseto use procurementagentsto assist with procurement,ifdeemednecessary. MOHPplans to recruit a specializedagent to assistwith procurementandsupply chain managementof HIV/AIDS drugs and therapies, untilsuch time as CentralMedicalStore (CMS)is reorganizedandits institutionalcapacity is strengthened. The FMA andumbrellaorganizationswill be responsible for monitoringcompliance with NACprocurementguidelines, andan annualprocurementauditreportby independentauditors will be producedto verify the accuracy ofreporting. Financial Management. The NAC Secretariat and developmentpartnershave agreedonjoint accounting,reporting,andauditingproceduresthat will be usedbyNACto track expenditures andreport on programprogress. The financial managementmanualwas reviewedat negotiationsandfinal commentsfor its improvementwere provided. The revisedfinancial managementmanualhas been approvedby the NAC Boardof Commissioners,and submission o f the final, satisfactoryfinancial managementmanual is a conditionof MAP effectiveness. The flow of funds has beenmappedout andis describedinthe GOM-Multi-DonorMemorandumof UnderstandingandinAnnex 6 (B): following agreement each year on the annual work planandoutputs, a detailedfinancingplanwill be agreedidentifyingwhichactivitieswill be fundedby "earmarked" donors (those who provideearmarkedprojectfunding) andwhichby "pooled" donors (those who provide generalprogramfunding ina commonbasketaccount). Donors contributingto the basket fundwill deposit their share o fprojectedfundingrequirements ina hardcurrencybasket accountheldina local bank. The Government's basketcontributionwill be depositedinto a local currencyNACbank account, whichwill be supplementedby transfers fromthe hardcurrency basketaccount fromtime to time, as implementationof the annual work planrequires.Inview of the agreedcommonprocurement framework for SMP activities,basket account funds maybe usedto finance any eligibleprogramexpenditures. -15- Donors who disburse on an earmarked basis, will do so within the framework o f the work plan agreedby all the parties. Disbursementsbypooled fundingdonors (including IDA) andby GOM will be released every quarter, based on submission o f ProgramMonitoring Reports (PMRs) which will be reviewed at quarterly meetings among N A C and its financing partners. PMR reporting formats (comprising summary reports on activity outputs, financial statements, and procurement implementation) have been agreed by N A C and the funding partners and are satisfactory to IDA for reports-based disbursement. Any adjustments to the annual work plan will bejointly agreed at the time of the quarterly review. Following successful completion o f a quarterly review, the N A C will submit disbursement requests to its fundingpartners (requests will be counter-signed by MOFiDAD for recording purposes). Quarterly tranche releases will cover a six monthperiod, inorder to avoid cash flow difficulties during the quarterly review process. Each partner's deposit will be based on its relative share inthe basket. The pooled funding arrangement will enter into effect on July 1,2003, to coincide with the beginning o f fiscal year 2003/2004; the initial IDA disbursement into the pooled account after Grant effectiveness will finance eligible expenditures for subprogram activities definedinthe approved Annual Work Plan, starting from the basket initiationdate o f July 1,2003. GruntsFucility, Most o f the funding for the proposedHIVIAIDS program (about 90%) will be channelledthrough the N A C Grants Facility to NGOs, CBOs, FBOs, private companies, and public institutions who will execute HIV/AIDS program activities. As the M A P program design i s deliberately demand-driven and seeks to expand the range o f partnerships steadily over time, it i s not possible to conduct institutional and fiduciary assessments of all grant recipients prior to approval o f the M A P programby the IDA Board. Instead, the organizational and financial appraisal o f potential grant recipients has beenmade an integral part o f the routine screening process for any proposal submitted to N A C for funding from the grant facility. For large scale proposals the FMA will be responsible for conductingthe organizational appraisal, for smaller community-basedproposals, the umbrella organizations will be responsible for exercising this due diligence. A standardized framework for assessingorganizational capacity has beendeveloped for this purpose (see Annex 12). Ifan applicant is found not to have adequatecapacityto managethe funds, thenthe NAC or the umbrella organizationmaypropose insteadan initial capacity-building grant to help the applicant "pass" the appraisal criteria and thus, graduate to a program grant. Following grant approval, the FMA will be responsible for carrying out regular spot checks o f grantees inorder to catch any irregularities at an early stage. Umbrella organizations will performthe same function with the CBOs to which they provide grant funds for local HIVIAIDSactivities. Recipients may also request guidance on fiduciary issues from the umbrella organization or the FMA. Audits. An external financial auditor, competitively recruited, will carry out an interimsix-month audit and a comprehensive annual audit, providing a combined progradentity report as well as individualized opinions for earmarked donors. The N A C auditor will examine not only N A C operations, but also FMA operations and a random sampling o f the umbrella organizations ineach audit report. The terms o f reference and recruitment process for the independent auditor have beenagreed with N A C and the fundingpartners, and have been approved bythe Auditor General's office. Thejoint auditing framework will enter into effect beginning with program year FY03/04. An annual independent ex-post procurement audit will also be conductedby an independentauditor, competitively recruited. The procurement audit will cover all procurement carried out by and for selected implementingagencies: NAC, Ministryof Health, all umbrella organizations and a sample o f some line - 16- Ministries and other grant recipients inorder to cover at least 15% by value and by number o f all procurement carried out inthe fiscal year under review.Terms o f reference for the procurement auditor and the annual exercise were agreed at appraisal. Program Reporting: Central to effective coordination of the national response will be NAC's ability to monitor what i s happening on the ground, analyse it for strategic implications, and feed it back into outreach and promotional programs aimed to address weaknesses or take advantage o f opportunities identifiedthrough the monitoring effort. The intensive efforts by NAC over the past year to develop a robust and comprehensive M&E system reflects the importance attached to this performance area by N A C and local stakeholders. NAC's funding partners wish to take advantage o f the shift to joint work programming and joint reporting to structure the external oversight relationship around monitoring processes that are N A C managed and N A C owned. Inkeepingwith this spirit, it has been agreed that N A C will report on implementation o f the annual work plan (AWP) through the following instruments: (1) quarterly programmonitoring reports (PMRs) based on implementation targets definedinthe Annual Work Plan and Budget; (2) interim programprogress report (July-December), complemented by the interimfinancial audit report; (3) annual program progress report (fiscal year basis), complemented by the annual financial and procurement audit reports; and (4) the annual national HIV/AIDS M&Ereport (calendar year basis). With respect to the interimprogram progress report andthe annual program progress report, it hasbeen agreed that their purpose i s not to duplicate the data contained inthe quarterly PMRs but to provide a more strategic and analytic assessmento f program progress than can be obtained through data provided by grant recipients, as well as to identifytrends and flag areas requiringattention. To minimize the administrative burdeno f this reporting requirement, NAC plans to outsource this task to an independent team o f multi-disciplinary specialists who would arrive each year inearly February and early August to carry out field assessments and meet with stakeholders. N A C will provide cumulative quantitative data for the periodin question (July-December for the Februaryvisit, and July-June for the August visit) by end-January and end-July to facilitate the work o f the team. The multi-disciplinaryteam would then prepare programprogress reports for discussion by NAC and funding partners according to agreedterms o f reference (an interim six-monthly report would be prepared for the February review meetingand an annual progress report for the September review meeting). Inrecruiting the specialized firm to provide this service, priority will be givento maintaining continuity ofteammembersover amulti-year periodin order to build institutional memory and knowledge o f program management arrangements. Selectiono f the multi-disciplinary teamwould bejointly agreedbetweenNAC and its development partners; the team would be accountable to N A C but its outputs would be shared with all financiers participating inthejoint reviews. Draft terms o f reference for this multi-disciplinaryteam have beenprepared. Team compositionwould include both international and national experts, and would ensure coverage o f themes relevant to effective program implementation. Evaluation mechanisms include a mid-term review o f the SMP (by December 2005) to identify successes and issues to be addressed. A ProgramEvaluation Report (ICR-equivalent) will be prepared at the end o f year five (June 2008) to assess program outcomes and achievements, and to draw lessons for the next phase o f program support for the national fight against HIV/AIDS. -17- D. Project Rationale 1. Project alternatives considered and reasons for rejection: The proposedproject is an Adaptable ProgramLoan (Grant) for Mala4 underthe Second Multi-Country HIV/AIDS Program (MAP 11) approvedfor the Africa Region on February 7,2002. The backgroundand rationale for the MAP I1have been set out inReport P 7497 of December 20,200 1. The major alternative consideredwas developing a specific MAP "project" with identifiable activities to be financed by IDA funds, inparallel with other donor funded activities. This alternative was rejected in favor of aprogram (sector wide) approach, because of the advantages to be gainedby: i)reducing the administrative burdenon the NationalAIDS Commission throughjoint work programming, accounting, andreportingsystems, ii)enabling the NAC to develop a strategic, integrated approachto coordinating the nationalresponse, and iii)buildinglocal ownership ofthe national programas awhole. 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue I Project (PSR) Ratings (Bank-finance projectsonly) ~ Implementation Development Bank-financed Progress (IP) Objective (DO) Reproductive Health PopulatiodFamily Planning S H S LIL Community DrivenDevelopment MASAF11 S S Community DrivenDevelopment MASAF I11 Other development agencies USAID Policy Project USAID MeasureEvaluation USAID UmoyoNetwork Program USAID Behavior Change (FHI) USAID Social Marketing (PSI) DfID SexualReproductive Health DflD National TB Control Program JICA Laboratory Upgrading EU Prevention of HIVthrough Safety and Care (PRESCAP) NORAD National TB Control Program I The SMP which MAP funds will support represents a substantialportionof HIV/AIDS funding in Malawi. However, it is complementedby other extemally-funded HIV/AIDS programs which are financed directly with in-country implementingpartners (without passingthrough NAC). Therefore, to see the "big picture" of resourceflows for HIV/AIDS, one must look at both categoriesof assistance the- SMP and the "non-NAC" programs - which support implementation of the National Strategic Framework. Some of the more important funding partners supporting HIV/AIDS activities outside the NAC-managed financial framework are U S government agencies (USAID, CDC, Dept of Labor, Dept of Defense), EU, UNICEF, and UNFPA. The combined support available from these sources projected over the next 4 - 18- years amounts to about $68.5 million, distributedacross all the major program categories. A summary table showing the expanded HIV/AIDS program fundingavailable (from external partners and from GOM) i s presentedbelow. A detailed table showing the breakdown o f HIV/AIDS fundingby development partner is attached inAnnex 3. "Big Picture'' on HIV/AIDS ProgramFunding(SMP + Non-NAC) (US$'OOO) Sub-Program Totals Totals Total TotalNon- Overall % Earmarked Pooled SMP NAC HIVAIDS Overall Funding Funding Funding Prevention & Advocacy 16,479.8 30,000.0 46,479.8 33,580.0 80,059.8 23% Treatment, Care, and 142,901.7 2,000.0 144,901.7 3,500.0 148,401.7 43% Support Impact Mitigation 2,239.0 10,000.0 12,239.0 4,650.0 16,889.0 5yo Sectoral HIV/AIDS 771.0 8,200.0 8,971.0 3,000.0 11,971.0 3% mainstreaming Capacity Building & 22,710.5 7,000.0 29,710.5 17,675.0 47,385.5 14% Partnerships Monitoring, Evaluation, & 3,590.5 6,000.0 9,590.5 5,400.0 14,990.5 4% Research NationalLeadership + 13,846.0 9,000.0 22,846.0 700.0 23,546.0 7% Coordination Totals 202.538.5 72.200.0 274.738.5 68.505.0 343.243.5 100% PooledFundingContributors: CIDA =US$lOm;NORAD = US$lOm;WB US$35m; DffD= US$7.2m; = GOM=US$lOm Inadditionto the programs which are specifically devotedto HIV/AIDS, there are anumber of complementary health sector programs (STI, reproductive health, TB, laboratory upgrading) which contribute inimportant ways to achieving the dual objectives o f the national HIV/AIDS strategic framework (reducing the transmission o f HIV and improving the quality o f life). These programs are supported primarily by DflD,NORAD, and JICA. 3. Lessonslearnedand reflectedinthe project design: Experience with national HIV/AIDS programs has demonstrated that effective implementation and achievement o f results are strongly correlated with a multi-sectoral approach, flexible design adapted to local conditions, and mechanisms to channel support directly to civil society and communities. Other lessons from experience which are beingapplied inthe Malawi case include: Genuine stakeholder involvement is fundamental: Duringproject preparation, PLWAs, NGOs, faith-based organizations, and other have participated inadvising on specific programs (inparticular with respect to the design o f the civil society grants mechanism), and advising on suitability o f proposed implementation arrangements (withparticular attention to M&E roles and responsibilities). During implementation, stakeholders will be actively involved inmanagement o f local level interventions funded through the grants mechanism, inproviding the informationnecessary for the monitoring and evaluation - 19- systemto provide useful lessons and trends, and inparticipatinginthe annual Joint Reviewprocess. Management of H I V / A I D S programs calls for exceptional measures: National AIDS Councils and their Secretariats (NAC Secretariat) have beenmore effective where they see themselves as guides, facilitators and coordinators rather than traditional project "control" and implementationbureaucracies. The MalawiNAC squarely places itself inthe facilitator and coordinator category, and is developing financial management and monitoring and evaluation systems, that will buildextensively on outsourcing and cooperative partnerships with specialized entities. Readiness for Implementation is a successindicator: The most successful M A P projects are those which have beenable to hit the ground runningand beginimplementation promptly upon project approval. N A C has applied this lesson by giving priority to preparation o f operational manuals, clarification o f key responsibilities, formation o f coalitions, and assessment o f institutional capacity. To facilitate start-up o f program activities immediately after M A P effectiveness, N A C has prepared an annual work plan and procurement plan with stakeholder input, and has selected the FMA and Umbrella organizations so that the Grants facility will be operational duringthe first quarter o f the first year. Special efforts are needed to scale up existing programs: Special interventions for targetted capacity buildingare under development and will be supported during the first year work program: i)umbrella organizations have beenrecruited to serve as intermediaries and capacity-builders for CSOs/CBOs; ii)a capacity assessment/ capacity buildingstrategy for the district assemblies/ AIDS coordinating committees will be initiated; iii)an institutional development strategy i s under preparation, buildingon the assessmentofNAC completed inMarch2003; and iv) consultant support to the Ministryo fHealth is underway to assist with the establishment o f the ministry'sHIV/AIDS unit. Monitoring and evaluation systems are key: Inan experimental and learning process (such as a national HIVIAIDSprogram), a good M&E systemi s essential. Duringpreparation, the N A C has given priority to developing a comprehensive M&E framework with support from USAIDand the Bank. The comprehensive logical framework, the operationalplan with implementationresponsibilities, and the first year work plan for M&Ehave beenprepared, and field testing and trainingbegan inJune 2003. Successful programs draw on the experience of others: The challenge i s not to create new knowledge, but to share existing, relevant knowledge more effectively among program coordinators and implementers. Exchanges betweenthe MalawiNAC and national AIDS programs inneighboring countries (eg, Uganda and Kenya) have already begun, and these contacts are givingN A C staff/managers peers whom they can consult on how to approach specific challenges (eg, outsourcing to an FMA, relations between Ministry of Health and NAC, relations with Office o f President). Participation in future regional workshops among N A C practitioners will be helpfulinmaintaining and buildingnew cross-country contacts. Partnerships matter: Combating HIV/AIDS effectively can only be done by genuine collaboration-within government, betweenthe public and private sectors and civil society, among citizens, and with and among donors. The MalawiNAC, assisted by UNAIDS, i s devoting considerable effort and energy to buildingpartnerships and promoting collaboration. The Technical Working Group (which groups GOM, NGOs, civil society, donors) meets regularly and has a number o f sub-groups where more technical, applied work takes place. The TWG functions as a clearinghouse for information and coordination, and the N A C discussion-database reaches an even wider group o fpartners throughout the country. The core donors supporting the national AIDS response have worked together intensively to support the NAC's efforts to develop a common management framework for external assistance, and - 20 - will continue this partnership during the implementation phase through agreedjoint oversight mechanisms. Multipleefforts make a difference: Private sector companies dealing with consumers know that multiple messages, with different content, sent through various media, and with diverse sponsorship, are required to affect the way individuals, families and communities act. The war against HIV/AIDS i s no different, and the national response will require substantial duplication o f effort to achieve desired results. The proposed Malawi M A P support has fully internalized this "creative duplication" philosophy, as reflected inthe multi-sectoral design and reliance on multiple implementers - the public sector, civil society, private companies, faith-based organizations, P L W A associations, and community groups. 4. Indications of recipientcommitment and ownership President Muluzi launched the National Strategic Framework for HIV/AIDS Prevention and Care in October 1999, and has championed the fight against HIVIAIDS. The Vice President chairs the Cabinet Committee on Health and HIV/AIDS, which meets regularly to oversee the multi-sectoral response, and there i s cross-party commitment to AIDS advocacy. The establishment o f the NAC as a multi-sectoral, autonomous institution reflects the Government's willingness to be innovative and to seek new, more effective instruments in the fight against the epidemic. In August 2002, the NAC was elevated to the Office o f the President, in order to strengthen NAC's ability to fulfill its multi-sectoral coordination mandate and to facilitate communications with the Head o f State on this critical issue. In April 2003, a full-time Minister for HIVIAIDS Programmes was appointed (within the Office o f the President). As o f FY02/03, the NAC appeared for the first time inthe national budget document with its ownbudget line. Equally important, the Government introducedthis fiscal year a separate authorization within each public sector agency's recurrent budget (ORT) to be used to initiate and implement HIVIAIDS programs within their respective sectodsphere o f activities. Discussions are now underway regarding the establishment o f a steering committee composed o f Principal Secretaries to track progress o f mainstreaming within the public sector and use o f these ORT funds. The Government recognizes the importance o f an effective N A C to provide leadership for the national response, and has committed itself to providing US$lO million over the next five years ($2 million per year) to N A C for implementation o f the SMP. 5. Value addedof Banksupport inthis project: The Bank's support for HIV/AIDS programs throughout the Africa region gives it unparalleled comparative knowledge o f design and implementation issues, and approaches that can accelerate program scale-up and effective performance on the ground. The primary value-added o f Bank support for the Malawi national AIDS program i s inthe sharing o f that information and in facilitating contacts among a regional network o f practitioners and peers who can advise and learn from each other. Bank input into the design o f the financial, procurement, and M&E systems has also proven valuable. Lastly, the flexibility o f M A P financial support and the Bank's willingness to participate in the basket fund, makes the M A P support a desirable complement to assistance from other development partners, whose procedures and list o f eligible activities may be more restricted. E. Summary Project Analysis (Detailed assessments are inthe project file, see Annex 8) 1. Economic(see Annex 4): -21 - 0 Cost benefit NPV=US$ million; ERR= % (see Annex 4) 0 Cost effectiveness 0 Other(specify) Recent studies on HIV/AIDS macro-economic impacts have concluded that the epidemic will reduce growth potential through two primary influences: (i) reduced efficiency o f the labor force, due to frequent staff turnover and absenteeism, and (ii) a declining investment and savings rate, resulting from shifts inbothpublic and private expenditures fromproductive activities to expenditures relatedto the disease. The studies indicate that potential GDP growth during 2000-2010 inMalawi could be reduced by between 1.5 and 2 %per annum as a result o f HIV/AIDS, which inturnwill imply a reduction o f between 1and 1.5 % per annum inper capita GDP. Investments in activities to prevent HIV infections and to extend the productive lives o f those living with AIDS, has a direct economic benefit interms o f enhancing the economy's growth potential through labor productivity gains and deferringnon-productive expenditures. Ifthe spread o f the disease i s not contained, total GDP inten years time could be up to 20% less than it would otherwise have been. Through its M&Eprogram, the N A C will attempt to measure the cost-effectiveness o f the different interventions implemented, as well as the longer term economic impact o f the program through tracer studies o f employment and income o f HIV positive individuals and their dependents. 2. Financial(see Annex 4 andAnnex 5): NPV=US$ million; FRR = % (see Annex 4) IDA funds will be providedon grant terms. Fiscal Impact: The main fiscal impact o f the program will be felt at two levels: i)contribution to the N A C basket fund (US$ 2 million per year); and ii)operating costs o f HIV/AIDS mainstreamingprograms for centraliline ministries (2% Other Recurrent Transactions (ORT) ministerial allocations). The fiscal impact o f program activities implemented by civil society grant recipients i s likely to be small. Upgrading o f health care waste management treatment systems may entail some increases in operating and maintenance costs at the health facility level, but these are not expected to be substantial as choice o f treatment systems was based on cost-effectiveness criteria. DuringPublic Expenditure Reviews (PER) or other similar exercises, the effect on the budget will be reviewed. 3. Technical: There are no particular technical issues related to HIV/AIDS interventions that are unique to Malawi. The NAC, Ministryo f Health, and local stakeholders have made progress indeveloping technical guidelines and training manuals to guide implementing partners incarrying out various interventions. PMTCT guidelines and training manuals have been finalized and are ready to launch; ART guidelines exist in draft; V C T guidelines and training manuals are undergoing final review. Standards for injection safety and health care waste management are under development. ART would be eligible for M A P and basket funding, if absorptive capacity exceeds the amounts coming from the Global Fund, provided that proposed programs ineach case satisfy the conditions identified inthe WHO/UNAIDS guidelines for ART inresource poor settings. Development o f an equity policy framework for ART is critical inthis respect. 4. Institutional: 4.1 Executing agencies: Program execution will be the responsibility o f public, private, and civil society organizations and local - 22 - communities, operating within the framework of agreedgrant agreementswith NAC, specifying respective responsibilities (eg, flow o f funds, funds management, reporting, etc). Grant recipients will be subject to an organizational and financial appraisal duringthe application process, to ensure that they have the capacity to apply fiduciary guidelines. The Ministryof Health has established an HIV/ADS Coordination Unitto leadthe health sector response and coordinate with civil society partners who are active inthis area. Technical assistance to the Ministrybegan inJune 2003, to assist with definingclearly the institutional mandate ofthe Unit,job descriptions and skill requirements, internal coordination arrangements, external partnershipmodalities, medium-termoperational strategy, and annual work plantasks. The establishment of this unitwill enable a progressive transfer o f responsibilities from the N A C Secretariat to the Ministryo f Health duringthe life o f the program. The bulko f the transition should be accomplished duringthe first year o f the program (FY03104). At the district level, discussions are underwaybetweenNAC, the Ministryo f District and Local Government, and the Decentralization Secretariat on how to integrate HIV/AIDS into the District Assembly (DA) development agenda, and ensurethat stakeholder outreach, coordination, and monitoring o f HIV/AIDS interventions are effectively addressedwithin the DA institutionalframework. 4.2 Project management: As arelatively new institution, NAC hasbeenclarifying itsroles andresponsibilities, consolidating its internal systems, and recruitingthe necessary staff to be able to perform its functions. An Institutional Assessment carried out in February/March 2003 provided recommendations on areas requiringattention, includingchanges inorganizational structure, changes instaffing skills mix, revisiono fjob descriptions, and strengthening o f staffperformance standards. Consultant support to assist with implementingthese recommendations was contracted in May 2003, and the N A C Board and Secretariat management are committed to carrying out a phased institutional development plan over the coming two years, the overall goal o f which i s to enhance the N A C Secretariat's ability to buildpartnerships and promote a multi-sectoral response. With the creation o f a new Minister for HIV/AIDSPrograms, it will be necessary to clarify working and reporting relationshipsbetween the NAC, the new Minister,the Board o f Commissioners and the Cabinet Committee on HIV/AIDS. The emerging consensus i s that the Minister would play the role o f active ambassador -- reachinginward to the public sector for HIVIAIDS mainstreaming and reaching outward to the country as a whole, breaking the culture o f silence. The N A C will continue as a multi-stakeholder commission, functioning as an autonomous institution, with the Executive Director reporting to the N A C Board. Once these relationships are clarified, it will be necessary to update the trust deed to make roles, functions, and reporting relationships consistent with current understandings. Inthe coming year (2003/04), an Act formalizing the institutional and policy framework for HIV/ADS and creating the NAC as a Public Commission will be developed. 4.3 Procurement issues: A procurement assessmento f the NAC and key implementingpartners was carried out prior to appraisal. Itwas noted that the programwould be implementedina highriskenvironment, arising from the multiplicity o f implementingpartners, many with limitedprocurement skills. However, adequate mitigationmeasures and controls have beenput inplace to manage the bulk o f the risks that may arise. Inthe case ofthe NAC, it was found that the Secretariat's in-house procurement capacity was inadequate; therefore the Secretariat i s recruitinga full-timeprocurement officer (the appointment will be completed inearly July). Inthe case of MOHP/CMS, the assessmentindicated that strengthening o f - 23 - pharmaceuticalprocurement and drugs logistics management i s needed. To address these weaknesses, MOHP plans to recruit a specialized pharmaceutical procurement agent to provide assistanceinthis area inthe short term (WHO or UNICEF procurement is beingconsidered). An action planhas beendeveloped which emphasizesdelivery ofbasic procurement training and clinics for N A C and program executing agencies. Duringprogram implementation, procurement consulting services will be retained byN A C to assist the Secretariat and implementingpartners with procurement tasks, as required. In addition to the procurement agent for specialized HN/AIDS drugs, MOHP and donors are working together to put inplace an institutional development / capacity buildingprogram for Central Medical Stores (CMS) with the aim of upgrading procurement procedures, skills, and commodities management/distributionover the mediumterm. An annual procurement audit will be carried out to complement the financial audits carried out at mid-year and end-year. 4.4 Financial management issues: A financialmanagement capacity assessment of the NAC and key implementingpartners was carried out prior to appraisal. It was notedthat the programwould be implementedina high risk environment arising from the multiplicity o f implementingpartners, many with limitedmanagement capacity. However, adequate mitigationmeasuresand controls have beenput inplace to manage the bulk o f the risks that may arise to donor and basket funds. Inthe case o f NAC, in-house staffing will be strengthened through the recruitment o f a Heado f Administration, and three additional accountants (the appointment process will be completedin early July). With respect to on-granting arrangements, potential grant recipients will be screened for organizational and financial capacity before grants are approved. Separate grant agreementswill be signed with each grant recipient defining, among other things, the financial accounting and reporting rules to be observed bythe recipient and sanctions to be applied in case o f breach o f the rules. The FMA and umbrella organizations will be responsible for monitoring compliance with these guidelines,and audits by independent auditors will be performed to verify the accuracy o freporting. 5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessmentand EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Safe collection, storage, and disposal o fmedical wastes i s the key environmental issue associated with scaling up the national HN/AIDS response. Currently, Malawi does not have a policy framework and defined technical standards for managing health care wastes. As input into the development o f such a national policy/actionplan, an assessment o f injection safety (IS) and health care waste management (HCWM) within the public and private health services was carried out inNovembedDecember 2002, supported by technical and financial assistance from UNICEF, WHO, and the World Bank. With respect to injection safety, the assessmentfoundthat injectionrecipients inMalawiwere at risk as a result o f serious breaks in infection control practices and reuse o f injection equipment inthe absence o f sterilization. Many injections inthe curative sector were unnecessary and might have beengiven more safely and with equal efficacy inan oral formulation. Inadequate collectionand disposal methods for usedinjection equipment exposedhealth workers and the community at large to risks o f injuryand infection from contaminated sharp waste. Major deficiencies inH C W management were observed throughout the collection, storage, transportation, and treatment cycle. The major weaknesses found include: lack o fplanning or internal management procedures; absence o f viable data about HCW productionand characteristics; no - 24 - monitoring system or staff member designated to monitor H C W management; insufficiency o f secure collection materials and protective gear; mixing o f H C W with household and office waste; and inefficient local incinerators. As a result, health care workers, non-technical health facility staff, municipal landfill workers, and landfill scavengers are at serious risk o f infection. While paramedical staff (doctors, midwives, nurses) were observed to be informed and demonstrate fairly good H C W M practices, the general public's knowledge o f risks linked with the handling o f H C W was found to be very weak. 5.2 What are the main features o f the E M P and are they adequate? The goal o f the H C W M Plan o f Action (POA) is to prevent and mitigate the environmental and health impact o f H C W on health care staff and the general public. The objectives o f the Plan o f Action are to: (i) infectionsduetoHCW;(ii) reduce improve service inH C W M and mitigate the impacts o f H C W on individuals and communities; and (iii) establish a well-managed multi-sector institutional framework for co-ordination and implementation o f HCWMmeasures. The H C W M Plan o f Action recommends: a) revisions and improvements to the legal and regulatory framework (including defining technical standards and roles and responsibilities), b) training activities for workers who come into contact with HCW; c) upgrading physical and management H C W M treatment systems at the health facility level (system selection was based on technical feasibility inview o f staff skills, cost, and ease o f maintenance); d) public awareness activities for the general public who may come into contact with HCW, e) development o f private-public partnerships for HCWM, and f ) monitoring and evaluation activities. The H C W M Plan o f Action also defines implementation responsibilities, timetable and cost estimates. Withinthe Ministryo fHealth, the Department o f PreventiveHealth Services (DPHS) through its Environmental Health Service (EHS) will take the lead inmanaging implementation o f the H C W M plan. The Health Education Unit o f the Ministrywill also be involved intraining and public awareness activities. EHS/DPHS will work closely with the Department o f Environmental Affairs at the Ministryo f Natural Resources and Environmental Affairs, which i s responsible for developing appropriate standards for environmental impact assessments involving waste management, including HCW. At the district and local levels, managers o f health facilities will be responsible for implementation, working closely with landfill managers (where they exist). 5.3 For Category A and B projects, timeline and status o f EA: Date o f receipt o f final draft: March 2003 The draft Final H C W M Plan was received at the end o f March 2003. The H C W M Plan was reviewed and commented duringtwo national workshops in May, and finalized in June. 5.4 H o w have stakeholders been consulted at the stage o f (a) environmental screening and (b) draft EA report o n the environmental impacts and proposed environment management plan? Describe mechanisms o f consultation that were used and which groups were consulted? A sample o f 8 clusters (districts or groups o f districts) was selected with probability proportional to population size. Based on the sampling results, the assessment team visited 80 health facilities inthe public and private sectors for the IS survey, and followed up with in-depth visits at 29 facilities to refine H C W data and practices. In addition to meeting with staff at the health facilities surveyed, members o f the general public (n=240) were interviewed at markets and other public locations inthe community around each o f the 80 health facilities (the sample was artificially stratified to ensure equal representation - 25 - o f age groups and gender). Inaddition to the health facility staff andmembers ofthe public, the assessment team also met individually with key stakeholder institutions/departments: (i) MOHP (Departments o f Preventive Health: EPI, Environmental Health and Health Education Units,Clinical Services, Health Planning, Technical Unit and Administration); (ii) Malawi National AIDS Commission; (iii) Bureau o f Malawi Standards; (iv) MNREA (Department o f Environmental Affairs); (v) City Assemblies (Lilongwe and Blantyre); (vi) Training Institutions (Polytechnic/Department o f Environmental Health, College o f Health Sciences, Kamuzu College o f Nursing,College o f Medicine); (vii) NGOs (JHPIEGO, SafeMotherhood, Medecins Sans Frontiires, MACRO); and (viii) Cooperation Agencies (UNICEF, WHO, WB, JICA, GTZ, EU). These meetings were organized to collect informationon stakeholder responsibilities, understandings, programmes and activities inthe field o f IS and HCWM, and constraints faced. Upon completion o f the field visit phase in December 2002, the assessment team provided a debriefing for stakeholders in Lilongwe on its preliminary findings. This initial debriefing was followed in January 2003 by a two day National Stakeholder Meeting and by district level consultations inFebruary 2003 in seven of the eight districts which had participated inthe field assessment to review findings and preliminary recommendations. The feedback from the national and district consultations was consistently positive: according to meeting minutes, participants confirmedthe main findings, agreed with the thrust o f recommendations, and emphasized the importance of implementing the preliminary recommendations. A national workshop inmid-May 2003 reviewed the draft national policy and draft action plan, and made recommendations for improvement. A follow-up workshop was held inlate M a y to review and endorse the revised versions, and the Ministry o f Health and Population finalized the H C W M Plan in June 2003. 5.5 What mechanisms have been established to monitor and evaluate the impact o f the project on the environment? D o the indicators reflect the objectives and results o f the EMP? Injection safety and health care waste management issues will be monitoredat two levels: (i) the overall M&Eframework for the national HIV/AIDS response includes programmatic indicators linked to proper handling o f injections and proper storage and disposal o f medical wastes; and (ii) an M&E framework for the action plan itself has beenprepared for the M O H P and other implementing agencies to use intracking implementation progress. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. HIV/AIDS transmission in Malawi as elsewhere has a significant gender dimension, associated with gender inequality and poverty. Known sero-positive status carries with it social stigma and risk o f ostracism. The Malawi NSF emphasizes the importance o f implementing interventions aimed at: transforming cultural attitudes which place men and women at highrisk for transmission, expanding life-skills education for school children and adolescents, increasing alternative income earning opportunities for female headed households, and reducing stigma for PLWAs. M A P funds would support any o f these interventions as eligible NSF activities, and thus i s expected to contribute positively to resolution o f social issues identified above. The one area where implementation of the national HIV/AIDS program could raise social equity issues relates to ART. This i s because any ART support i s unlikely to reach all eligible sero-positive individuals, and i s likely to reach urban-based patients disproportionately to rural dwellers, due to better - 26 - availability of supporting laboratoryhracking facilities inurban areas. The GOM/MOHP i s developing an ethical framework for implementation o f the ART program which would be based on a human-rights based approach. 6.2 Participatory Approach: How are key stakeholders participating inthe project? Key stakeholders are participating inthe national HIV/AIDS program in a number o f ways. Duringthe preparation o f the MAP-supported program, NGOs, FBOs, private companies, and public sector staff have been actively involved in developing the overall program framework, guidingthe design o f key implementation instruments (eg, the grants facility, the M&Eframework), and contributing to the medium-term and annual work plan. Duringthe implementationphase, stakeholders will wear a number o f hats: supervisory, executive, and beneficiary. Specifically, representatives o f civil society and the public sector will: i)oversee NSF implementation intheir capacity as memberso f the Board o f Commissioners o fN A C and as memberso f the national TWG and its sub-groups; ii)implement HIVIAIDS interventions fundedthrough the grants facility; and iii)benefit from the range o f activities supportedby the national program. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? As mentioned above, PLWA associations, NGOs, private sector businesses, faith-based organizations, etc. have providedinput into the design o f key procedures/activities (eg, grants mechanism, monitoring arrangements, capacity needs program, medical waste management plans, mainstreamingplans), through participation in situations analyses, stakeholder workshops/consultations, and group-specific outreach activities. DuringMAP implementation, civil society organizations (CSOs) will play avariety ofroles: a) they may be the beneficiary o f MAP supported activities (eg, capacity building); b) they may be NAC grant recipients, carrying out HIV/AIDS interventions and contributing to the national monitoringeffort through submission o f programresults data; c) they may participate as stakeholders by expressing their members'views on policy and guidelinesdevelopment; and lastly, d) they will play an oversight role, through their participation inthe Board o f Commissioners and the MGFCC. Regular consultations with CSOs will be achieved through their participation inthe national TWG and its thematic sub-groups, topic specific task forces, etc. 6.4 What institutional arrangements have beenprovidedto ensure the project achieves its social development outcomes? The Board o f Commissioners ofthe NAC includes representatives from a broad spectrum of civil society, including traditional leaders, youth organizations, and PLWAs, with the goal o f ensuring that diverse social groups have a say inthe direction o f the national AIDS program. Moreover, the national program includes support for building the capacity o f key stakeholders inthe nationalresponse. For example, particular attention will be given to buildingthe capacity of HIV stakeholder associations (eg, NAPHAM, MANET, and MANASO) inorder to increase their ability to reach out to their special constituencies and respondto their needs. New coalitions and partnerships will also be supported, so that they can assist in scaling up the national response by reachingpreviously - 27 - marginalized groups (eg, faith-based coalition, private sector coalition). N A C i s developing an HIV/AIDS gender strategy to increase awareness o f the gender dimensions o f the epidemic. An annualjoint review will be organized each year to take stock o f implementationprogress and to guide development o f the next year's work plan. Thisjoint review will be based on inputs providedby the Technical Working Group and its sub-groups, once again with the goal o f ensuring that key stakeholders are listenedto and shape future funding priorities. Informationand feedback provided through the TWG will be complementedand enriched by special studies, surveys o fkey social groups, and gender assessments; information from these studies should also assist in identifying whether social development objectives are being met or where gapdweaknesses are occurring. Lastly, from an operational perspective, the program's emphasis on behavior change activities, expansion o f mainstreamingprograms in the public and private sectors, and implementation o f the grants facility mechanism should greatly increase the coverage o f the adult population receiving reliable information about HIV/AIDS transmission and prevention, as well as improved access to care, support, treatment, and impact mitigation services. Incombination, these program interventions should contribute to achieving the project's social development goals o f reducing HIV prevalence and improving the quality o f life o f PLWAs. 6.5 H o w will the project monitor performance interms o f social development outcomes? The M&E system for the national HIV/AIDS response will track quality o f life indicators at the outcome and program output levels. 7. Safeguard Policies: 7.2 Describe provisions made bythe project to ensure compliance with applicable safeguard policies. See section E.5 above and Annex 15. - 28 - F. Sustainability and Risks 1. Sustainability: From a process perspective, the institutional arrangements, procedures, and systems put inplace with MAP and donor partner assistance are expected to be sustainable and to continue inuse beyondthe immediate program period. The strengthening o f skills and knowledge among civil society groups, private companies, and public sector institutions i s expected to result in lasting capacity inthe public and private sectors to undertake such HIViAIDS programs infuture. Financial sustainability will continue to depend on extemal financial partnerships for the foreseeable future. 2. Critical Risks (reflecting the failure o f critical assumptions found inthe fourth column o f Annex 1): The critical risktable below assessesthe risk to program success if various events occur. The table measures the actual risk to program goals and objectives, not the likelihood o f the event occurring. Risk Risk Rating Risk Mitigation Measure From Outputs to Objective N A C not able to coordinate and mobilize H Capacity building/ institutional investment the national response effectively strategy will implemented Communication strategy will be implemented Leaders (political, traditional, religious, M Specially targetted B C programs for these economic) are not willing to participate groups will be implemented and training of actively and support the national trainers i s underway response Support for the functioning o f constituency- based coalitions (faith-based, business) will be providedby the program Community/NGO capacity does not S Umbrella organizations will assist community materialize based groups to submit local HIV/AIDS proposals and will provide capacity-building support A communication strategy will be implemented to reach communities at grass-roots level The health delivery system i s unable to H M O H P has established an HIV/AIDS unit to scale up the health sector response provide leadership for the bio-medical response M O H P i s involving civil society partners as implementers in the delivery o f care, support, - 29 - mdtreatment services htensive training and capacity building ?rogramswill be supported MOHPis puttinginplace fiduciary TA to assist with procurement and financial management functions 'undsfor HIV/AIDS programs are not S NAC i s strengtheningand computerizing its Nrovidedina timely way financial management and reporting systems A professional firm (FMA) will handle grant making administration, with time-based performance standards Application, approval, and disbursement procedures for CBOs/NGOs are simple and clear A&Eplanisn't implementedeffectively M An operationalplandetailing implementation ndso isn'table to contribute to program roles and user friendly reporting guidelines earning and adjustment o f have been prepared mplementation strategy A costed annual M&Eplan will be prepared each year and adequatebudget provided The annual M&Eplan will include a specific section on dissemination activitieshools. +om Componentsto Outputs {xtemal funding to the N A C for the M Achievement o f planned milestones and Jational response i s insufficient transparent accounting for resources i s expected to reduce perceivedrisks on the part of donors. Joint annual reviews to take stock o f progress will provide a framework for reviewing requirements and planned in-flows. herall Risk Rating S .isk Rating H (High Risk), S (Substantial Ris - M (Modest Risk), N qegligible or Low Risk) 3. Possible Controversial Aspects: - 30 - G. Main Grant Conditions 1. EffectivenessCondition i) the following documents have beenadoptedbyNAC, inform and substance, satisfactory to the Association: a) Operational Manual; b) the Annual Work Plan and Budget for the first year o f Project implementation; and c) a procurement plan for the first year o f Project implementation. ii)theNAChascontractedandmobilizedtheFMA,undertermsandconditionsacceptabletothe Association; iii)theRecipienthasincludedtheexternalanddomesticcontributionsfortheProgramforFiscalYear 2003-2004 inthe Recipient's approved annual Development Budget; iv) the NAC has established a computerizedfinancial management systemsatisfactory to the Association; v) the Recipient has opened the Project Account andmade the initial deposit referredto in Section 3.04 (b) (i)fthe Development Grant Agreement. o 2. Other [classify according to covenant types usedinthe Legal Agreements.] Conditionof disbursement: N o withdrawals will be made unless the Association approves the Annual Work Plan and Budget for the respective fiscal year. Datedcovenants: i)ConsultantswillbeappointedbySeptember30,2003tocarryoutannualindependentfinancial audits. ii)ConsultantswillbeappointedbyApril30,2004tocarryoutannualindependentprocurementaudits. iii)ConsultantswillbeappointedbySeptember30,2005tocarryoutanindependentmid-term evaluation o f Project activities. H. Readiness for Implementation c 1. a) The engineeringdesign documents for the first year's activities are complete and ready for the start o f project implementation. 1. b) Not applicable. E2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 3. The Project Implementation Plan has been appraised and found to be realistic and o f satisfactory quality. 4. The following items are lacking and are discussed under loan conditions (Section G): The Strategic Management Plan (the equivalent of the PIP) has beenreviewedand found to be realistic and o f satisfactory quality. The final annual work plan and first year procurement plan are conditions o f -31 - effectiveness. I. Compliance with Bank Policies 'x1. - This project complies with all applicable Bank policies. -2.ThefollowingexceptionstoBankpoliciesarerecommendedforapproval.Theprojectcomplies with all other applicable Bank policies. Country ManagerIDirector -32 - Annex 1: Project Design Summary MALAWI: Multi-Sectoral AIDS Project (MAP) Sector-related CAS Goal: Sector Indicators: Sector1country reports: (from Goal to Bank Mission) Mitigate the social and % of people who are sentinel surveiiance t Effective multi-sectoral economic impact of the HIV-infected (by gender, age, Second generation response HIV/AIDS epidemic in Malawi residence) surveillance reports % of orphans and other Population-basedsurvey (e.g. vulnerable children to whom DHS, BSS, CWIQ) community support is provided (by gender and residence) Project Development Outcome I Impact Project reports: (from Objective to Goal) Objective: Indicators: Reduce the transmission of Percent of sexually active Population-basedsurvey (e.g. Respected leaders (faith HIVIAIDS respondentswho had sex with DHS, BSS, CWIQ) community, business, a non-regular partner within teachers, political) promote the past 12 months (by ,behavior change. gender, residence) Improve the quality of life of Percent of population Population-based survey (e.g. those infected and affected by expressing accepting attitudes DHS, BSS, CWIQ) HIV/AIDS towards persons living with I HlVlAlDS - 33 - Iutput from each Output Indicators: Jroject reports: :omponent: ;cope of the HIV/AIDS Number of clients tested for iMIS t Quarterly Service :ommunity/NGO/private 2sponse is scaled up HIV in VCT sites and receiving :overage Report ;ector have capacity to result increased from 1.5 % of ?xpandservices t National, population in 2002 to 10 YOin listrict, traditional, and 2008 iusiness leaders are :ommitted to openly tackling he epidemic Yo of pregnant women HMlS t Quarterly Service StandardPMTCT guidelines counselled in PMTCT, tested :overage Report ire in place and being used and received their serostatus results increased from 0% in 2001 to 50% in 2008 Number of persons with HMlS t Quarterly Service Sufficient number of health advanced HIV infection on Coverage Report iacilities have the set up and ARV therapy increased from staff to administer ARVs 3,000 in 2002 to 25,000 in 2008 # of community home based HMlS t Quarterly Service Standard CHBC guidelines are care visits increased from Coverage Report in place and being used 11,000 visits per year in 2001 to 175,000 visits per year in 2008 lesource flows for HIV/AIDS Funds spent on HlVlAlDS Government expenditure National leaders and irograms are increased & programs (by national govt., NAC Annual Report international partners remain iccelerated district governments, & +reportst Financial UNAIDS committed external donors) show steady Resource Flow Survey increase throughout program period (from baseline to be established in first year - 2003/04) Funds provided by NAC to FMA t NAC grants Potential grantees are grant recipients show steady management tracking system submitting relevant and increase throughout program complete proposals period from baseline to be established in 2003104 (by CBO, NGO, FBO, private company) Jational response involves # of HIV/AIDS grant proposals FMA t NAC grants NAC is able to mobilize the nore sectors and more civil under implementation (by management tracking system national response + funds are ,ocietystakeholders CBOs, NGOs, FBOs, private) made available in a timely wa! shows steady increase - 34 - through out program period (from baseline to be established in first year - 2003104) Number of local govts (district :MA t NAC grants and city assemblies) with nanagementtracking system established AIDS Coordinator post and AIDS coordination program increases to 100 percent by 2008 (28 districts and 4 city assemblies) Number of large private com- Vorkplace survey Jisible commitment of political panies and public institutions md business leaders that have HlVlAlDS workplace policies and mainstreaming programmes doubles by the end of the program period (from 7 in 2002 to 15 by 2008) Ivlonitoringand evaluation % of recommendations in the rnnual HlVlAlDS M&E report, Effective management system information is used to guide the innual HlVlAlDS M&E report IACAWP, MOHP AWP, and n place national response hat are incorporated into the 1 ilOEST AWP VAC, 2) MOHP, and 3) MOES' innual work plans. Project Components I Inputs: (budget for each 'roject reports: (from Components to Sub-components: component) Outputs) 1. Prevention & Advocacy 46.48 \]AS Annual Progress qeports, Surveys, Audits 2. Treatment, Care and 144.90 support 3. Impact Mitigation 12.24 4. Sectoral Mainstreaming 8.97 5. Capacity-building & 29.71 partnerships - 35 - Annex 2: Detailed Project Description MALAWI: Multi-Sectoral AIDS Project (MAP) The proposed Multi-sectoral AIDS Project (MAP) for Malawi would support implementation o f the Strategic Management Plan (SMP) over the next five years. The SMP includes those activities for which the N A C acts either as coordinator/implementer or as financier through the HIV/AIDS grants facility. The SMP comprises seven major subprograms (see below). IDA funds will be disbursed into a joint pooled account, to finance those elements o f the SMP which are not being funded by ear-marked contributions. Distribution o f funding among the subprograms i s indicative as final allocations will depend on rolling annual work plans. By Component: Project Component 1: Prevention and Advocacy US$46.48 million - This subprogram covers a broadrange o f activities and services aimed at changing behavior and preventing transmission o f HIV. Activity clusters include: Behavior Changefor target populations: The National HIV/AIDS/SRH B C I Strategy and the National Reproductive Health Strategy provide the conceptual framework for expanding advocacy, prevention and mitigation strategies at all levels (especially at district level). Promotion of safe sex (including condoms):As a complement to the BCI interventions described above, a particular area o f focus will be promotion o f correct and consistent condom use through social marketing, and distribution o f (quality) condoms in all health facilities and retail outlets. To reach the school age population, the emphasis will be on incorporating safe sex messages, life-skills education, and information about HIV/AIDS into the primary and secondary academic curricula and exams. Out o f school youth will also be targeted. Prevention of sexually transmitted infections (STI): The treatment o f STIs reduces the transmission o f HIV/AIDS, while the use o f condoms can interrupt transmission o f both. Maternal health, ante- and post-natal care and family planning, are opportunities that will be used to deliver services related to both HIV/AIDS and STIs. Ante-natal women will be screened for syphilis (and if infected, treated with their partners). Clients with STIs will be managed usingthe syndromic management approach. Voluntary counselling and testing (VCT): VCT i s fairly limited in Malawi, against a background o f increasing demand. The goal i s to develop V C T services nationwide through expansion o f existing service providers and entry o f new partners. Activities will include: development and dissemination o f a common policy framework, technical guidelines, and training materials; strengthening o f laboratory infrastructure & equipment and enhancement o f human skills (through training o f site counsellors, community based counsellors, V C T supervisors, V C T trainers, and whole blood rapid testing personnel); advocacy and marketing o f V C T services; and quality control to ensure that V C T i s delivered according to national guidelines (including client surveys, staff surveys). Prevention of mother to child transmission (PMTCT):At present, PMTCT programmes in Malawi are few, new and rudimentary, and offered on a pilot basis by NGOs or as research by medical research institutions. The goal i s to strengthen and expand PMTCT programmes by: i)providing education/ information, counselling and testing services to women o f reproductive age; quality services to pregnant women during ante-natal, delivery and post-natal care; and anti-retroviral drugs for PMTCT to sero-positive pregnant women; ii)promoting and supporting safer infant feeding options including replacement feeding; iii)strengthening referral mechanisms for mothers to access existing care and - 36 - support services; and conducting operational research to inform PMTCT programmes nationwide. Prevention of health-care related infections: At present, there are no reliable estimates o f the extent to which HIV i s transmitted through medical procedures in Malawi (eg, blood transfusions, injections, and exposure to medical wastes). Common wisdom i s that this transmission mode accounts for a small proportion o f the cases, but a recent assessment o f injection safety and health care waste management suggests that risks may be greater than previously thought. Activities to reduce these types o f infections would include: screening all transfused blood for HIV and other blood infections using highly sensitive tests; development o f a sound policy framework, including legal regulations, technical guidelines, and EIA standards for health care wastes; provisiono f disposable injection equipment and secure health care waste storage containers; provision o f safety geadprevention equipment for workers handling medical wastes (boots, gloves, masks, etc); establishment o f appropriate waste disposal sitedprocurement o f appropriate waste disposal technology (eg, efficient incinerators, secure fencing, stabilized pits; etc.); and training programs for health care workers, municipal waste workers, and traditional/private medical practitioners; and IEC/BC programs for the general public and dump site scavengers. Prevention activities and programs will be implemented by a combination o f public, private, and civil society organizations and local communities (MOHP, CHAM, NGOs, FBOs, CBOs, local governments, private sector, etc.). Project Component 2: Treatment, Care, and Support US$144.90 million - This subprogram covers a range o f health based interventions aimed at reducing the morbidity and mortality associated with HIV/AIDS. The subprogram comprises two main activity clusters: a) clinical care and treatment, and b) community / home-based care. The clinical care and treatment cluster includes treatment interventions for patients who seek medical care for Opportunistic Infections (01s) and other HIV-related illnesses in the health delivery system, including the provision o f anti retroviral drugs (ARVs). Management o f 01s will be strengthened at all levels o f the health delivery system in the context of the Essential Health Package (EHP). The ARV programme will be expanded gradually from an initial 4 pilot districts (with better health infrastructure) to the rest o f the country, with a target o f reaching 25,000 patients. In order to support this 01and ARV treatment expansion, pharmaceutical procurement, drugs logistic management, and laboratory capacity will be strengthened and upgraded. Another important activity under this subprogram will be training programs for health workers in diagnosis and treatment o f HIV/AIDS patients, including anti-stigma sensitization, counselling and psychosocial support, palliative and end-of-life care. As the syndromic management guidelines on Sexually Transmitted Infections (STIs) have just been revised, refresher training and training o f new health workers on the revised STI syndromic guidelines will also be included. Lastly, for patients on ART, patient monitoring services (disease staging, adherence) will be strengthened to ensure effectiveness o f therapies. The community home based care (CHBC) cluster will include interventions to expand and improve the provision o f care to the chronically illin their homes and communities. Many people with AIDS are being cared for at home by their family members with limited resources, knowledge and skills, and where CHBC services are available, they only reach a handful o f patients. Activities within this cluster will include expansion o f service provider organisations' ability to provide new services, as well as enabling the development of new means of addressing CHBC (eg, DOT systems) through the mobilisation o f community groups to respond to local needs. Resources will be available for service provision to patients in their homes in the areas o f nursing care, basic treatment o f opportunistic infections, palliative - 37 - care, nutrition supplements, and psychosocial and spiritual support. In order to improve knowledge and skills at the community level, community mobilization/education programs concerning care services will be organized, and consumer educational materials on self-care for persons living with HIV/AIDS will be developed and disseminated. Training programs for traditional care providers, CBOs, FBOs on home-based palliative and end-of-life care will also be covered. Establishing linkages between health care facilities and community/home-based care programs to ensure a continuum o f preventive, curative, and palliative care will also be promoted. The main implementers for clinical care interventions are MoHP through its hospitals and facilities at all levels and C H A M hospitals and facilities. Other implementers include NGOs, private clinics, and teachinghraining institutions. The main implementers for CHBC activities will be NGOs, CBOs, and FBOs with the active involvement o f community and family members. MOHP will take the lead in coordinating the bio-medical response, within the framework o f the multi-sectoral response coordinated byNAC. Project Component 3: Impact Mitigation US$ 12.24 million - The HIV/AIDS epidemic and other disasters in Malawi results in large numbers o f orphans, widows/widowers and communities with social and economical problems which present a tremendous challenge to affected individuals, families and communities. This subprogram therefore aims to mitigate the impact o f the HIV/AIDS epidemic on particularly vulnerable members o f society: orphans and other vulnerable children, widows / widowers, and the dependent elderly. Activities within this category would include: strengthening the capacity o f communities to identify and register orphans, widows / widowers, and dependent elderly and the nature o f support required; educational support and training activities for OVCs (including nutritional packages where needed); skills training and income generation activities for vulnerable households (those with chronically ill family members, orphans, dependent elderly); community-based and institutional care for orphans; psycho-social support (including inheritance planning) for affected families; and B C I activities to increase awareness o f policy, laws and human rights affecting OVCs and surviving spouses (eg, inheritance rights. The preference will be, wherever possible, to build the capacity o f extended families and promote the absorption o f orphans, widows and widowers, and dependent grandparents within such families in line with cultural norms, values and laws relating to support for needy people. Attention will also be given to increasing collaboration and coordination among institutions providing care and support to vulnerable survivors (orphans, elderly, widows/widowers). Public, private, and civil society organizations and local communities (Ministry o f Gender and Community Services; Ministry o f Youth, Sports, and Culture; MOF; EP&D; international and national NGOs, FBOs, CBOs, local governments, etc.) will implement impact mitigation interventions. Project Component 4: Sectoral Mainstreaming US$8.97 million - The National HIV/AIDS Strategic Framework (2000 -2004) identifies HIV/AIDS mainstreaming inthe public and private sectors as one o f the key strategies for scaling up the national response to the epidemic. However, inpractice, both sectors are just beginningto integrate HIV/AIDS into the way they manage their workforce or plan their business/program activities. In2002, a number o f public institutions appointed HIVIAIDS focal points for the first time, created HIVIAIDS workplace committees, and introduced a budget line for HIVIAIDS activities inthe workplace. Similarly inthe private sector, some companies have introduced work place policies and integrated health care programs - 38 - for their employees and dependents. This subprogram will buildo n this progress and will enable public institutions, private companies, and civil society organizations to mainstream HIV/AIDS in their workplace and intheir core business, thereby mitigating the epidemic's impact on labor productivity and service delivery. At the national level, interventions could include legal changes (revision o f national labor legislation, revision o f public service regulations defining civil servant benefits), administrative changes (establishing posts for HIV focal points ineach ministry,requiring sector HIV strategies) and operational support inthe form o f training guidelines and manuals. At the institutional level, interventions could range from baseline KAP surveys and sero-prevalence testing, to establishment o f institutional focal points, formation o f support groups, HIV/AIDS awareness training, sector-based impact assessments, revision o f core business practices / programs to address HIV/AIDS impacts, human resource management strategies to manage HIV/AIDS induced attrition, etc. Interventions would be carried out by public, private, and civil society organizations, with technical support from expert individuals, specialized NGOs, P L W A associations, P L W A volunteers, etc. Liaison officers inthe Commission will oversee and coordinate activities under this component. Project Component 5: Capacity-building and Partnerships US$29.71 million - Several formal bodies have been established in Malawi to help coordinate the national response in their respective jurisdiction (eg, NAC, State/Faith Task Force, district level committees). In civil society, umbrella organizations, NGO networks, and P L W A associations also exist, which have the potential to facilitate efforts by smaller partners. Community based groups, small NGOs, and small and medium enterprises have a role to play in scaling up the national response. The efforts o f these implementing and coordinating partners could be enhanced if they were to receive targetted support in their respective area of weakness, whether it be access to technical information on recommended practices, selective skills development, or assistance with systemdfinancial management. The purpose o f this subprogram i s therefore to build the capacity o f public, private, and civil society organizations to implement and scale up a multi-sectoral response to the epidemic. Interventions will assist NGOs, FBOs, CBOs, public sector institutions, local governments, and private companies to develop long term visions, operational frameworks, and technical skills to address the epidemic. Specific activities will depend on needs o f the target organizations, but are likely to include programme design; training in HIV/AIDS; planning, financial management, procurement, and management skills; support in leadership and governance; and coordination skills at district and community levels. Competitively identified umbrella (or intermediary) organizations will be recruited to facilitate capacity building o f small CSOs. Specific capacity building strategies may be developed and implemented to strengthen the ability o f local governments to integrate HIV/AIDS in district planning and department activities and to monitor and coordinate H N / A I D S activities at the district level. In addition, coalitions among organizations involved in the expansion o f HIV/AIDS programmes will be strengthened (eg, business coalition, faith task force, national AIDS associations, etc.) to improve outreach to their respective constituencies. The subprogram will also support other broader mechanisms for networking and partnership and facilitate transfer o f leadership, governance and technical skills and promote information distribution. The activities within this subprogram will be facilitated by a capacity-building officer in the Commission, but will be carried out by the organizations themselves with support from expert individuals and organizations. Project Component 6: Monitoring, Evaluation, and Research US$9.59 million - This subprogramwill cover the range of interventionsneeded to enable the N A C to track the epidemic and national response and to understand which interventions are proving most effective under different local and cultural conditions. NAC's monitoring and evaluation system i s structured to capture data at - 39 - four levels: impact assessment, outcome assessment, programme monitoring (financial and activity), and country capacity. Activities included inthe M & E work plan will include biological and behavioral surveillance, poverty analysis (to measure socio-economic impacts o f the epidemic), programme activity monitoring, and specialized studies. Priority studies inthe national HIV/AIDS research strategy would also be covered inthis program category. An operational M&E plan and manual have beendeveloped which define roles, responsibilities, data sources, frequency o f data collection and analysis, and mechanisms for informationbestpractices dissemination. Activities inthe M&E and research programs will be carried out by specialized institutions suchas MOHP, MOEST, MOGCS, MOL, NSO, CSR, and EP&D. Program activity/financial data on the national response will be provided by N A C grant recipients through the FMA. The NAC M&Eofficer and Research officer will take the lead in coordinating activities under this subprogram and generating the annual M&E and annualresearch report. N A C will share progress reports and M&E data with EP&D, inits capacity o f monitor o f the Public Sector InvestmentProgram (PSIP) and the Malawi PRSP. Project Component 7: National Leadership and Coordination US$22.85 million - This subprogram consists of two main activity clusters: a) national leadership and coordination, and b) program management. Leadership and Coordination: this cluster would include support for: monitoring implementation o f the National HIV/AIDSPolicy and providing guidance to stakeholders and the sectors; poverty analysis and integration of HIV/AIDS in macro-economic plans and programmes; advocacy for increased resources to HIV/AIDS, in areas that are under-funded but critical to scale up efforts; development o f the national level strategic framework to guide implementation and to focus the leadership operations o f the National AIDS Commission; development and operation o f informationtools (database, web site, etc.) and dissemination o f data on implementing agencies, programmes, distribution o f interventions, activity statistics. Coordination activities will include facilitation o f the HIV/AIDS Technical Working Group (TWG), an important instrument for monitoring programme progress, networking and consensus-building over future directions in the national response, and other ad hoc task forces which may be established from time to time. The subprogram will also support Annual Joint Review Conferences and preparation o f annual plans o f action for the Commission. Program management: this cluster includes the operations of: the Board of Commissioners, the Malawi Global Fund Coordinating Committee, the National AIDS Secretariat, and the Financial Management Agent. Procurement and financial auditors, multi-disciplinary monitoring teams, and institutional developmentkapacity-buildingadvisors are also included. Activities will be the direct responsibility o f the National AIDS Commission, working in collaboration with key partners and stakeholders and with support from technical advisors as and when needed. -40- Annex 3: Estimated Project Costs MALAWI: Multi-Sectoral AIDS Project (MAP) 1. Prevention & Advocacy 31.15 15.33 46.48 2. Treatment, Care and Support 43.42 101.48 144.90 3. Impact Mitigation 8.57 3.67 12.24 4. Sectoral Mainstreaming 6.7 1 2.26 8.97 5. Capacity buildingand Partnerships 19.58 10.13 29.71 6. Monitoring, Evaluation, & Research 6.27 3.32 9.59 7. National Leadership & Coordination 14.93 7.92 22.85 Total Baseline Cost 130.63 144.11 274.74 Physical Contingencies 0.00 0.00 0.00 4 Price Continaencies 0.00 0.00 0.00 Total Project Cost; 130.63 144.11 274.74 Total Financing Required 130.63 144.11 274.74 -41 - -1.- c, 9 - 42 - T 1Identifiable taxes and duties are 2.5 (US$m)and the total project cost, net of taxes, is 272.24 (US$m). Therefore, the project cost sharing ratio is 12.8 % o f total project cost net o f taxes. - 43 - Annex 4: Economic Summary MALAWI: Multi-Sectoral AIDS Project (MAP) The "Economic Analysis o f HIV/AIDS" contained inthe Second Multi-Country HIV/AIDS Program (MAP2) (APL) for the Africa Region (Report No. P7497 AFR) provides the economic justification for the Malawi Multi-Sectoral HIV/AIDS Program. As it indicates, HIV/AIDS undermines the three major determinants o f economic growth, namely physical, human, and social capital. Due to its long incubation period (7-10 years), the impact o f the HIViAIDS epidemic i s likely to be felt over time with the rate o f growth o f physical and human capital and the efficiency o f social capital declining slowly inparallel with the maturing o f the HIV/AIDS epidemic. The behavior o f GDP would reflect a similar gradual downward reduction o f the rate o f growth (or increased rate o f contraction), rather than a sudden fall inGDP per capita. Recent studies to estimate the impact o f HIV/AIDS on future growth o f the Malawian economy have concluded that the epidemic will reduce growth potential through two primary influences: (i) reduced efficiency o f the labor force, due to frequent staff turnover and absenteeism, and (ii) a declining invest-ment and savings rate, resulting from shifts inboth public and private expenditures from productive activities to expenditures related to the disease. These two negative influences are balanced against the potential increase inthe per capita GDP due to a lower growth rate o f population (estimated to decline from 2.1% in 2000 to 1.7 in2010). The studies indicate that potential GDP growth during 2000-2010 in Malawi could be reduced by between 1.5 and 2 % per annum as a result o f HIV/AIDS, which in turn will imply a reduction o f between 1 and 1.5 YOper annum inper capita GDP. The fiscal impact o f the HIVIAIDS epidemic manifests itself on both sides o f the ledger: (i)reduces it economic productivity o f the economically active adult population, which translates into smaller fiscal revenues generated by the economy, and (ii) it increases the demands on public funds (eg, for health services and drug treatments, training o f replacement teachers, orphans and vulnerable children care, and civil servant pensions and death benefits). InMalawi's case, the 2000 Public Expenditure Review documented that pensions and gratuities doubled from 0.8 % o f GDP in 1995 to 1.7 % o f GDP in2000, traced to the increasingprevalence of HIV/AIDS amongst the civil servants and their dependents. Inview ofthe above, investments inactivities to preventHIVinfections andto extendthe productive lives o f those living with AIDS, has a direct economic benefit interms o f enhancing the economy's growth potential through labor productivity gains and deferring non-productive expenditures. As noted inthe analysis above, ifthe spreado fthe disease is not contained, total GDP inten years time couldbe up to 20% less than it would otherwise have been. Consequently, although a detailed quantitative analysis has not been carried out, it i s clear that investments to contain the spread o f the epidemic are economically justified. - 44 - Annex 5: Financial Summary MALAWI: Multi-Sectoral AIDS Project (MAP) Years Ending 2008 II IMPLEMENTATION PERIOD Year1 I year2 I Year3 Iyear4 I Year5 IYear6 IYear 7 Total Financing Required Project Costs Investment Costs 37.7 42.7 47.8 52.8 57.8 12.6 0.0 Recurrent Costs 3.7 4.0 4.2 4.4 4.7 2.3 0.0 Total Project Costs 41.4 46.7 52.0 57.2 62.5 14.9 0.0 Total Financing 41.4 46.7 52.0 57.2 62.5 14.9 0.0 I Financing IBRDllDA 3.O 5.0 6.5 8.0 9.5 3.O 0.0 Government 1.5 2.0 2.0 2.0 2.0 0.5 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 36.9 39.7 43.5 47.2 51.0 11.4 0.0 Jser FeeslBeneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - 4 5 - Annex 6(A): Procurement Arrangements MALAWI: Multi-Sectoral AIDS Project (MAP) Procurement Countrv ProcurementEnvironment 1, The first Country Procurement Assessment Review (CPAR) is currently beingcarried out in Malawi (June/July 2003). The procurement systemwas reviewed in 1996 with the assistance o f consultants under the aegis o f the Fiscal Restructuring and Deregulation TA Credit. A number o f recommendations were made to reformthe procurement systemincluding: a) revisingthe existing procurement regulations to make them more transparent, efficient, and economic; b) developing and implementing a procurement training program for government staff; c) preparing standard bidding documents and manuals; and d) promulgating a procurement law based on the UNCITRAL model. All the above recommendations are now under implementation. 2. A Procurement Billbasedon the UNCITRAL modelwas approved by Parliament inMay 2003, and i s awaiting Presidentialenactment andpromulgation o f regulations neededto make the Billeffective. The Bill contains the elements of good public procurement practice including: (i) effective and wide advertising o f upcoming procurement opportunities; (ii) opening o f bids; (iii) public pre-disclosure o f all relevant informationincludingtransparent and clear bidevaluation and contract award procedures; (iv) clear accountabilities for decision making; and (v) an enforceable right o f review for bidders when public entities breachthe rules. Inparallel, Parliament also approved in May 2003 new Finance and Audit Bills to address the recommendations o f the Country Financial Accountability Assessment (CFAA) carried out in2001bythe Bankinassociationwith other bilateral and multilateral development partners. 3. UntilthenewProcurement law entersinto effect, public sector procurementis governed by Interim Procurement Guidelines (IPG), which were issuedto all Ministries and Departments on July 1, 2000 by the Office o f the President and Cabinet (OPC). All public procurement i s requiredto be carried out inaccordance with the provisions inthe IPG, however, where the IPG i s inconflict with the Finance and Audit Act, the latter prevails. As a first step, the Ministries and Departments are requiredto procure their items from the stockable items at the relevant Stores Controllers. Where the goods are not available, authority from the appropriate Stores Controller must be obtained to source from a list o f approved suppliers whichis maintainedby the Government Contracting-out Unit(GCU). Inthe case of works, a list o f contractors i s maintained by the National Construction Industry Council o f Malawi (NCIC). The IPGprovides for the formation o f Internal Procurement Committees inall Ministries and Departments as award authorities for all procurement. 4. All orders for goods exceeding MWK 100,000 inaggregate(approx USD 1,100) and individual works contracts exceeding MWK 500,000 (approx. USD 5,500) must be cleared by GCU. Works contracts between MWK 300,000 - MWK 500,000 mustbe cleared with the Department o f Buildings (DOB). Inthe case o f the Central Medical Stores (CMS), any goods contracts exceeding MWK 500,000 (approx. USD 5,500) mustbe cleared by the Medical BuyingCommittee (MBC) and contracts above MWK 2,500,000 (approx USD 28,000) by the GCU. The current review thresholds are too low creating bottle necks inprocessing procurement. 5. The main deficiencies inthe current guidelines include: (i) of the Meritpoint systemfor use evaluation o f all goods and works procurement with only 30% weight for price in the case o f Goods and 20% for price in Works; (ii) use o f qualification criteria (e.g. financial capability and previous - 46 - performance) as evaluation criteria; (iii) - 25% application of excessive and inappropriate margin of preference for locally manufacturedgoods, 20% for local retailers and 15% for works, even under NCB and shopping procedures; (iv) use o f margin o f preference (15%) for local consulting firms; (v) use of registration and classification as a condition to purchase biddingdocuments, and as a condition for eligibility to bidrather than as a condition for award; (vi) inadequate treatment onhandling complaints; (vii) lack of emphasis on procurement strategy & planning, procurementmonitoring, and contract expenditure andprogress monitoring; and (viii) no provisionfor evaluation panels made up 3-5 of sector specialists who would be responsible for actually carrying out bidproposal evaluation based on the nature o f the works, goods or services to be procured. The M O Uwhich will be signed by the GOM and the Partners includes an agreementby GOM to waive all the unacceptable features of the IPGwhich are contrary to achieving the bestvalue for money. The IPG already includes a provisionthat any agreements with international donors supercede the IPG. A N A C Procurement Manualproviding guidelines for procurement activities by N A C and by grant recipients was revised during negotiations and i s satisfactory to IDA. For this program, there will be no requirementfor any o f the implementing agencies to send procurement documents to GCU for review. Use of Bank Guidelines 6. All works and goods financed underthe IDA grant would beprocuredinaccordance with the Guidelines: Procurement under IBRD Loans and IDA Credits,January 1995 and as revised in January and August 1996, September1997 and January 1999. Consultants will be selected in accordance with the Guidelines: Selection and Employment of Consultants by WorldBank Borrowers, January 1997 and as revised September 1997,January 1999 and May 2002. National Competitive Bidding(NCB) procedures are described inthe N A C Procurement Manual and are consistent with the Bank's "Requirement for Local Procurement in Borrowing Countries" as agreed inMarch 2002 as part o f the harmonization efforts at country level with other development partners. 7. The Bank's Standard BiddingDocuments (SBD) will be usedfor all ICB andwith appropriate amendments for all NCB. The Bank's Standard Request for Proposals (SRFP) would be usedfor all consulting assignments. All the implementingagencies should ensure that each time they are usingthe most current version o f the appropriate SBD or SRFP and standard forms o f evaluation. Less competitive biddingand selectionprocedures should not be usedas an expedient to by-pass more competitive methods and fractioning o f large procurements into smaller ones should not be done solely to allow the use o f less competitive methods or to avoidreview by the Partners. The detailed procedures to be followed under the grants facility are described inthe Grants manual and are consistent with paragraph 3.15 o f the Bank Procurement Guidelines on community participation inprocurement. Advertising 8. A General Procurement Notice (GPN) is mandatory andwill be publishedinthe UN Development Business as providedunderthe Guidelinesand in Development Gateway Market (Dgmarket). The GPN would be updated on a yearly basis and would show all outstanding ICB and all consulting services estimated to cost USD 200,000 or more. Specific Procurement Notices (SPN) will be required for contracts to be procured under ICB andNCB procedures and for consultant contracts to obtain expressions o f interest (EOI) prior to the preparation o f the shortlist. SPNs will as (a minimum) bepublishedina newspaper o f wide national circulation. Consultant contracts estimated to cost USD 200,000 or more will be advertised inDevelopment Business and inDgMarket. Sufficient time would be allowed (not less than six weeks for ICB and not less than 30 days for NCB and 14 days for EOI) to allow adequate time for biddersand consultants to obtain documents and respondappropriately. -47- ProcurementCapacity 9. The National AIDS Commission is the principal implementingagency for the national HIV/AIDS program and i s responsible for coordination and planning o f interventions, communications and outreach, resource mobilization, advocacy and partnership building. The N A C i s established as a public trust, and reports to a newly created Minister o f HIV/AIDS Programs. 10. Implementationo f programmatic interventions will be carried out by a range o f organizations - public institutions, NGOs, FBOs, CBOs, private companies -who will apply to a NAC-operated Grants Facility for funding. A framework manual describing the governance structure and operational procedures for the grants facility has beenprepared, as well as proposal writing guidelinesand application formats for different categories o f grant recipients (NGOs,public sector, and private sector). At the sub-national level, NAC will work through umbrella organizations to reach smaller organizations and community groups, andto manage on-granting to the community level. Over the mediumterm, the goal i s for district government coordinating structures to take over these functions. Disbursementsfrom the grants facility will be managed by a professional financial firm contracted by the NAC, and grant recipients and N A C will signa grant agreement clearly definingrespective responsibilities (including recipient M&Ereporting). 11. Two institutions are central to effective management o f the national HIV/AIDS response: the National AIDS Commission and the Ministry o f Health and Population (MOHP). The procurement capacity assessmentfor these implementing agencies has beencarried out. N A C does not have previous experience indirectly implementing a Bank project and the program incorporates mitigation measures which include hiringo f an in-house procurement officer and recruitment o f longterm consultant(s) (LTC) "on call" basis to provide procurement support and advisory services. The Ministryo f Health i s currently implementing an IDA funded LIL,but procurement procedures for health sector goods are weak. The ministrytherefore plans to hire a specialized pharmaceuticalprocurement agent until MOHP's procedures and capacity through the Central Medical Stores (CMS) are strengthened(MOHP i s considering usingthe services o f WHO or UNICEFfor procurement o f specialized HIV/AIDS drug regimens). Most of the other line ministries have hadexperience inimplementingBank and other donor financed projects and have the capacity to carry out procurementunder the project. The summary assessment shows a "high risk" for the program and the prior review thresholds have beenset to reflect this rating. Procurement Post Reviews (PPRs) will be carriedout annually by independent auditors and based on the findings o f the reviews, the prior review thresholds may be adjusted. 12. Duringappraisal, procurement clinics were organizedfor NAC staff andpotential umbrella organizations on the procedures containedinthe Procurement Manual. Subsequently, the NGOs selected to perform as umbrellaorganizations participated inthe annual procurement clinic organized by the Bank inJune 2003. The program launchworkshop will also include a session onprocurement. The focus will be to re-orient key staff on the principles of goodpublic procurement practice. The program also includes fundingfor key staffto attend Bank supported regional procurement training inESAMIor GIMPA. Procurement training workshops and clinics would also be held during Bank supervision missions. The course contents for these training workshops clinics will be guidedby the findings o f the PPRs. ProcurementPlans 13. Each year, N A C will prepare an annual procurement plan for the next twelve months o f the program, showing contract packages to be procured by the N A C Secretariat, and for each package, its estimated cost, procurement method and processing times for key activities till completion, The procurement plan for the grants facility will only show indicative budget per year, but will not include -48- detailed activities since the activities will be demand driven. The annual procurement plans (NAC plan and Grants Facility Plan) for the first year o f the Program will be completed before effectiveness. For subsequent years, N A C will submit by May 15 up-dated versions o f the procurement plans inrespect o f the following twelve months for review and clearance by the Partners. 14. Any revisions to the procurement plan shall require the concurrence o f the FundingPartners. N A C and Grants Recipients shall apply the most competitive method o fprocurement appropriate to the circumstances o f the specific procurement as described inthe Procurement Manual and the Table below. Grant recipients may select a more competitive methodfor a particular procurement ifthey wish to do so, however, Partner concurrence will be required to use a less competitive methodother than the one set out inthe agreedProcurement Plan. Absence ofthis concurrence may result inmisprocurement. 15. Training, workshops, conference attendance and study tours will be carried out on the basis o f approved annual programs that will identify the general framework o f training and similar activities for the year, including the nature o f traininglstudy tourslworkshops, the number o f participants, and cost estimates. Procurement ImplementationArrangements 16. Procurement will be carried out at two levels: by N A C (for N A C managed activities) and by grant recipients (for sub-programs funded through the N A C grants facility). Each grant recipient will be responsible for procurement planning and processing o f works and goods contracts and the selection o f consultants required to implement their activities. Scope of Procurementand Procurementmethods 17. N o I C B works contracts are expected under the project. Works contracts estimated to cost between USD 50,000 and 250,000 will be procured using N C B procedures as provided for inthe NAC Procurement Manual. Very small contracts estimated to cost less than USD 50,000 equivalent may be procured by way o f soliciting quotations through written invitations from not less than three qualified contractors. RegistratiodClassification o f contractors may be used to identify contractors for such very small contracts. The invitation shall include a detailed description o f the works, basic specifications, the required completion date, a simple form o f agreement acceptable to the Bank, and relevant drawings [where applicable]. Inall cases the award o f contract shall be made to the contractor who offers the lowest price for the required work, and who has the experience and resources to successfully complete the contract. 18. To the extent possible, goods that could be procuredby an implementing agency under one supplier would be grouped into contract packages, and packages estimated to cost the equivalent o f USD 100,000 or more would be procured under ICB procedures. Procurement o f goods packages estimated to cost more than U S D 30,000 but less than U S D 100,000 would be procured usingNCB procedures. Goods packages estimated to cost less than U S D 30,000 would be procured by shopping o n the basis o f comparison o f quotations from at least three eligible and qualified suppliers or from United Nations Agencies. Requests for such quotations will include a clear description and quantity o f the goods; as well as requirements for delivery time and point o f delivery. ARVs and other drugs for HIV/AIDS may be procured using LIB procedures by inviting bids from the WHO list o f prequalified manufacturers. 19. Software, spare parts and accessories and ARV reagents or drugs which are o f proprietary nature may with IDA concurrence, be procured under contracts negotiated directly with the - 49 - manufacturers/suppliers or their authorized agents. 20. Consulting Services and Training will consist o f various studies and technical assistanceto be carried out by both national and international consultants as well as workshops and group discussions. As a rule, consulting firms for all assignments estimated to cost the equivalent of USD 100,000 or more will be selected through Quality and Cost Based Selection (QCBS) methodology. Assignments estimated to cost the equivalent o f USD 200,000 or more would be advertised for EO1inDevelopment Business (UNDB),inDgMarket and inat least one newspaper ofwide national circulation. Inaddition, EO1for specialized assignments may be advertised inan international newspaper or magazine. Inthe case o f assignments estimated to cost less than USD200,000 the assignment will be advertised nationally. The shortlist o f firms for assignments estimated to cost less than USD 100,000 may be made up entirely o f national consultants ifat least three qualified firms are available at competitive costs inMalawi. However, foreign consultants who wishto participate shouldnot be excluded from consideration. Consultant services estimated to cost less than the equivalent o f USD 50,000 may be contracted by comparing the qualifications o f consultants. Auditors would be selected usingLeast-Cost-Selection procedures. Services which meet the requirements set forth inparagraph 3.5 o f the Consultant Guidelinesmay be procuredunder contracts awarded inaccordance with the provisions ofparagraphs 3.1 and 3.5 of the Consultant Guidelines. Incase o f assignmentsrequiringindividual consultants, the selection will follow the procedures stipulatedin Section V o f the Consultants Guidelines. 21. Training programs and workshops for N A C would be packaged inthe annual work plan and budget, and items therein procuredusingappropriate methods. IDA and NAC funding partners will review and clear training packages within the framework o f the annual work plan. 22. The detailed procurementprocedures to be followed underthe grants facility are described inthe Grants Facility Procurement Guidelines (taken from the N A C Procurement Manual) and are consistent with paragraph 3.15 o f the Procurement Guidelines on Community Participation in Procurement. IDA Review 23. The M O UbetweenG O M and the pooledfunding partners designates the World Bank to exercise prior review on behalf o f the funding partners for procurements over agreed thresholds. All goods contracts estimated to cost USD 200,000 or more and works contracts estimated to cost USD250,000 or more will be subject to the Bank's prior review inaccordance with the procedures inAppendix Io f the Procurement Guidelines. Any amendments to existing contracts raisingtheir values to levels equivalent or above the prior review thresholds are subject to IDA review. All contracts awardedon basis o f direct contracting will require prior review and clearance o f IDA. - 50 - 24. All single source selection will be subject to IDA prior review. Consultancy contracts with firms with estimated value o fUSD 100,000 or more, and consultancy contracts with individuals estimated value o f U S D 50,000 or more will be subject to prior review by IDA in accordance with the procedures inAppendix Iofthe Consultants Guidelines. All out o fcountry traininglworkshops will be subject to IDA review within the framework o f the Annual Work Plan and Budget review process. 25. Contracts which are not subject to prior review will be selectively reviewed by the Bank during project implementation and will be governed by the procedures set forth inparagraph 4 o f Appendix Ito the relevant Guidelines. Monitoring and evaluation o f procurement performance at all levels (national, regional, and community) would be carried out for procurement under the prior review thresholds during IDA supervision missions and through annual ex-post procurement audits. At a minimum, 1 out o f 5 contracts managedby the NAC and those managedby line ministries will be subject to post review. In addition, 1out o f 10 o f the grants awarded under the grants facility to civil society organizations will be subject to post review. Post-reviews o f in-country training will be conducted from time to time to review the selection o f institutionslfacilitatorslcourse contentsltrainees andjustifications thereof, and costs incurred. Annual independent technical audits (ex-post procurement audits) would: (a) verify that the procurement and contracting procedures and processes followed for the projects were in accordance with the IDA Grant Agreement (DGA); (b) verify technical compliance, physical completion and price competitiveness o f each contract inthe selected representative sample; (c) review and comment on contract administration and management issues as dealt with by N A C and grant recipients; (d) review capacity o f NAC and grant recipients inhandlingprocurement efficiently; and (e) identify improvements inthe procurement process inthe light of any identifieddeficiencies. The Recipient, N A C and the Partners will review all thresholds stated inthis section on an annual basis. Amendments may be agreed upon based on performance and actual values o f procurement implemented. Amendments to the IDA Grant Agreement may be proposed accordingly. ContractManagement andExpenditureReports 26. N o t more than one calendar month after the end o f each quarter, NAC shall submit to IDA a Procurement Monitoring Report and a Contracts Expenditure and Progress Report as part o f the Program Monitoring Report (PMR), providing the status of procurement, and expenditure and progress on individual contracts for NAC managed procurement. Formats were agreed duringappraisal. Procurement methods (Table A) Note: Because o f the nature o f the operation, Tables A and A 1 are not applicable. -51 - Prior reviewthresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review' >=250,000 ICB All contracts >=50,000 - 250,000 NCB FirstContract by IA <50,000 Price Comparison None Direct contracting All contracts 2. Goods >= 100,000 ICB/LIB/UN US$200,000andabove >=30,000 - < 100,000 NCB/LIB/UN None <30,000 Shoppingm None DirectContracting All contracts 3. Services >= 100,000, firms QCBS/SFB All contracts < 100,000, firms QCBS/LCS/SFB None < 50,000, firms SBCQ None >=50,000 individuals Individual All contracts <50,000, individuals Individual None Single Source Selection All contracts Total value of contracts subject to prior review: Overall Procurement Risk Assessment: High Frequencyof procurementsupervisionmissionsproposed: One every 3 months (includesspecialprocurementsupervision for post-review/audits) LIB will be usedonly ifthere is a limitednumberof suppliers _ _ -~~ ~ I\ ~ Thresholds generallydiffer by country and project. Consult "Assessment of Agency's Capacity to Implement Procurement" and contact the RegionalProcurementAdviser for guidance. - 52 - Annex 6(B): Financial Management and Disbursement Arrangements MALAWI: Multi-Sectoral AIDS Project (MAP) FinancialManaPement 1. Summary of the FinancialManagement Assessment 1. This annex is a record ofthe results of the assessment o f the financial management arrangements for the proposedMulti-Sectoral HIV/AIDS Project inMalawi. It also provides a summary o f country-wide financial management issues that are relevant to the project, institutional and implementation arrangements, and a summary o f FMrisk analysis. The flow o f funds aspect has also been summarized underthe disbursement arrangement. Country FinancialAccountabilitv Issues 2. As inmany developing countries in Sub-SaharaAfrica, development of Financial Management in the MalawiPublic Sector has only startedto receive attention and improve recently. There has been significant improvement inpublic sector accounting and reporting inthe last five years. This i s a culmination o f many years o f struggle and effort to raise the standards o f accounting and reporting inthe region. However, substantial reforms are needed inmany areas o f public financial management and accountability inMalawibacked by an aggressive effort to enhance capacity o f the Malawi nationals in Accountancy and general accountability particularly inthe public sector. Institutions o f accountability in Malawihave also been o f particular interest to the country and her development partners. The Society o f Accountants inMalawi (SOCAM) 1994 report on the Public Sector Financial Management, indicated that while a Law on the independence o f the Office o f the Auditor General exists, the reality was far from it,thusreducing the levelo feffectiveness. 3. Recent assessments undertaken by the Governmentjointly with development partners, such as the Country FinancialAccountability Assessment (CFAA) in 2002, have attempted to identify critical areas inneedof strengthening to facilitate soundfinancial management practices and ensure improved financial accountability inthe public sector. One way o f doing so i s through an efficient and timely mechanismfor sharing information, and it i s expected that this will be achieved when the Integrated Financial Management Information System (IFMIS)begins to bear fruit. This will also support the MediumTerm Expenditure Framework (MTEF) aimed at improvingpublic expenditure bybringing about better linkages betweenpolicy and government priorities and resource management through the budget.This is beingaddressedwith support from the ongoing IDA fundedFinancial Management Transparency and Accountability Project (Cr. 3734-MAI) which became effective on June 2,2003. In particular, the project will focus on expenditure accountability by (a) improving management systems and information flows, (b) promotingcompliance and oversight, (c) strengtheningperformance monitoring ,and (d) developing skills and capacity. These actions coupled with improved governance and participation o f the Malawi people inmanagement o f public affairs, will substantially mitigate the well recognizedrisk attributed to inadequate accounting and auditing systems inpublic sector across the country. Institutionaland ImplementationArrangements for the Program 4. The NationalAIDS Commission (NAC) hasbeenmandatedbythe Government of Malawi (GOM) to coordinate the implementation o f the National HIV /AIDS Strategic Framework inthe country. N A C willbe supported by government institutions including line ministries, local governments and others, as well as by civil society such as NGOs, CBOs, FBOs, private firms and community groups, and by - 53 - university and research institutions, all o f which will be the primary implementing agencies working with and amongst the Malawi people across sectors throughout the country. 5. The GOM and NAC's funding partners are consolidating their resources to support NAC in fulfillingits mandate. Eightfundingpartners, inaddition to the GOM, are currently committed to the program and four o f these partners have agreed to pool their resources with the GOM in what i s locally referred to as a `Basket Fund'. The remaining partners will provide their support to NAC outside the `Basket Fund' on an earmarked basis. Nevertheless, all contributions -whether pooled or earmarked - will be receipted and accounted inaccordance with thejointly agreed accounting and reporting arrangements. The details o f this collaboration are articulated and formalized through the Memorandum o f Understanding (MOU) that has been signed by the fundingpartners and the Government o f Malawi. 6. T o assist N A C as it transforms itself from an implementing to a coordinating agency and scales up its activities to deliver the SMP, the services o f a Financial Management Agent (FMA) will be engaged to disburse and manage the Grants Facility for the program. This approach has been successfully used in similar operations in other countries, Kenya being the most notable. This approach has also been adopted inother countries where M A P Sare either on-going or under preparation (e.g., Senegal, Tanzania, etc.). FinancialManaeement Cauacitv Assessment 7. A financial management capacity assessment mission was carried out inJanuary 2003, and the team concluded that the program will be implemented ina highrisk environment. The risk factors identified arise from the following: * First,the leadimplementing agency, the NAC, is a newly established organization which has no experience with implementing an IDA-financed project and has not yet had time to establish a track record. The number o f staff inthe accounting department i s too few to adequately execute the tasks that this programdemands as it scales up. * Second, the largest single beneficiary o f N A C funds - once the Global Fundfor AIDS, Malaria, and Tuberculosis (GFAMT) begins disbursing- will be the Ministryo f Health and Population (MOHP). According to audit reports issued by the National Audit Office, the financial systems inthe ministry cannot be relied upon at this time, pending implementation o f the government-wide Integrated Financial Management Information System (IFMIS). - 54 - * Third, grant recipients at the community level will include CBOs, DACCs, and other groups with limited management capacity. Action Plan to Mitigate Risks and Increase Financial Management Capacity 8. Risksidentifiedduringthe financial assessment mission were discussed with N A C and funding partners, and numerous mitigating steps were subsequently taken and assessed duringappraisal and negotiations. To mitigate risks and strengthen controls as well as overall accountability at all three levels, the following interventions are planned: * At the level o fNAG, additional competent and qualified staff will be appointed inearly July (Head of Administration, Project Accountant, Internal Audit Accountants), to complement and support the Director o f Administration and Finance (DAF) and existing DAF staff. Also, N A C will contract out financial transactions related to the Grants Facility to a Financial Management Agent (FMA). This should reduce the risk significantly, providedthe agent i s diligently supervised and monitoredby N A C in accordance with the contract. NAC's Financial Management Manual has been revised to reflect changes resulting from the new SMP framework, and will provide clear guidance to staff. The procurement manual for N A C and procurement guidelines for grant recipients o fNAC funding under the program are also critical elements in the financial accountability framework. * At the level o f MOHP, the GFATMhas appointed a LocalFundAgent (LFA) to represent them in Malawi and provide oversight on funds management and ensure that capacity gaps are addressed. The MOHP andN A C are currently discussing with the LFA how best MOHP can meet financial accountability and reporting requirements for both the HIV/AIDS and malaria program funding from the GFATM. GOM should initiate the process o f obtaining a consultant's help to ensure remedial measures are implemented promptly. * At the NGO and community level, capacity buildingprograms for NAC grant recipients inthe area of financial management are planned as part o f the SMP program. N A C will also implement rigorous financial and procurement audit controls (interim financial audit at mid-year, annual comprehensive audit, annual ex-post procurement audits). 9. Additionally, the MOUbetween the GOM and the funding partners recording their agreement on fiduciary arrangements has been signed, and NAC's Financial Management Manual has been revised, in accordance with IDA comments. The GOM has indicated its commitment to provide its pooled contribution on a quarterly basis throughout the life o f the project. The Grants Facility has been agreed and the grants management system has been documented and agreed. Selection o f the FMA was completed in late June 2003, and contract signature and FMA mobilization are conditions o f Grant effectiveness. The remaining actions necessary for sufficient and adequate financial management arrangements are identifiedbelow: I / Responsible Completion Action Authoritv Date Finalize Annual Work Plan (AWP) and pooled funding 11 NAC/Donors IIEffectiveness contributions for FY04. 12. 1Complete computerization o f financial management systems, in NAC I I Effectiveness 1 line with new program structure and revised chart o f accounts. 3. IIContract and mobilize the FMA. II NA C I Effectiveness 4. Review the functioning o f the newly established Internal Audit NAC/Donors June 30, 2004 ~~ unitinNAC and recommend changes ifrequired. - 55 - Supervisionof financial managementand disbursement will be linkedwith the quarterlyreviews of PMRs and semi-annual audits. Itwill be importantthat the project is availedwith an adequate supervisionbudget and staff weeks for close andin-depthsupervision, not only for general supervision, but also for the fiduciary aspects inview ofthe highrisk attributedto the project.Joint AFTFM andLOA participationin supervisionof fiduciary arrangementcan not be over emphasized, aimedat complementingsupervisionoftechnical andimplementationaspects of the projectby the TTL. Funds Flow Arrangements 10. The proposedHIV/AIDS programdescribedinthis document will use financialmanagement, disbursement andreportingarrangements that are consistent with the guidance providedinthe SWAP guidelines issuedNovember2002. The NAC andfundingpartners haveagreedonjoint accounting, reporting, andauditingprocedures that will be usedto track receipts and expenditures andreporton programprogress. "Program Monitoring Report" (PMR) formats were finalizedat negotiationsand include financial, procurement and output information. These formats are fully consistent with the Bank's FMR requirements, but havebeencalledPMRs inorder to satisfy all fundingpartners. 11. The framework for the SMPjoint work programmingand `pooling of funds' arrangementhas been agreedandhas beenformalizedthroughthe signingof the MemorandumofUnderstanding(MOU) in June 2003. Inthe processof formulating the MOU, a critical review of the flow of funds hasbeen carriedout by the fundingpartnersandNAC, who havenow reacheda good understanding ofwhat amount ofresources is requiredto implementthis program. Overallpercentages for financingprogram costs havebeenagreedinprinciple for each fundingpartner and GOM, while actual annual amounts and percentage shares will be agreedeach year amongthe basket donors. 12. The flow of funds for the SMP annual work plan hasbeenmappedout as follows: following agreement each year on the annualwork planandoutputs amongNAC and its fundingpartners, a detailedfinancing planwill be agreedidentifying which activities will be funded by earmarkedfunding partners andwhich by pooledfundingpartners. Donors contributingto the basketfund will deposit their share o f projectedfundingrequirements for the next six months in a hardcurrency basket account heldin a local commercialbank. Donors who disburse on an earmarkedbasis will do so within the framework o f the work planagreedby all the partiesand accordingto their bilateralagreementwith the NAC. NAC andits partners (both earmarkedandpooled)will reviewprogress against the plannedwork planon a quarterlybasis, with subsequentdisbursementsmade on the basis o f six-monthlyprojections.Any adjustmentswill bejointly agreedat the time ofthe quarterlyreview. 13. The pooledfunding arrangementwill enter into effect onJuly 1,2003, to coincidewith the beginningof fiscal year 2003/2004. The trigger mechanismfor release of funds by all fundingpartners (includingthe GOMpooledcontribution) will be the ProgramMonitoring Reports(PMRs) and accompanyingrequestfor disbursement. The first PMR will bebasedon the projectedactivities and cash forecast for the first six months as derivedfrom the approvedwork plan for FY04. The initialIDA disbursement into the pooledaccount after Grant effectivenesswill be basedonIDA'Sshare of the forecast for the periodJuly 1,2003 through December 31,2003. All subsequentPMRs will be prepared and submittedto fundingpartners on a quarterlybasis as agreedinthe MOU, with the first suchquarterly reportprovidedby November 15,2003. - 56 - Grants Facility 14. Approximately 90% o f the proposed HIViAIDSprogramfundingwill be channeled through the Grants Facility to public, private, and civil society organizations and local communities. The Framework Document for the Grants Facility sets out the purpose, objectives and guidingprinciples o f the Facility, the agreed implementation arrangements (including inter alia institutional framework, grant mechanisms, financial management, and capacity building),andproject cycle (including partner selection and proposal screening and approval procedures). Accompanying documents are the Grants Operational Manual which is for use by recipients of grants from the Grants Facility, and a series o f proposal writing and project planning guidelines. Additional informationon the Grants Facility i s providedinAnnex 12, and an overview o f Grant Mechanisms i s providedbelow: Community Grant Community-level level services: Mechanism Grants for service delivery Task Orders services: CBO grants Umbrella Organisations Typical 1.NGOs working in 1. NGOs 1. CBO/NGO work- 1. NGOs grantee more than 1district 2. Training ing at community 2. Ministries institutions level 3. Companies 3. Research groups, 2. NGOs working in etc one district Typical 1. Prevention 1. Operations 1. Community care 1. CBO support project 2.Care/support research 2. Prevention 2. DACC support activities 3. Impact mitigation 2. Capacity building 3. Impact mitigation 4. Workplace 3. M&E studies, interventions surveys Application to FMA - Pro-active by NAC - to Umbrella RFP process -- proposalformats Organisation to N A C - as andwhen -- proposal RFP format -- proposal as and when --- one-off2003 proposals come in format Grant 1year renewable Duration o f workplan 1year renewable 2 year renewable Duration Grant size Medium Medium-lar Be Small Large 15. Inorder to mitigate the risksinvolvedwith the scalingupofNAC's programandinrecognition of NAC's current limitedcapacity, the services o f a Financial Management Agent (FMA) will be engaged to manage financial administration o f the Grants Facility. The selection process will be completed by endJune, and contracting andmobilizing the FMA i s a condition of MAP effectiveness. 16. The FMAwill screenproposals against general eligibility criteria (usingindependentexperts drawn from a roster o f experts), review proposal consistency with budgetingguidelines, and assess potential partners on their technical, organizational and financial management capacity. Understanding that potential grant recipients (e.g., CBOs, FBOs) may lack the necessary capacity in service delivery and program management, umbrella organizations will be contracted to provide training and support. In addition, the FMA will conduct regular site visits to grant recipients to ensure that adequate financial management controls are enforced and to provide additional capacity building, as required. Separate - 57 - Grant Agreements will be signed with each grant recipient defining, inter alia, the financial accounting and reporting requirementsunder the Agreement and remediesto be applied incase o f non-compliance. 17. Disbursements under the Grants Facility will be managed by the FMA,underthe supervision o f N A C and inaccordance with approvedproposals and signed Grant Agreements. The initial grant disbursementwill be basedupon the fundingrequirementsfor the first two quarters of the approved project's work plan. Thereafter, disbursementswill be made each quarter, conditional on receipt o f a satisfactory report for the previous quarter (including accounting for the funds received for that quarter), and the next two quarters' projectiono f funding requirements. Financial and other reporting requirements, triggers for disbursement, and audit requirementsare set out inthe Grants Operational Manual. N A C has also providedfor remedial actions against a grant recipient that i s in default of compliance with the accountability provisions of the manual as documented inthat recipient's Grant Agreement. NationalLeadershiDand Coordination 18. The remaining HIViAIDS program funding will be utilized for NAC's national leadership and coordination activities. The budget and disbursements for these activities will be managed directly by NAC, according to the Annual Work Plan. 2. Audit Arrangements 19. Responsibility for audit o f all government projects rests with the National Audit Office (NAO); this rule applies also to NAC. Ithasbeenagreedwith the NAOthat, due to resource and capacity constraints at the N A O and in accordance with the Finance and Audit Act (Chapter 37:Ol o f the Laws o f Malawi), NAC's financial statements and records will be audited by a private, independentauditor to be competitively selected. The terms o f reference (TOR) for the combined progradentity audit have been agreed with NAC, the NAO, and fundingpartners, and are acceptable to IDA. The N A C auditor will examine all N A C operations including transactions flowing through the FMA, a random sampling o f umbrella organizations, and major public sector grant recipients (eg, MOHP). 20. The audit will be performed on a six monthly cycle. An interimaudit will be performed for the six monthperiod ending December 31, and the auditor will submit the interimaudit report within 45 days following the end o f the period under review (ie, by February 15). The statutory audit report for the entire fiscal year (July l-June 30) will be submittedwithin 120 days (four months) following the end o f the financial year (Le., by October 31). As such, NAC will readily comply with IDA audit requirements. As disbursements will be made on the basis of quarterly PMRs, the audit will include an opinionon the reliability o f these quarterly reports. Each audit report will be accompanied by a management letter which will include explicit recommendations for improvement and N A C action. The audits will be reviewedby the fundingpartners duringthe next quarterly review o f N A C performance, and any necessary actions, together with a timelinefor their resolution, will be agreed at these review meetings. 3. Disbursement Arrangements 21. N A C will maintainthe following bank accounts: Forpooled `basket'funds: There will be three bank accounts for the basket funds. Pooled funding partners will deposit their contributions into a pooledU S dollar account heldina local commercial bank. The GOMwill transfer their counterpart funds to a holdingaccount inthe Reserve Bank of Malawi. - 58 - N A C will immediately transfer the GOM funds to the pooled local currency account ina commercial bank. As required, generally on a monthly basis so as to minimize foreign exchange losses, N A C will transfer funds from the U S dollar account to the pooled local currency account for purposes o f the agreed work plan. For earmarkedfunds: N A C will maintain separate bank accounts, either in a designated holding account with the Reserve Bank o f Malawi or ina Foreign Currency Denominated Account (FCDA), into which earmarked donors will deposit their funds. NAC will also maintain a local currency operating account ina commercial bank for each earmarked donor. As required to meet eligible expenditures, N A C will transfer funds from the holding account or FCDA to the respective local currency account. 22. Flow of Fundsfrom IDA to NAC: Inaccordance with the agreed MOU, IDA will advance funds to the pooled U S dollar account described above. Disbursements to the pooledU S dollar account will be made o n the basis o f PMRs, with each disbursement made by IDA recorded as an advance. The initial advance will be based on IDA's share o f the cash forecast for the first six months' activities as derived from the Annual Work Plan for FY04. Subsequent advances will be based on quarterly PMRs and NAC's disbursement request for the ensuing six-month period. Expenditures will be recorded on the basis of IDA'Sshare of the previous quarter's eligible expenditures as reported inthe quarterly PMR. In accordance with the Guidelines for Report-Based Disbursements (November 2002), each P M R submitted to IDA will be accompaniedby bank reconciliation statements for the pooled US dollar account and the pooled local currency account and Withdrawal Application Form 1903B. 23. There i s n o specific ceiling when a project uses report-based disbursements; the amount i s limited to the lower o f what has been requested and the amount determined by IDA as reasonable to finance expenditures over the six-month period for which the project has provided a forecast. 24. Use of Statementsof Expenditures(SOE): The project has opted for and IDA has agreed to report-based disbursements. Allocation of grant proceeds (Table C) Table C: Allocation of Grant Proceeds I 3.00 To be agreed each year based on IDA's Subprograms II share o f the basket no01 IUnallocated 32.00 I I II I -1 I I I I ~~ Total Project Costs with Bank Financing 35.00 Total 35.00 - 59 - Annex 7: Project Processing Schedule MALAWI: Multi-SectoralAIDS Project (MAP) ITime taken to prepare the project (months) I 12 I 13 I First Bank mission (identification) 0310112002 0310112002 Appraisal mission departure 0211712003 0312112003 II Negotiations 0311712003 0511612003 Planned Date of Effectiveness II 0513012003 II 1013112003 II Prepared by: National AIDS Commission, National AIDS Technical Working Group (TWG), development partners, G O M stakeholders Preparation assistance: Japanese PHRD grant No. TF051635: $635,000 (approved Sept 2002) Japanese PHRD grant No. TF051636: $65,000 (approved Sept 2002) Bank staff who worked on the projectincluded: Name Speciality Christine Kimes Sr. Operations OfficerlTeam Leader Sheila Dutta EpidemiologistlPublic Health Specialist DavidWilson Monitoring and Evaluation Specialist Nadeem Mohammad OperationsIGrants Specialist Albertus Voetberg Lead Health Specialist Elizabeth Ashbourne Private Sector Mainstreaming Specialist Donald Mphande Sr. Financial Management Specialist John Nyaga Sr. Financial Management Specialist RajatNarula Sr. Financial Management Specialist Ivonna Kratynski Sr. Finance Officer Kofi Awanyo Sr. Procurement Specialist Yolanda Tayler Sr. Procurement Specialist Johnstone Nyirenda Procurement Specialist Francis M'Buka DecentralizatiodCDD Specialist Kate Kuper Institutional DevelopmentlLocal Government Specialist Manush Hristov Counsel Tesfaalem G. Iyesus Sr. Procurement Specialist Hope Phillips Operations Officer Tanangachi Ngwira Executive Team Assistant Shimwaayi Muntemba Sr. Social Scientist Philip Hedger Private Sector I Pharmaceutical Specialist Bibiane Uwera ProgramAssistant - 60 - Annex 8: Documents in the Project File* MALAWI: Multi-Sectoral AIDS Project (MAP) A. Project Implementation Plan 1. Strategic Management Plan 2. FirstYear Annual Work Plan (draft) 3. Multi-donor M O U 4. M O U Operational Guidelines 5. Monitoring and Evaluation Plan (Parts A & B) 6. HealthCare Waste Management Plan of Action B. Bank Staff Assessments 1. Financial Management Capacity Assessment 2. Procurement Capacity Assessment 3. Health Sector Goods Procurement Assessment C. Other 1. National Strategic Framework 2. NationalAIDS Policy (draft) 3. N A C Financial Management Manual 4. N A C Procurement Manual 5. N A C Grants Facility Framework Document 6. NGO ProposalWriting Guidelines 7. N A C Grants Agreement + Grants Operational Manual 8. Public Sector Proposal Writing Guidelines 9. Private Sector ProposalWriting Guidelines 10. NAC Institutional Assessment 11. Injection Safety & Medical Waste Assessment Report 12. HealthCare Waste Management Policy Paper 13. Report o fnational and district consultations on I S & MW Assessment findings 14. NAC/MOHP guidelines and manuals (VCT, PMTCT, ART) 15. Public Sector Mainstreaming Guidelines 16. RapidAppraisal o fMainstreaming inthe Public Sector 17. N A C ProgramActivity Reporting System (M&E) *Including electronic files - 61 - Annex 9: Statement of Loans and Credits MALAWI: Multi-Sectoral AIDS Project (MAP) 26-Jun-2003 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO75911 2003 Third Social Action Fund (MASAF 3) 0.00 32.80 0.00 0.00 62.74 0.00 0.00 PO78408 2003 FIN. MGMT, TRANSPARENCY,ACCOUNTABILI 0.00 23.70 0.00 0.00 24.99 0.09 0.00 P080368 2003 EMERGENCY DROUGHT RECOVERY PROJECT 0.00 29.00 0.00 0.00 31.47 -7.30 0.00 PO70235 2001 Regional Trade Fac. Proj. -Malawi 0.00 15.00 0.00 0.00 11.40 3.44 0.00 PO35917 2001 Mulanje Mt. Biodiversity Conservation Pr 0.00 0.00 6.75 0.00 7.01 3.87 0.00 PO73832 2001 TA. ADJUSTMENT (FRDP Ill) 0.00 3.00 0.00 0.00 2.37 1.24 0.00 PO63095 2000 Privatization and Utility Reform Project 0.00 28.90 0.00 0.00 25.89 16.04 0.00 P036038 1999 POPULATlONiFP PROJEC 0.00 5.00 0.00 0.00 2.36 2.18 1.38 PO01666 1999 ROAD MAIN. a REHAB 0.00 30.00 0.00 0.00 13.65 11.41 0.00 PO49599 1999 MASAFll 0.00 66.00 0.00 0.00 5.97 6.83 0.00 PO01670 1998 SECONDARY ED PROJECT 0.00 48.20 0.00 0.00 22.80 22.05 0.00 PO01667 1995 NAT WATER DEV 0.00 79.20 0.00 0.00 6.21 14.85 0.00 Total: 0.00 360.80 6.75 0.00 216.87 74.69 1.38 - 62 - MALAWI STATEMENT OF IFC's HeldandDisbursedPortfolio May 30 2003 - InMillions USDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1999 AEF Kabula Hotel 0.64 0.00 0.00 0.00 0.64 0.00 0.00 0.00 1997 AEF Maravi 0.21 0.00 0.00 0.00 0.21 0.00 0.00 0.00 1996 AEF Mwaiwathu 0.00 0.81 0.00 0.00 0.00 0.81 0.00 0.00 1998 AEF UhluGarden 0.20 0.00 0.00 0.00 0.20 0.00 0.00 0.00 2000 NICO 0.00 1.04 0.00 0.00 0.00 1.04 0.00 0.00 Total Portfolio: 1.05 1.85 0.00 0.00 1.05 1.85 0.00 0.00 Approvals Pending Commitment F Y Approval Company Loan Equity Quasi Partic Total Pending Commitment: 0.00 0.00 0.00 0.00 - 63 - Annex I O : Country at a Glance MALAWI: Multi-Sectoral AIDS Project (MAP) Sub- POVERTY and SOCIAL Saharan Low- Malawi Africa income Developmentdiamond' 2001 Population, mid-year(millions) 10.5 674 2,511 Life expectancy GNI per capita (Atlas method, US$) 160 470 430 GNI (Atlas method, US$billions) 1.7 317 1,069 T Average annual growth, 1995-01 Population (%) 2.2 2.5 1.9 Laborforce ("A) 2.1 2.6 2.3 GNI per Most recent estimate (latest year available, 1995-01) capita Poverty(% of populationbelownationalpoveltyline) 60 L Urban population(% of totalpopulation) 15 32 31 Life expectancyat birth (years) 38.8 47 59 infant mortality(per 1,000live births) 103 91 76 Child malnutrition(% of children under5) 25 Access to improved water source Access to an improvedwater source (% of population) 57 55 76 illiteracy (% ofpopuletion age 15+) 39 37 37 Gross primaryenrollment (% of school-agepopulation) 131 78 96 -Malawi 1 Male 138 85 103 Low-incomegroup Female 125 72 88 KEY ECONOMIC RATIOSand LONG-TERMTRENDS 1981 1991 2000 2001 Economicratios. GDP (US$ billions) 1.3 2.2 1.7 1.7 Grossdomestic investmenffGDP 19.6 20.2 12.5 10.9 Exportsof goods and servicesiGDP 25.0 23.3 26.4 26.0 Trade Gross domesticsavingslGDP 14.0 14.2 0.5 -1.o Gross nationalsavingslGDP 4.5 10.6 -1.3 -1.9 CurrentaccountbalancelGDP -11.4 -13.8 -12.9 Interest paymentslGDP 4.0 1.7 1.5 1.5 Total debffGDP 65.7 75.6 156.6 156.4 Total debt serviceiexports 38.4 29.0 20.1 20.2 Presentvalue of debffGDP 90.5 88.4 Presentvalue of debffexports 331.3 330.4 I Indebtedness 1981-91 1991-01 2000 2001 2001-05 (average annualgrowth) GDP 3.2 3.7 1.7 -1.5 4.3 -Malawi GDP Der cadta 0.0 1.6 -0.4 -3.5 2.3 Low-incomegroup -5.7 3.7 2.9 Agriculture 39.8 43.7 41.6 37.1 2o Industry 21.7 26.9 19.1 16.3 0 Manufacturing 14.0 18.0 13.8 11.5 Services 38.5 29.4 39.4 46.7 -20 Generalgovernmentconsumption 6.4 -1.9 33.3 9.1 -30 Grossdomestic investment 0.3 -8.8 -20.4 -10.2 -Exports *Imports Note: 2001 data are preliminary estimates. *The diamondsshow lour key indicatorsin the country (in bold) comparedwith its income-groupaverage. If data are missing,the diamondwill be incomplete. - 64 - Malawi ~~~ PRICES and GOVERNMENT FINANCE 1981 1991 2000 2001 Domestic prices 6-lnflatlon (%) (% change) Consumer prices 11.8 12.6 29.6 27.2 Implicit GDP deflator 16.3 10.7 25.2 26.1 Governmentffnance (% of GDP, includes current grants) Current revenue 19.5 18.6 17.4 17.8 96 97 98 99 00 01 Current budget balance -4.2 -1.2 -2.8 -5.7 Overall surplusldeficit -14.9 -6.3 -14.2 -14.1 -GDP deflator ' O ' C P I TRADE I 1981 1991 2000 2001 (US$millions) Export and Import levels (US$ mill.) Total exports (fob) 476 406 441 Tobacco 250 247 236 Tea 37 37 36 I Manufactures 23 56 60 Total imports (cif) 645 563 566 Food 11 30 34 Fuel and energy 54 75 68 I Capital goods 280 223 217 Export price index (1995=100) 118 86 85 95 96 97 98 99 Import price index (?995=?00) 93 93 91 Exports Imports O0 O1 Terms of trade (1995=?00) 127 92 93 BALANCE of PAYMENTS 1981 1991 2000 2001 (US$ millions) Current account balance to GDP (%) Exports of goods and services 316 513 451 456 Imports of goods and services 391 683 657 664 Resource balance -75 -170 -206 -209 Net income -130 4 7 -38 -32 Net current transfers 0 -33 8 16 Current account balance -250 -237 -225 Financing items (net) 262 225 193 Changes in net reserves 25 -11 11 32 201 Memo: Reserves including gold (US$ millions) 54 285 243 202 Conversion rate (DEC, local/US$) 0.9 2.8 59.5 72.2 EXTERNAL DEBT and RESOURCE FLOWS 1981 1991 2000 2001 (US$millions) Composition of 2001 debt (US$ mill.) Total debt outstanding and disbursed 822 1,665 2,674 2,735 iBRD 52 85 9 4 G: 27 IDA 151 866 1,654 1,762 F 1 7 A:. Total debt service 122 151 94 95 IBRD 2 16 9 6 IDA 2 9 28 31 Composition of net resource flows Official grants 148 98 Official creditors 80 130 145 141 Private creditors 4 -10 -1 -1 Foreign direct investment 27 28 Portfolio equity 0 0 I World Bank program I / Commitments 29 74 A IBRD E Bilateral Disbursements ~ 48 100 112 107 B IDA -- D .Other multilateral F Private Principal repayments 1 11 22 24 C-IMF G Short-term .. Net flows 47 88 91 83 Interest payments 3 13 13 13 Net transfers 44 75 78 70 Development tconomics 11Fiscal year data. - 65 - Additional Annex I 1:Multi-Donor Memorandum of Understanding MALAWI: Multi-Sectoral AIDS Project (MAP) General A Memorandumo f Understanding(MOU) has beendeveloped to set out the framework under which financial support from FundingPartners and the Government o f Malawi (GOM) will be channeled to the National AIDS Commission (NAC) for implementation o f the Strategic Management Plan. Operational Guidelines to the M O Uhave also beendeveloped to provide detailed guidance on reporting requirements, review mechanisms, and audit arrangements. The FundingPartners may be national governments, multilateral institutions, non-governmental organizations or other institutions and each may appoint an agent to assume its responsibilities under the Memorandum o f Understanding. New FundingPartners will be able to join the MOUunder procedures definedinthe MOU. Purpose The FundingPartners and GOM have entered into partnership to support implementation of the National HIV/AIDSStrategic Framework whose goals are to: 1) reduce incidence o fHIV and other sexually transmitted infections, 2) improve the quality o f life o f those infected and affected by HIV/AIDS and 3) mitigate the impact o f HIV/AIDS inall sectors and at all levels o f Malawian society. The operational framework for this partnership is provided by the Strategic ManagementPlan, which will be translated into action by means o f an annual work plan and budget,to be agreed each year and amended quarterly with the consent of the Participants. The purpose o f the programi s to coordinate the national response and facilitate the delivery o f key interventions through all organizations and communities inMalawi. Financial The FundingPartners and GOM will provide their financial contributions through : (i) pooled funds for general application to the agreed Annual Work Plan (AWP); or (ii) earmarked funds supplied for direct attribution to specific projects or budget lines inthe Annual Work Plan. The provisions o f the M O U guide bothtypes of Contribution. Table 1presents a table ofknown and anticipated financial commitments to the N A C from earmarked and pooledfunding partners and GOM. Contributions will be pledgedannually, with indicative amounts provided by Participants duringthe semi-annual review meetingheldinFebruary each year to review AWP implementation and to review the draft AWP for the next fiscal year. Informal consultation with the FundingPartners on the Work Plan and Budgetwill be followed by approval o f the N A C Boardo f Commissioners and then formal presentation to the Participants by the end o f April. Participant pledges will be confirmed at that time and entered into the national budget process. Disbursements Disbursementswill be released on a quarterly basis, and will be calculatedto cover requirementsfor a six month period, based on the annual work plan and expenditures/commitments at the end o f a quarterly - 66 - reporting period. N A C will provide quarterly program monitoring reports (PMRs), comprising output/activity reports, financial statements, and procurement status reports, within 30 days o f the end o f each quarter. The FundingPartners, GOM, and N A C will then meet within the next 15 days to review the quarterly P M R and agree on any adjustments that may be required at that time. Requests for disbursement will be submitted to the Participants following the satisfactory completion o f the Quarterly meeting. The PMR will be prepared according to a format agreed among all the partners, and the quarterly meeting will likewise be managed according to TOR jointly agreed. Table 2 presents the schedule o f quarterly meetings andjoint review tasks. Audits N A C operations will be subject to external audits, by a competitively recruited independent auditing firm,applying internationally accepted accountingprocedures and standards. The external audit will cover all funds available to N A C for implementation o f the program, irrespective o f the source o f funding. The auditors will produce an interimreport covering the July-December period, and the combined program I entity comprehensive audit for the entire year will be produced after the end o f the fiscal year (June 30). Terms o f reference for the audits have been agreed among the MOUParticipants and approved by the Auditor General's office. Procurement Procurement o f all goods and services shall be as specified inthe N A C Procurement Manual, which i s fully consistent with IDA ICB, Consultant, and community participation guidelines. The manual defines thresholds for different types o f procedures and prior review requirements applicable to N A C and other entities receiving funds through the Program. The FundingPartners have agreed that IDA will review and provide clearances on procurement on behalf o f the Partners. Deviation from these Policies and Guidelines may result in an expense being inadmissible for FundingPartner financing. Non-performanceunder the MOU Inthe event o f failure to implement, or to report on the programina manner consistent with the terms o f the Memorandum o f Understanding, FundingPartners will have the right to suspend disbursements to the Program inaccordance with their bilateral agreements. Prior to the execution o f any such suspension o f disbursements, FundingPartners will informthe Govemment of Malawi ina timely manner that suspension may occur. Inall cases, prior to the execution of a suspension o f disbursements, Participants will meet to seek a resolution to the issues at hand. New FundingPartners N e w FundingPartners mayj o i n the Memorandum o f Understanding on the basis of: agreement o f N A C and MOUsignatories; provision o f a minimumo f $250,000 per annum to flow to or through NAC; written agreement to comply with the provisions o f the MOU; the applicant organization i s not a recipient or potential recipient of funds from NAC; and the new Funding Partner has the authority to enter into legal agreements. Amendments The MOUmay be amended at any time upon the written agreement o f all Participants. - 67 - Entry into Force and Duration The MOU was signed on June 24,2003 by the Government o f Malawi and representatives o f the Pooled FundingPartners: Canada, Norway, the United Kingdom, and the International Development Association. The MOUentered into force as o f said date, with earmarked funding partners expected to sign in the coming months as they complete their respective legal reviews. - 68 - IDA 35,000.0 12.7% 35,000.0 100% 48% DfID 7,200.0 2.6% 7,200.0 100% 10% Govt of Malawi 10,000.0 3.7% 10,000.0 100% 14% I Total I 274.738.5 I 100.0% I 72.200.0 I 26% IIL I JUL II II AUG SEPT 4thQtrly Mtg IAnnual Joint Review 1 1 OCT II NOV lst Mtg. Qtrly. Reviewof consolidatedaudit report andprocurementaudit report DEC JAN FEB 2"dQtrly Mtg Semi-Annual Review+Draft Annual Wk PlanReview MAR 1 APR I MAY 31dQrtly Mtg FinalAnnual Work Plan, Budget, andAnnual ProcurementPlan JUNE s - 69 - Additional Annex 12: NAC Grants Facility MALAWI: Multi-Sectoral AIDS Project (MAP) Background Inrecognition ofthe disastrous impact ofthe HIV/AIDS epidemic onhuman and economic development inMalawi, the Government ofMalawi (GoM) launchedthe National Strategic Framework (NSF) for HIV/AIDS Prevention and Care (2000-4) in 1999.The goals o f the NSF are: (i) Reduced incidence o f HIVinfection; (ii) Improved quality o f life for people infected and affected by HIV/AIDS (PLWA); and (iii) mitigatedimpact o f HIV/AIDS on Malawian society. The National AIDS Commission (NAC), created in July 2001, coordinates implementation o f the multi-sectoral and decentralized response. N A C successfully mobilised resource commitments from the Global Fundfor AIDS, Malaria and Tuberculosis, the World Bank and bilateral donors. One o f NAC's priorities i s to massively increase the delivery and uptake o f HIV/AIDS services for prevention, care and impact mitigation. Service delivery will rely on civil society, i.e. CBOs, NGO and Faith-based organisations (FBO), the private sector and public sector institutions such as Ministries, parastatal organisations and District AIDS Coordination Committees. Inorder to make resources available to these organizations in an effective, efficient and accountable manner, the N A C developed a grants management system, the `Grants Facility'. Goal and objectives The purpose o f the Grants Facility i s "to increase the utilisation ofprevention, care and impact mitigation services across Malawi ", in support o f the NSF goals o f reduced HIV transmission and improved quality o f life for PLWA. Specific objectives are: 1. Increasedfinancial resources available to civil society andprivate organizations to implement HIV/AIDS services and activities; 2. Increasednumber andrange o f civil society and private organizations receiving resources and support; 3. Improved human and organizational capacities to implement quality services. Guiding principles The guidingprinciples for the Grants Facility are: 0 Respect for the rights and dignity o f each person, irrespective o f behaviours, HIV status, gender, age, religion, sexuality, or race; 0 Confidential, voluntary, non-judgmental and non-discriminatory service delivery; 0 Inclusive and supportive management, recognizing that all Malawian and foreign organisations have a potential to contribute to the response; 0 Respect for and compliance with the NSF, the National HIV/AIDS Policy and any protocols and guidelines deriving from the above; 0 Decentralization o f management systems, increasing responsiveness to local needs and contexts. - 70 - Grant Recipients The Grants Facility aims to provide support to all organizations across civil society that are able and willing to contribute to the national response, implement services and account for funds received. Grant recipients may include: Communities and CBOs, where neededthrough intermediary organizations; NGOs, includingAIDS Service Organisations (ASO) and International NGOs; FBOs includingmission hospitals and faith communities Professional associations, clubs and trade unions; For-profit business entities, small and mediumenterprises (SMEs); Media groups, journalists, and commercial training organizations; Local government organizations, e.g. District Assemblies (DAs), DACCs; Schools and universities; Central government institutions, e.g. ministriesand statutory corporations. Services and Activities to be supported The Grants Facility supports any activity that supports the goal of the NSF and follows national technical guidelines.This includes: Services for prevention, care and support, and mitigation o f the impact o f HIV/AIDS on individuals, communities and organisations; Activities that help create a supportive environment and increased capacity o f civil society for service delivery, e.g. technical andor organizational capacity building,formative or other research, advocacy and networkingor information support. Activities that contribute to tracking the epidemic and measuring the scope and effectiveness o f the national response. Implementation arrangements Implementationo f the Grants Facility i s the responsibility o f the N A C Secretariat. A SteeringCommittee o f primary and secondary stakeholders, chaired by the N A C Chairperson, i s responsible for governance o f the Facility and for ratifying grant approvals by the N A C Secretariat. Financial Management, including coordination o f the proposal review process, organizational capacity appraisal o f applicants, organisational capacity building o f recipients, and progress monitoring, will be contracted out to an accounting firm: the Financial ManagementAgent (FMA). The Grants Facility relies on existing Technical Working Groups to develop national technical guidelines for service delivery, and to identify a roster o f experts for external review o f project proposals. N A C plans to recruit several Liaison Officers (eg, for public sector, local government, Faith-based, private sector, etc.) and a Capacity BuildingOfficer to coordinate capacity buildingo f grant recipients. Strategic planning To increase the effectiveness and efficiency o f the scaling upprocess towards nation-wide coverage of essential HIV/AIDS services, N A C plans to use a strategic planning process for the grants facility, as input to the overall national HIVIAIDSplanningeffort. The keyelements of the Grants Facility strategic planningprocess are: Annual Situation and ResponseAnalyses; Annual revision o f the Grants Facility Scale up Strategy, identifying priority services, partners and - 71 - geographic areas 0 Annual revisiono f the Grants Facility Communication Strategy, specifying how to engagenew partners in the response Grant Mechanisms The Grants Facility allows for flexible grant and contract mechanisms, as per the needo f the contracting partners. The main grant mechanisms are: 0 Grants for Service Delivery, i.e. grants for organisations that submit unsolicited proposals for HIV/AIDSservices or activities, often larger grants for national levelHIV/AIDS organisations; 0 Task Orders on the basis o f a call for proposals for specific services (e.g. a specific piece o f research), or after joint workplan development with a "sole source'' organisation (e.g. a line ministry); 0 Umbrella Mechanism for Community-basedServices, i.e. contracts with intermediary organisations who inturn support and subcontract smaller partners, such as CBOs or Village AIDS Committees (VACs); 0 Other grant and contract mechanisms may be developed. Selectionof Recipients,ProposalReview and Contracting Identificationo f grant recipients depends on the grant mechanism: N A C may pro-actively approach potential implementingpartners, or interested organisations may approach the N A C with a project proposal. Advocacy and sensitisation i s neededfor private sector, district government, ministries and faith based organisations, and this i s the responsibility o fN A C Liaison Officers. Proposalguidelines exist for HIV/AIDSservice delivery organisations and Umbrella Organisations, for Ministries and public sector institutions, and for private sector organisations. Guidelines for DACCs and CBOs will be developed. Multi-district and national scale proposals are submittedto the N A C FMA,who will screen the proposal to assess if it meets general eligibility criteria, andor ifit needs to be submitted to an Umbrella Organisation, e.g. in case o f local district level projects. Proposal review i s transparent and objective, with set criteria and external reviewers. Proposals will be reviewed from three perspectives using standardized review sheets (see attachments): 1. External review o fproject designand technical meritby three independent experts against set criteria; reviewers may ask for clarifications or suggest changes inproject design as a condition for approval; 2. Screening by FMA o f proposal consistency with budgeting guidelines; 3. On-site organisational pre-appraisal o f applicant organisationby FMA to assess technical, organisational and financial management capacity. The three step process to be followed is expected to take about 14weeks from receipt to decision (assuming that proposals submitted are complete and do not require extensive re-writing by the applicant). Ifthe three levels o f review are satisfactory, the proposal with supporting review documents i s presented to the N A C for its review and approval. Once approved, a grant agreement i s offered consisting o f the agreement letter, approved workplan and budget, a "Grant Operational Manual", explaining contractual roles and reporting requirements, and a "Grants Facility Procurement Guidelines" booklet providing helpfulexplanations and formats for procurement rules. All grant agreements are brought before the Steering Committee for ex-post ratification. - 72 - ReportingRequirements Grant recipients are requiredto report on progress and performance to the NAC. During grant implementation, progress reporting will consist of: 0 Monthly Project Activity Monitoring Reports, to report service statistics according to a simple standardized format usedby all service providers as part o f the National M&E system; 0 Quarterly Narrative Reports, according to a report format, detailing major activities and achievements, lessons learnt, support needs, andplans for the next two quarters; 0 Quarterly Financial Reports, consisting of an expenditure report, bank reconciliation statement, supported by original bills and vouchers; 0 Quarterly Procurement Report, according to a simple report format inthe Grant Manual; 0 Annual Report o f all activities, including financial report and where applicable, a statement from the auditors. Upon completion o f work plan activities, the grant recipient will submit a Project Completion Report. Grant disbursement and auditing The initial grant disbursementfollowing proposal approvalI grant agreement signature will be based upon the successful applicant's fundingrequirementsfor the first two quarters o f the approved work plan. Thereafter, disbursements will be made each quarter, conditional on receipt o f satisfactory quarterly reports for the last quarter (including progress, financial, and procurement), and a 6-month projectionof funding requirements (with supporting workplan) after actual expenditures and commitments out o f the initial disbursement are taken into account. Proposals receiving grants over the equivalent o f US$ 5,000 require an annual external audit o f grant expenditure and financial management systems. Smaller grants are subject to spot checks by the FMA, the umbrella organization, or the NAC's auditor. CapacityBuilding Capacity buildingi s one o f the three specific objectives o f the Grant Facility. N A C i s considering the recruitment o f a N A C Capacity Building Officer to coordinate technical and organisational capacity buildingof all implementingpartners, including contract management with national training institutions. A Capacitybuildingstrategy will describe capacitybuildingneeds and purpose, guidingprinciples and methodologies, and will be complemented by annual implementation plans for detailed capacity building activities. Umbrella Organisations are contractedto strengthen CBOs in service delivery and programme management, and DACCs in strategic planning and CBO support. All grant recipients are encouraged to identify capacity buildingneeds intheir proposals and addressthese inthe workplan. Monitoring of organisational capacity takes place through repeat training needskapacity assessments, and self-reported support needs. Monitoringand Evaluation The FMA management information systems will enable monthly monitoring of output data such as number andrange of grant recipients, funds distributedand used, and service statistics disaggregated for district, age and gender. - 73 - An output-to-purpose review o f the Grants Facility will be carried out annually bythe N A C as part of the joint review process. The proposed logical framework for this review i s presented below. A mid-term evaluation i s proposed to take place in2005. Objectives Indicators Means of verification Purpose 1. # vulnerable adults reachedwith 1. Progress reports Increasedutilisation o f B C I 2. (( essential HIVIAIDS 2. # adolescents reached with B C I 3. " prevention, care and 3. # women using PMTCT services 4. " impact mitigation 4. # people tested and counselled 5. <' services through VCT 6. '( 5. # P W A using care & support 7. services 6. # orphans usingsupport services 7. #widows using support services output 1 1. total $ disbursedto grantees 1. FMAreport Increased access to 2. total $ expendedby grantees 2. FMAreport resources o f civil society partners output 2 1. # proposals receivedI assessedI 1. FMAreport Increased number and approved 2. FMAreport variety of civil society 2. # newlongoing grants 3. FMAreport partners engaged inthe 3. # grantees (NGOIprivatelpublic) response output 3 1. # I A s with capacity building 1. NACproject progress Increased capacity of support reports partners to implement 2. # capacity buildingevents 2. IA progress reports quality services (NACIFMNUmbrella' s) 3. IA progress reports 3. # IA staff trained 4. IA progress reports 4. # community people trained 5. IA progress reports 5. evidence o f increased capacity 6. FMA annual report 6. # o f unqualified audit reports o f IA grants - 74 - Attachment 1 Proposal Review Score Sheet Organisation: . This score sheet is meant primarily as a review guide to the proposalcontent, and the scores assigned may not necessarily be the final appraisal o f the proposal. The proposing organisation will be appraised separately on organisational capacity and financial management capacity. E * Please indicate assigned points for each category inthe spaceto the left. Project Design 1. Overall strengtho f the intervention design: intervention strategy and choice o f out of 10 target population 2. Responsiveness of the project purpose to needs of the target population outof5 3. Sensitivity to gender and social inequalities out of5 4. Clarity of purpose and logical linkto objectives and intervention activities outof 10 5. Quality and adequacy o f monitoring and evaluation plan outof 10 6. Feasibility: can the stated objectives be achieved within giventime plan and outof5 budget 7. HIViAIDS Service delivery: technical strengthand consistency with best out of 10 II TotalSustainability and practice points for section 1 I O u t o f 5 5 I Collaboration 1. Cost-effectiveness of the intervention outof 10 2. Potential for sustainability of the services by organisation or others outof 10 3. Extent to which the proposal articulates a collaboration plan with other outof5 organisationshervice providers II Total point for section 3 l o u t o f 2 5 I organisational Capacity I 1. Current o f Dast exDerience in HIV/AIDS or relevant Droiects I I Outof10 I 2. Adequacy of human and financial resources to implement the intervention outof 10 technically and administratively 3. Adequacy of organisationalmanagement outof 10 Total points for Section 4 Out of 30 TOTAL POINTS FORPROPOSAL outof 110 Accepted Accepted conditionally Not accepted (Giveconditions separately) - 75 - Checklist for Organisational & FinancialManagement Appraisal Factor Assessment Key issues 1 2 3 4 5 1 Governanceand management mission statement o f organisation values re. HIV/AIDS board o f trusteeddirectors Staffing and organisation oreanomam III staff numbers team work I team iob descriptions III III III skills and experience in: .project management .HIV/AIDSprevention .community care & support .health services I personnel files present personnel Dolicv Recruitment policv Writteninduction Drogramme I I I staffheam development policy salary structure and procedures staff appraisal record o f staffs work with clients staffmeetings written code of practice on working procedures accommodatiodoffice Financialmanagementhystems registration with Government/District accounting systems I separate bank account II II 1I experience in grant management other sources o f income financial planninghudgeting financial monitoring external audit system - 76 - audited accounts o f last 3 years capital assets available contracting serviceslconsultants Project management I project planning system performancemonitoring system evaluatiodreview system participation o f stakeholders Externalrelations with NAC with DACC/DA with other NGOs 111with Drivate Dractitioners I with communitv with PLWA III III II 1 = poor; 5 = excellent Strongpoints: Weak points/ TA needs 1 1. 2. 3. Conditionsfor funding: Criteriafor BudgetAssessment by FMA The project proposal review consists ofthree parts: 1. External technical review o f project design; 2. Organisational pre-appraisal on-site by FMA, and 3. Assessment of adherence to budgetingguidelinesby FMA. Below are the criteria usedfor the budgetreview by FMA. Ifany one o f these conditions i s not met, the FMA will request the applicant organisation to re-submit the proposal. Notificationto re-submit the proposal will be provided within 3 weeks o f receipt o f the proposal by the FMA. - 77 - 1. I s the budgetpresentedin the required format? * Overall budget * Budgeting details per line item * Summary budget 2. Are funds requestedfor itemsthat are excludedfor funding inthe proposal guidelines? * Previous obligations * Baddebts * Land 3. Are expensesjustified? * Inthe narrativeproposal budget -+ Workshops I seminarsI conferences outside Malawi without justification Capital assets without justification? 4. Are there major mistakesinthe calculations? -78 - Additional Annex 13: National HlVlAlDS Monitoring and Evaluation Plan MALAWI: Multi-Sectoral AIDS Project (MAP) Background With the increasing spread o f HIV/AIDS, it has been important to sharpen monitoring and evaluation tools to check whether programmes are meeting goals and producing the desired impact on the lives o f individuals, families, and communities. The need for documenting success o f programmes has driventhe emphasis on monitoring and evaluation by stakeholders, including the Government o f Malawi and fundingpartners. The National HIV/AIDSMonitoring and EvaluationSystem Giventhis imperative, the National AIDS Commission and stakeholders have developed a National HIV/AIDS M&E System to enable the country to track its progress towards the goals and objectives as stated in the National HIV/AIDS Strategic Framework (NSF). The instrument for translating this system from theory into action i s the National HIVIAIDSM&EPlan, which lays the conceptual foundation and defines the operational mechanisms which will be used. The national HIV/AIDS M&E Plan i s divided into two parts: * Part A, the Conceptual Framework, lays the conceptual foundation for the M&E system, by providing a logical framework for organizing and prioritizing national efforts. Itprovides a description o f goals, illustrative activities, and measurable indicators by programme area, and defines a set o f data sources that will be usedto gather the necessary M&E information. * Part B, the Operational Plan, provides detailedindicator descriptions and describes the collection, flow, analysis, reporting, and dissemination o f information, the organizations and individuals responsible for these tasks, and the data systems necessary to accommodate this information. Part B also defines and describes the informationproducts that will be the result o f the national M&E system, and recommends an overall 5 year implementation cycle for the National M&E system(including functional responsibilities and an operational budget). The LogicalFramework The logical framework for this M&E plan is informed by the overall goal of the NSF: to reduce incidence o f HIV and other sexually transmitted infections and to improve the quality o f life of those infected and affected by HIV/AIDS. Three key objectives o fNSF have been selected as follows: To reduce HIV incidence inMalawi. To improve the quality o f life o f PLWAs & those affected by HIV/AIDS. To mitigate the impact o f HIV/AIDS on Malawian Society. The logicalframework is organized according to the following levels: impact assessment, outcomes assessment, monitoring o f programmes (HIVprevention, HIV/AIDStreatment, care and support, HIV/AIDSImpact Mitigation), andmonitoring ofnational leadership, coordination, andmanagement functions. Socioeconomic status, gender, and special populations are not identified in this framework as stand-alone programmatic areas, but rather are considered to be relevant to all efforts within prevention, care and support, and capacity-building. - 79 - The full logical framework i s attached inannex, which classifies national indicators by M&Elevel, priority area, and programme area. As a general rule, impact and outcome indicators are derived from data collected through national efforts, whereas the programme monitoring indicators are generally derived from routine data systems and reporting formats usedat the programme level. Existing data sources have beenfully evaluated and integrated inthe systemwhenever possible, and in some cases new data sources have beendefinedto fill informational gaps. Summary information on data sources and cooperating institutions i s presented in annex. ImplementationArrangements Inline withNAC's overall mandate to coordinate and act as guardianofthe nationalHIV response,NAC will play a leadership role through its Planning, Monitoring and Evaluation Unitto ensure that the National HIV/AIDS M&E system i s implementedas intended. Cooperating institutions inthe M&E systemhave been fully involvedindeveloping the implementationarrangements and advising on data collection and analysis modalities. Based on these consultations, implementationresponsibilities for the different stakeholders have beenidentifiedand agreed (Board of Commissioners, NAC Executive Director, N A C Heado f Planning and M&E Officer, FMA, implementers o f HIV interventions, research institutions, and external funding partners). The Operational Plan (Part B) provides a clear definition of activities, implementation time frames and responsibilities. The categories o f activities within the National HIV/AIDS M&E systemcan be categorised as follows: * Set-up and operationalisationofNationalHIV/AIDS M&E System Generation o f data sources not commissioned by N A C Generation o f data sources commissioned byN A C Co-ordination to ensure that all data source information i s receivedto inform all N A C indicators * Development and disseminationo f N A C informationproducts These activities are detailed inthe Operations Planwith clear implementation time frames ina GANNT chart format. These M&E activities will be translated into Annual M&E Work Plans each year, including fundingrequirements and expected outputs. InformationProducts InDecember 2002 andJanuary 2003,NAC ascertained the information needs ofits stakeholders through a series o f field visits, interviews and questionnaires. Based on these informationneeds, the N A C HIVIAIDS M&E systemwill produce the following periodic informationproducts: . Annual HIV/ADS M&E Report Quarterly Service Coverage Report UNGASS Report * GFATMReport * Regular Information Systems Updates In addition to these periodic informationproducts, N A C would also respondto specific and ad hoc informationneeds o f its stakeholders. Each o f the periodic informationproducts i s described below: - 80 - Annual HIV/AIDS M&E Report : The purpose o f this report is to provide a comprehensive overview o f Malawi's response to HIV. This will be done by reporting on all indicators contained inNAC's national HIV/AIDS M&E system, and by providing key observations and guidance for future implementation. The person inN A C who will be responsible for this report i s the N A C M&E Officer, with key support from the Heado fPlanning. The report will be compiled during January and February each year, intime for the HIV/AIDSM&E Report Dissemination Seminar inMarch o f the same year. The timingo fthe report i s procedurally linked to NAC's annual work planning andbudgetingcycle to facilitate usingthe information to guide strategic planning and coordination decisions. A draft report outline has beendeveloped. Ouarterly Service Coverage Report: The purpose o f this report is to provide a quick overview o f service coverage inthe previous quarter to better inform implementers and funders o f interventions, o f where gaps are, and how to maximise resource utilisation. The report will provide informationon coverage statistics per programme area, and will be based on the informationprovidedby N A C grantees and non-grantees inthe N A C Activity Report Form. The production o f this report will also ensure that N A C meets GFATMrequirementsinterms o f minimumreporting standards, as well as reporting to its basket donors. This report will be compiled on a quarterly basis, within one month o f receipt o f data from FMA. A draft report outline has been developed. UNGASSReport: Malawi is a signatory to the 2001 Declarationof Commitment at the UnitedNations Special Session on HIVIAIDS (UNGASS). Part o f this Declaration o f Commitment includes a set o f indicators that the Government o f Malawi has agreed to report on to UNAIDSon a periodic basis. Therefore, the purpose of this report i s to provide periodic updates on Malawi's progress inthe fight against AIDS, by reporting on the 12 specific indicators definedinthe UNAIDS Guidelinesfor the Construction of CoreIndicators. All 12UNGASSindicators have been included inthe log frame for Malawi HIV/AIDS M&E systemto ensure that the data collection and analysis for the UNGASS indicators form part o f the regular M&Eprocesseswithin NAC. This report will be compiled on a biennialbasis by the N A C M&EOfficer, with technical support from the in-country UNAIDSoffice. The format o f this report will be based on format providedby UNAIDS. GFATM ReDort: the NAC, as part of its legal commitment to the Global Fund, is requiredto submit an annual report to the GFATM. Inaddition to reporting on milestones for the six program interventions supported by the Global Fundallocation ina particular calendar year, the report will also cover: i)Status o f the epidemic inthe region; ii)Status o f the epidemic inthe country; iii)NAC's response inpreventing further spread ofdisease; iv) Unexpectedresults and lessons learnt; and v) Reporting on all GFATM indicators (these have beenincluded in the national N A C M&E log frame). Regular InformationSvstemUpdates: All M&Ereports producedbyNAC (Annual HIV/AIDS M&E report, Quarterly Service Coverage Report, UNGASS report, and GFATMreport) will be available on NAC's website for electronic download (inPDF or M S Word format). This will ensure that N A C stakeholders will be able to access up-to-date information. All indicator data will be updated as and when new data becomes available. Once indicator data has beenupdated, it will be submitted to the Malawi Socio-Economic Database (MASEDA) administrator for update on the National Statistical Office's systems. -81 - Malawi: NationalHIV/AIDS Logical Framework LEVEL, AREA, AND CORE INDICATORS DATA SOURCE OBJECTIVE Reduced HIV incidence % of people who are HlV-infected(by age group (15 - 79, 20 -24 Sentinel surveillance & and 25 49), gender, and residence)(GFATM) - 2nd generation surveillance Syphilis prevalence among pregnantwomen (by age group (15-19, 20 - 24 and 25 -49), Sentinel surveillance and residence) (GFATM) % of HlV-infectedinfants born to HlV-infectedmothers Formula-based estimate Improved quality of life of those % of orphans and other vulnerable children to whom Population-based survey infected and affected community support is provided (by gender and residence) (e.g. DHS, BSS, CWIQ) Ratio of currentschool attendanceamong orphans to that Population-based survey among non-orphans, among 10-14year-olds(bygender and (e.g. DHS, BSS, CWIQ) residence) % of sexually active respondentswho had sex with a Population-based survey non-regular partner within the previous 12 months (by (e.g. DHS, BSS, CWIQ) gender, residence) % of people reporting the consistentuse of a condom during Population-based survey sexual intercoursewitha non-regularsexual partner (by (e.g. DHS, BSS, CWIQ) gender, residence and age (15 -24,25-49)) (GFATM) Median age at first sex among 15-24year-olds (by gender, Population-based survey (e.g residence) (GFATM) DHS, BSS, CWIQ) %of young people aged 15-24who had sex with more than Population-based survey (e.g one partner in the last 12 months (by gender, residence) DHS, BSS, CWIQ) Increased knowledge of HIVIAIDS % of young people aged 15-24who both correct/y identify Population-based survey prevention ways of preventing thesexual transmissionof H/Vand who (e.g. DHS, BSS, CWIQ) reject major misconceptions about H/V transmission(by gender and residence) (GFATM) % of people in general population exposed to HIV/AIDS Population-based survey media campaign (by gender,type of employment and (e.g. DHS, BSS, CWIQ) res'dence) Decreased stigma and discrimination 00 of populat on expresshg accepting attitJdes towards POPUat on-basedsmev among general population towards PLWHlAs (by gender andievel of education) II(e.g. DHS, BSS, cwiaj PLWHAs Information, Education. and Communication number of hours aired (by type of iiediaj Report Improved, standardized, comprehensive, and effective IEC strategy I # of HIV/AIDS brochureshooklets produced and number of I Quarterly Service Coveraae copies distributed Report Promotionof Safer Sex Practices % of schools with teachers whohave been trained in IIMOEST Inspection Reports (ABCs) life-skills-basedH/V/A/DSeducation and taught it during the Reduced high-risk sexual behaviour, last curriculumyear(by type of school (primaty/secondaty, especially among priority groups such school proprietor (public / private) and school location (rural / as youth HlVlAlDS education (by gender and whether they are Report - 82 - LEVEL,AREA, AND CORE INDICATORS DATA SOURCE OBJECTIVE #of condoms distributed to retail outlets (Le. for selling) or to Quarter Service Coverage clinics for free distribution (per district, relating distribution to Report population size in district) Data from social marketing agencies #of condoms dispensed to end user (by type of institution) Supply Chain Manager Prevent.on of Motner-to-Cnild % of Wtpregnant women receivinga completecourseof Census Data Transmission ARVprophylais to reduce the risk of MTCT(by type of HMlS Annual Report Reduce0 motner-io-cni d (vertical) provider) (GFATM) transmission of rilV # of health facilities Drovidinaat least the minimum Dackaae HMlS Annual ReDort of PMTCT services in the p& 12 months, by location . I % of pregnant women who have been counselled in PMTCT, I Quarterly Service Coverage tested and received their serostatus results (by age group (15 -24.25-49)) Report HMlS Annual Report % of pregnant women that have been tested, who are HIV Quarterly Service Coverage positive (by age group (15 -24,25-49) Report HMlS Annual Report % of HIV positive Dreanantwomen who have been urovided Quarterlv Service Coveraae with 3 month supply alternative infant feeding ' Report % of pregnant women offered PMTCT who are referred for Quarterly Service Coverage care andsupport services (by district) Report STI Treatment and Prevention % ofpatients with STls at hea/thfacilities who have been IIIIHealthfacility survey Improved management and reduced diagnosed, treated, and counselledaccording to national incidence of STls other than HIV yearsand older) (GFATM). - management guidelines (by gender and age (>20, and 20 - . oo of nealthfaci it es with STI arugs n stocd and no STI arLg Drug Stock Supply Report stock outs of >1 week within last 12 months #of STI cases seen at health facilities (by type of case (new Quarterly Service Coverage case or referred partner) and by gender) Report HMlS Annual Report Blood Safetv. lniection Safetv. and % of health facilities that apply national guidelines for blood Healthfacility survey Health Care Waste Manaaement screening, storage, distribution & transfusions (by district) Improved blood safety, injection safety, and health care waste management %of health care facilities that apply national standards for Health facility survey infection prevention and health care waste storage (by district) %transfusedblood units that have been screened for HIV NBTS report according to national guidelines in the past 12 months Voluntaw Counselina and Testing %of districts where VCT sites (integrated or stand alone) are HMlS Annual Report Improved access to ethically sound located as per national guidelines (evew 8 kms in rural VCT services areas, and'l site for evity 10 000 peopie in urban areas) #of clients tested for HIV at VCT sites and receiving result I Quarterly Service Coverage (byage(15-24,25-49)andgender) Report - 83 - LEVEL,AREA, AND CORE INDICATORS DATA SOURCE OBJECTIVE Ar S Treat an Clinical Care (incl. ARV Therapy) Quarterly Service Coveraue Increased access to improved and therapy(By age group (< 20 and 20 and older), gender and Report comprehensive health treatment for by type of health facility (public/private)) (GFATM) persons infected with HIV % of AIDS cases managed for 01s (by gender) (GFATM- HMlS Annual Report but different wording) % of health facilities with drugs for 01s in stock and no stock Drug Stock Supply Report outs of > 1 week in last 12 months (by district) % of health facilities where ARV services are being offered Drug Stock Supply Report with no ARV drug6 stock outs of > 1 week in last 12 months (by district) % of detected TB cases who have successfully completed the HMlS Annual Report treatment (by gender and by type of TB) Community and Home-based #of households receiving external assistance in caring for Quarterly Service Coverage Care and Support adults who have been chronically ill for 3 or more months Report during the past 12 months (by residence and type of help) Improved quality of life for PLWAs and affected communities # of persons enrolled at PLWA organisations (by gender, Quarterlv Service Coverage PLWA organisation and age (15 -24,25-49) Report #of community home based care visits (by residence and by Quarterly Service Coverage tvue of visit (clinician /volunteer)) Report I, Area 3: HlVlAlDSImpactMitigation Obi Improvethe indivi and ffected by HI Suuuort for Orohans and Vulnerable #of orphans and other vulnerable children receiving Quarterlv Selvice Coveraae Children (OVC) care/support in past 12 months (by type of support Report Increased social, financial and legal (psychosocial, nutrition, financial) and gender) support for orphans and vulnerable children A of community inliatives or commbn ty organ'zations Quarterly Service Coverage receiv ng support to care for orphans (by d strict) Report A of (orphaned) chiloren whose schoo fees are paid for at MOGCS school fee registers seconoaly school eve (by gender) Sectoral Mainstreaminq % of large private companies andpubl~insriturions that have Workplace survey Increased level of resources, effort, H/V/A/DSworkplacepolicies and mainstreaming and coordination to respond to the programmes (by type of inst tution (pLb idprivate) and by HIV/AIDS epidemic in all sectors of type of expend ture) (GFATM) the economv # and % of employees and their spouses in the public and Quarterly Service Coverage private sectors that have been reached by interventions Report defined in their employers' workplace policy (by type of institution (oublic/Drivatesector)) CaDacitvBuildina and Partnershius Amount and % of overall funding received bv the NAC that IS FMA Financial Manaaement Increased capacity and participation ir granted to CBOs, local NGOs, internationalNGOs, FBOs, System Report decision-making and action among all government, private sector, educational institutions and organizations engaged in the national international organisations in the last 12 months (GFATM) response to the HIV/AIDS epidemic #of CBO alliances created by the NAC or in which the NAC NAC database participates in order to increase demand for and supply services to taraet oouulation (GFATM) - 84 - LEVEL, AREA, AND CORE INDICATORS DATA SOURCE OBJECTIVE when the grant proposal is receivedto when funding is System Report -Report National Management and Amount of funds spent on H/V/A/DS(by category of UNAIDS/NCPI Financial Commitment expenditure and funding source (government,civil society Resource Flow survey Improved national commitment, and donor agencies)) leadership, and management of the national responseto the HIV/AIDS epidemic National CompositePolicy lndex (by questionnaire NCPl Questionnaire component) #of times in which the NAC decision-making structures NAC meeting minutes operate to review progress data or to decide program management issues (# of meetings, aaenda, list of participants, decisions made) (GFATM) Dissemination of annual publication, the National HIV/AIDS National HlVlAlDS M&E To generate empirical data and M&E Report, by NAC at the annual NAC M&E dissemination Report informationthrough biological and seminar (by sector) behavioural surveillance, research, programme monitoring, and financial monitoringthat will direct HIV/AIDS prevention, care and support, and imoact mitioation efforts. time (by type of partner) Annual sentinel sutveiilance has been completed on time by National HlVlAlDS M&E MOHP Report Development of a National HIV/AIDS Research Strategy National HIV/AIDS M&E Report Development of functioning, accessible research inventory National HlVlAlDS research database that registers HIV/AIDS-related research database implemented in Malawi % of HIVIAIDS-related research studies in Malawi that are in National HlVlAlDS research the national HIV/AIDS research database (by programme conference - 85 - - 86 - - 1 51 P r" - 87 - Additional Annex 14: District Government and HlVlAlDS MALAWI: Multi-Sectoral AIDS Project (MAP) Background At the district level, there is currently no statutory department or unitto deal specifically with HIV/AIDS. Inmany districts, District AIDS Committees (DACCs) were formed prior to the Decentralization law. These DACCs were ad hoc committees made up o f various directorates o f national ministries along with some community members. They have n o allocated staff or operating budget and have relied on ad hoc funds from the National Government, Local Government Departments and external partners. Some DACCS have been constituted as subcommittees o f statutory committees, but these have generally been under the Health-related committee and have not been seen as multi-sectoral groups. In most cases, de facto coordinators were district health officers who were given D A C C coordination as an additional task. Although many districts have identifiedHIViAIDS as a key priority, inpractice it has not always featured strongly inthe activities o f districts, often due to a lack o f dedicated resources. Some DACCS have produced District AIDS Plans and some activities are occasionally funded by districts and local partners. The main source o f capital funding at the district level -- -- the District Development Fund(DDF) does not include provision for HIV/AIDS, and it i s not clear whether any District Governments (DAs) set aside 2% o f the ORT budget for HIV/AIDS this fiscal year. All local authorities were encouraged in a recent circular to have a budget line for HIV/AIDS, to be funded from their own revenues. To reinforce this recommendation, the Decentralization Secretariat i s planningto integrate HIV/AIDS and gender into support for the District Planning system. The idea i s to develop a manual for integrating HIV/AIDS into district planning and to conduct training inthis regard. Wayforward -pending questions (policy) Recent research and experience indicate that a number o f elements are key to effective local government responses to HIVIAIDS. These include leadership and advocacy by councilors and chief executives/mayors and the existence o f a well-resourced coordinating unit reporting directly to the chief executive that provides the institutional home for the HIV/AIDS program. To bring such a framework into existence inMalawi, will require certain policy and operational issues to be addressed relating to the role and structuring o f the DACCs: (i) possibilityofestablishingtheDACCasastatutoryauthority (ii) possibilityofestablishingthepostofDACCCoordinatorwithinthedistrictcivilservicestructure (iii)optionsforfundingthisposition(includingprosandconsofdonorfundsforthispurpose) (iv) clarifying the reporting responsibilities o f the chief executive and other sector directors inrespect o f HIV/AIDS (v) the inclusion o f HIV/AIDS indicators inthe performance evaluation o f district sector department officers (vi) the fundingmechanisms for supporting the DACCS andDistrict AIDS Programs The N A C has started to discuss these policy questions with the Decentralization Secretariat, the Ministry o f District and Local Government, and the Department for HumanResource Management (DHRMD). The answers given to these questions will shape how support for HIV/AIDS activities at the district level should be structured. - 88 - Wayforward -pending questions Cfunctions) Experience from other countries shows that the local levelunit (DACCs or a successor entity) should have a coordination mandate, rather than an implementation mandate (except in so far as workplace programs for district authority staff are concerned). This coordination mandate i s key, since district departments should be integrating HIV/AIDS into their sector plans at district level rather than have it seen as a separate activity. For example, districts could engage inthe fight against HIV/AIDS inthe following ways: a. Leadership/Advocacy (councilors, chief executive/mayor) b. Internal workplace programs (staff) c. External service delivery i. integratedplanning(eachdepartmentcandosomethingwithintheirfunctionalarea) d. Coordination function - across departments, between levels o f government, with external partners ii.healthsystemcontinuumofcare e. M&E f. Channelingfundsto CSOs andassociated fiduciary responsibilities Stakeholders operating at the district level believe that districts could be engaging directly ina. through d. above, ifthey were to receive support and assistance fromNAC. Iti s generally felt that the functions ine. and f.above will require considerable capacity within a district, and that this should thereforebe considered a medium to long term objective. Wayforward -pending questions Cfinancing) At a financial level, decisions are required as to the most appropriate mechanismfor channeling funds to districts for HIV/AIDS activities. There are a number o f options which can be considered singly or in combination: i)GOM funds earmarked for HIV/AIDS (the 2% HIVIAIDS ORT allocation), ii)N A C funds for AIDS programs channeled directly to the district DDF,iii)N A C funds for AIDS programs channeled directly to DACCs, iv) etc. The Ministryo f Local Government's preference i s to use the DDFmechanism, providing ifnecessary a "ring-fenced" window for HIV/AIDS to reduce riskso f fungibility (there is also a provisionfor separate accounts for donor funds).New internal audit procedures and newly appointed district financial managers are expected to reduce risks (apparently funds can (and have) beenfrozen and repaid where there is misappropriationo f funds). As long as AIDS activities are inapproved District Development Plans (DDPs), procedures are not overly cumbersome. Wayforward -pending questions (capacity building) Inorder to determine what support strategy mightbeneededto enable districts to performthe functions identified above, an assessment o f capacity would be helpful in establishing a baseline and identifying where capacity-enhancement might be most needed. Such an assessment should also recommend the resources (staffing and budget) that DAs/DACCs would need to undertake these activities: Coordination between departments . Coordination with external partners Linksto local leaders, centralministries andN A C . Training andmaterialsdevelopment * Establishing workplace programs * Supporting integratedplanning Disseminating good practice - 89 - * M&Eand tracking coverage * Obtaining and managing D A C C HIV/AIDS funds * Channeling AIDS funds to departments or external partners (for AIDS) programs (where capacity exists) Linkage with theNAC GrantsFacility The Grants Facility o f the NAC i s the instrument through which the scale-up o f service delivery for HIV/AIDS i s to be effected nationally, at district level, and at the local level. Inview o f the current weakness o f existing districts and DACCs, and the needto clarify basic policy, function, and financing questions regarding organization o f AIDS activities at the district level, the NAC has adopted a two pronged strategy: (i) inorder to increase outreach inthe short term, umbrella organizations will be contractedto act as intermediaries inproviding funds and technical support to smaller CSOs; (ii) over the medium term (within 3 years ?),Districts with sufficient capacity will take over this grant-making and technical support role from the umbrella organizations. T o ensure that the districts and DACCs (or their successor committees) do in fact have the capacity to take over the full list o f functions described earlier, two types o f support are envisaged. First, the umbrella organizations will be required under their TOR to work with the DACCs to build their capacity to disseminate information, to coordinate responses among partners, and to eventually take over the direct contracting o f CSOs. The latter could be accomplished through inclusion o f DACCs inprocesses such as appraisal, approvals and monitoring o f sub-project grantees such that they can learn what fiduciary responsibilities are required. Second, a capacity support strategy for districts would be developed and carried out, based on the capacity assessment o f the districts and DACCs described above. T o facilitate this process, the N A C i s considering appointing a D A C C Liaison Officer responsible for supporting DACCs in the fight against HIV/AIDS. This person would be responsible for liaison with central bodies (such as the MDLGand Decentralization Secretariat) as well as for coordinating support to the DACCs (including the necessary TA for the capacity support strategy). DAs/DACCs will be able to submit project proposals to the N A C for district level responses, if these are based on the DDPs. Links with MASAF-funded Activities Under MASAF's main program interventions, a participatory rural appraisal (PRA) i s conducted by district staff and used to identify a community's top development priority. While HIV/AIDS may be identified as a priority problem inthe community, if it i s not the first priority, M A S A F does not support an extended PRA to develop specific proposals. Ifthe district technical team working with M A S A F could share community PRAs with the relevant N A C grant facility umbrella organization, it would enable the umbrella organization to identify and establish contact directly with those communities who have expressed HIVIAIDS as a priority. Under MASAF's SSP component, vulnerable groups (including those affected by HIV/AIDS) can apply for funds on a demand-driven basis through a CSO acting on their behalf. There i s a negative list o f activities and an indicative positive one, including feeding schemes and income generating activities. The appraisal team for such proposals i s chaired by the District Social Welfare Officer, and may include members from relevant sector ministries,NGO/CBOs, and the DACCs. After approval, M A S A F publishes inthe newspaper all sub-projects that it is funding by district. NACgrants facility umbrella organizations, working with the DACCs intheir area o f intervention, should monitor M A S A F approvals - 90 - of SSP grants, inorder to maintain a comprehensive perspective on HIV/AIDS activities and partners operating within each district. Summary of Next Steps The following actions were identifiedby the NAC and key LGpartners as beingon the critical path for increasingthe local government responseto HIV/AIDS: (i) Conductacapacityandneedsassessmentinthedistrictsforstrengtheningdistrictresponsesto HIV/AIDS. (ii)AppointaDistrictLiaisonofficerinNAC (iii)Prepareapolicyoptionspaperandreachagreementonpolicyissues(DACCinstitutionalstructure, staffing, legal basis, financing mechanisms.) (iv) Develop strategy for implementingLGHIV/AIDS Responses, based on (i) above (v) Develop TORSand contract T A to implement strategy i.e provide support to DACCS to implement HIV/AIDS programs. (vi) ImplementProgramo f Capacity Buildingfor DACCs inDistricts With respect to (i) the NAC is inthe process of drawingup TORSfor such a capacity assessment above, which would be funded from the N A C basket. This assessmentwill be complementary to a study by UNDP o f capacity needs in 9 districts. Together, these assessmentswill identify the needs o f DACCs and how they should be strengthened.Next step: finalize TOR and recruit consultant. Basedon the findings o f the district level capacity assessments, the N A C would like to contract a single consultancy to conduct items (iii), and (v) above. The consultancy would needapproximately three (iv) weeks to complete. This consultancy would be financed by N A C but could be supported under the UNDP or a combination o f this and/or basket funds. A District Liaison Officer would ideallybe inplace inN A C to work with the consultant on (iii), (iv) and (v). Next Step:NAC to develop TORSfor consultancy to conduct (iii),(iv) and (v) above, usingcapacity assessments as key inputs. Buildingon the outputs ofthe previous consultancy, NAC would like to contract an implementation support agency to work on a 2 year program o f capacity buildingin districts to respond to HIV/AIDS, harmonizing efforts with the UNDP programin9 districts and other partners working inthis area. N A S A : NAC to include capacity buildingsupport contract inthe first year Annual Work Plan, andinitiate recruitment when TOR are available for the program. - 91 - Additional Annex 15: Health Care Waste Management Action Plan MALAWI: Multi-Sectoral AIDS Project (MAP) 1.0 INTRODUCTION The Health Care Waste Management Action Plan has been developed within the framework o f the national HIVIAIDS and infection prevention program whose objectives are to contribute to the reduction o f HIV/AIDS prevalence and to reduce impacts o f HIV/AIDS on infected and affected people, through a community and multisectoral approach. The Health Care Waste Management Plan was developed based on an assessment o f Health Care Waste Management (HCWM) in29 Health Facilities o f Malawi. Health care services in Malawi are provided by three main institutions: the Ministry o f Health and Population (MOHP); the Christian Health Association o f Malawi (CHAM); and the Ministry o f Local Government. Health services are provided at three levels: primary, secondary and tertiary. The country has 504 health care facilities, which include central hospitals, district hospitals, rural hospitals, private hospitals, health centres, maternity units and dispensaries. In 1998, the health staff comprised 6,699 agents. 1.1 Context: The assessment found that the main constraints in H C W M are: - The institutional and legal framework i s weak: HCWM i s not a priority in the national health policy, and the institutional framework i s marked by a lack o f national strategy, clear responsibilities, specific guidelines and procedures inH C W M . - Organization, collection and treatment o f H C W are deficient: In spite o f remarkable efforts in some health centres, the organization o f HCWM by health facilities leaves a lot to be desired: absence o f reliable data on amount o f waste produced; n o persodteam responsible for H C W issues; insufficient protective equipment for staff; lack o f H C W segregation; inadequate pre-collection, collection and storage containers; unsustainable H C W treatment systems; and inadequate financial resources. - Knowledge and good H C W M practices are generallv insufficient: Several socio-professional categories (hospital staff, collection staff, scavengers, people using recycled objects, etc.) come into direct contact with H C W and are at direct risk for HIV/AIDS contamination. Generally, medical staff are relatively conscious o f the risks associated with H C W manipulation, even though most o f them were not trained in HCW management. Ward attendants, ground staff and cleaners (responsible for the removal and emptying of wastes dustbins within the health centres) have little awareness o f the impacts and effects o f bad H C W management. Health workers responsible for collection generally have a low level of education. Most o f them work in poor hygienic and protective conditions: not enough safety equipment, etc. Informal scavenging and recycling activities inthe garbage dumps are opportunities and sources o f income for poor people. Due to their very low level o f education and precarious living conditions, it i s difficult for them to understand the dangers related to waste scavenging and handling. The general public needs information about the dangers related to the materials collected from HCW, especially people using recycled products and those giving and/or receiving health care at home. - Private companies are not involved in H C W M : In Malawi, no private companies are involved in solid waste collection (City Assemblies perform this function). For external transportation o f HCW, - 92 - the inexistence of specialized companies constitutes a major constraint for the health centres in need o f external treatment. - Financial resources allocated to H C W are not sufficient: Solid waste management suffers from lack o f financial support from the state and local governments. Inhealth facilities, financial resources are generally allocated more to clinical services than to waste management. Inorder to addressthese weaknesses, ahealthcarewastemanagementplanofactionwas developed. 2.0 THE HCWM PLANOF ACTION 2.1 Goal: The goal o f the Plan o f Action (POA) i s to prevent and mitigate the environmental and health impact o f H C W on health care staff and the general public. 2.2 Objectives: (i) to reduce infections due to HCW (ii) to improve service in H C W M and mitigate the impacts o f H C W o n individuals and communities (iii) to establish a well-managed multi-sector institutional framework for co-ordination and implementation o f H C W M measures 2.3 Components: Measures advocated inthe H C W M plan have been structured around the following components: Objective1:Improve the institutionaland legal frameworkfor HCWM Activities: Set up a structure for co -ordination and follow up o f the HCWMplan develop regulations for H C W M develop technical guidelines for H C W M Objective2: Train the hospitalstaff and the HCW handlers Activities: Develop training programs Train trainers Train all staff working in health care waste management Evaluate implementation o f the training program Objective3: Improve HCWMin healthfacilities Activities: Regulate H C W M inthe health facilities Supply the health facilities with materials and equipment for H C W M Promote the use o f recyclable materials Set up procedures o f control in H C W management Allocate financial resources for H C W M activities - 93 - Objective 4: Makethe generalpublic aware of the riskslinkedto HCWM Activities: Informpublic o f dangers linkedwith HCW and reuse o f scavenged materials Ensuresound HCWMinthe household (home based care) Objective 5: Support private initiativesandpartnership in HCWM Activities: Informprivate companies o f the businessopportunities insolid waste management Set up framework andpartnership betweenpublic sector and private sector inH C W M Objective 6: MonitoringandEvaluationof HCWMplan Activities: Follow up the execution and evaluate the H C W M Plan 2.4 Treatment and elimination systems A comparative analysis, taking into account economic and technical criteria, resultedin the following treatment recommendations : -- modern incinerators inCentral /national and district hospitals because o f their fairly low cost; local incinerators (built with local material) inhealth centres and urban health posts becauseo f their -- very low cost and small quantities o f HCW produced inthese facilities; pit latrines inrural healthposts because of very low HCW production; stabilized sides o f pits and bottompits for health posts. All solid waste cannot be incinerated. Inappropriate incinerators as well as technical infeasibility o f complete combustion for certain wastes (plastic, chemical and radioactive products, mercury, heavy metals, etc.) can generate air pollution. For this reason, incinerators are recommended inthe action plan as part o f a waste segregation strategy at the source, in order to greatly reduce the infectious wastes and restrict the contamination o f other non-contagious wastes (papers, plastics, pipes and syringes, etc.). All types o f wastes shall not be incinerated. Selective sifting will be used to send all non-contaminated wastes towards more classical treatment systems (disinfection, burial, garbage dumps), so that only the contaminated or risk-based wastes (needles, etc.) will be incinerated. These categories o f wastes do not emit toxic products (or very few), especially dioxins and mercury. Moreover, the system allows total melting o f needles which are the most feared vectors for the accidental transmission of HIV/AIDS. In health centres located in district and rural areas, the quantities o f health care wastes produced are very small. If segregation i s respected, the volume to be incinerated will be insignificant. In addition, the promotion o f the use o f non-chlorinated plastic containers will help reduce pollution stemming from incineration. In order for institutions to meet waste management standards, the following alternative options are proposed: chemical disinfection; safe land-filling or burial within hospital grounds (if appropriate area i s available). Other systems (autoclaving, microwaves) are not recommended because they are very expensive and require highly qualified staff for operating. For liquid wastes, chemical disinfecting i s the most effective way o f treating infectious wastes. A combined system would be recommended (disinfecting and septic tank) for Regional and rural health - 94 - facilities. In the central hospitals, owing to the important volumes of water involved, it i s preferable to choose a physico-chemical treatment, including a disinfecting post. However, this system requires more detailed study interms o f feasibility. 3.0 ACTION PLANFORIMPLEMENTATION 3.1 ProgramSequencing Before such an elaborate plan i s implemented, certain activities can be started immediately, and others can be implemented over the mediudlong term. 3.1.1. Immediateactivities The following actions couldbe carried out immediately: set up a structure for coordination and follow up o f the POA elaboration and disseminationo f regulations and basic technical guidelines inH C W M elaboration o f H C W M training program elaboration of public awareness programmes planning o f start-up activities set up o f H C W Mprocedures inhealth facilities, includinghealth staff responsibilities 3.1.2 Short term activities: training o f trainers training all the stakeholders involved inthe H C W M diffusingpublic awarenessprogrammes assessmentof training program implementation halfway appraisal 3.1.3 MediumAongerterm activities: improvement o f H C W M inhealth facilities Supporting private initiatives and partnership inH C W M Monitoring and evaluation o f the H C W M plan 3.1.4 Timetable The following timetable shows the proposed implementation schedule of HCWM Plan over a five year period. II HCWMPlanActivities YR 1 IY R 2 I Y R 3 I Y R 4 I Y R 5 I Set UD a structure for coordination and follow up o f the POA II-__ I Planning o f initial activities --- Regulation o f HCW management _--__---__ Development o f technical guidelinesfor H C W M ---___-- Elaboration o f training programs and training o f trainers __-- Training for health staff active inH C W M ................................ I Public awareness (general public) I........................................... I 3.2 InstitutionalArrangements - 95 - 3.2.1 Improvementof the institutionaland legalframework The Ministry o f Health and Population (MOHP) will be responsible for the improvement o f the institutional and legal framework. These activities shouldbe conductedinthe first year o f the programme by the Department o f Preventive Health Services (DPHS) and through the Environmental Health Service (EHS). 3.2.2 HCWM improvement at healthfacilities EHS and Health facility managers will work together to introduce improved HCWM systems at health facilities. EHS will regulate the HCW management in health facilities, DPHS will supply health facility managers with H C W M equipment and materials, and execution o f H C W M improvement programs will be conductedby health facility managers and their staff. 3.2.3 Training The training activities should be led by the DPHS / EHS o f the MOHP. This structure has competence in H C W M and could be assisted by training institutions in this field. At district levels, management of training activities should be assigned to the District team. Specific training activities will be done in the first two years o f the programme 3.2.4 Public awareness The Health Education Unit of the MOHP will lead the activities intended to make the general public aware about HCW. At the local level, the District team will do the supervision. These activities will take place over a five year period, through district public meetings, radio and television messages, posters, etc. 3.2.5 Control and Monitoringof the POA At the local level, the control and monitoring ofHCWMplan implementation should be done by the District team which will ensure monthly monitoring, while the yearly follow up will be realizedby EHWDPHS. 3.2.6 Evaluationand supervisionof the POA The evaluation o f the H C W M Plan should be assigned to international consultants (under supervision o f EHS/DPHS), to ensure objectivity. This evaluation should be done halfway through (at the end of the 2nd year) and at the end o f the first phase program (year 5). 4.0 MONITORING PLAN Waste management i s a continual task demanding a permanent effort from each and every person at a health facility. Duringthe upgradingphase, the process o f H C W M needs to be investigatedand recorded. Once the requiredlevel i s reached, regular monitoring should ensure that the desired standard i s maintained. The monitoring o f H C W M i s part o f the overall quality management system. To measure the efficiency o f the H C W M Plan, as far as the reduction o f infections i s concerned, activities will be monitored and evaluated, in collaboration with concerned institutions: MOHP, MNREA, City Assemblies,NGOs, etc. A Logical Framework for the Plan of Action has beenprepared. - 96 - Additional Annex 16: Supervision Framework MALAWI: Multi-Sectoral AIDS Project (MAP) General The donors participating inthe pooledbasket find have agreed on a common approach to program oversight, and the Bank's supervision role has been designed within that framework. The common approach takes advantage o f the shift to joint work programming andjoint reporting to structure the external oversight relationship around monitoringprocesses that are N A C managed and N A C owned. In practice, this means that external oversight will be linked to the quarterly review schedule agreed with the NAC and to the annual stakeholder events planned for September and March each year (the first tied to the retrospective annual program review and the second to the annual M&Ereport). The second characteristic o f the joint approach to program supervision i s that no one donor partner has to provide the entire complement o f specialist skills required to oversee a multi-sectoral, multi-stakeholder, national program. Review Cycle The quarterly reviews (QRs) are scheduled to take place 45-60 days after quarter end (September, November, February, May). At their most basic, quarterly reviews will provide the opportunity to review progress inmeeting implementation targets defined inthe Annual Work Plan and Budget, as captured in the quarterly program monitoringreports (PMRs), and future funding requirements based on actual expenditures. However, some quarterly reviews will involve more in-depth reviews and assessments, as follows: November QR: i s the first QR meeting o f the fiscal year to review the P M R from the first quarter (July-Sept); this QR will also review the annual financial audit report and the annual procurement report which will have been produced for the previous fiscal year program (first such audit reports due inNovember 2004). February QR: i s the second QR of the fiscal year and combines both program review and forward planning tasks: inaddition to reviewing the 2nd quarter P M R (Oct-Dec), this QR will review the interim audit report and an interimprogramprogress report, both reports covering the July-December period; lastly, this QR will provide the first opportunity for NAC and partners to exchange views on the preliminary version o f the annual work plan for the next fiscal year. M a y QR: i s the thirdQR o f the fiscal year to review the 3rd quarter P M R (Jan-March); this QR will handle any final reviews tied to the annual planning cycle (ie, final presentation o f annual work plan, annual budget, annual procurement plan, etc.) and agreement on the final financing plan (basket shares). September QR: is the final QR o f the fiscal year; this QR will combine review o f the 4th quarter P M R and the annual program progress report on SMP implementation. Inaddition to the quarterly review cycle, two annual reviews will take place each year. InSeptember, the National Joint Stakeholder Review will be organized to review the N A C Annual Report on SMP implementation duringthe previous fiscal year (the quarterly review and the annual stakeholder review will be held back-to-back). InMarch, NACwill organize the National M&EDissemination Conference to share the findings o f the annual monitoring report and to flag trends, areas o f concern, and priorities for attention inmanaging the national response. As inthe case o f the September stakeholder meeting, the annual M&E conference will be combined with a NAC-donor meeting. The March NAC-donor meeting will be to review the revised draft annual work plan which takes into account preliminary donor - 97 - comments as well as recommendations from the annual M&Ereport. An important aspect of thejoint supervision approach o fthe basket partners is the agreement to rely on N A C monitoring processes as much as possible, rather than bringing in large teams o f donor staff and donor-hired consultants. Instead, the basket partners will rely primarily on the interim and annual progress reports produced by an independent team o f multi-disciplinary experts to be hired by NAC. These reports will complement the quarterly PMRs by strategically assessing programprogress, providing feedback on observed trends, and identifying areas requiring attention. Selection o f the multi-disciplinary team would bejointly agreed betweenN A C and its funding partners; the team would be accountable to N A C but its outputs would be shared with all financiers participating inthe September and February quarterly reviews. Inrecruiting the specialized firm to provide this service, priority will be given to maintaining continuity o f team members over a multi-year period inorder to build institutional memory o f the Malawi national program design and issues. Team composition would include both international and national experts, and would ensure coverage o f themes relevant to effective program implemen-ta-tion: institutional development; monitoring & evaluation; prevention, care and support; social development (impact mitigation, gender, young people, psycho social support); grant management, community participation, etc. Donor Coordination The members o f the donor group participating inthe pooled fundingarrangement have organized themselves so that the Country Office o f each basket partner (CIDA, DfID,NORAD, IDA) has a senior officer inpost responsible for program oversight who will participate in all quarterly review meetings and other meetings as may be required from time to time. The September and March meetings are expected to attract home office senior managers and specialized staff in addition to Country Office staff, as they provide the forum for strategic oversight and dialogue, linked to the Annual Program Implementation and the Annual M&EReports. Most earmarked donors participating in the program also have in-country representatives (CDC, Global Fund,UNDP) who will participate inthese regular review meetings. Bank Role Within the supervisionframework described above, the Bank will take the lead on monitoring the fiduciary systems which are key to smooth functioning and credibility o f the pooled basket arrangement. Inparticular, the Bank financial management/disbursement team will work with the N A C andFMA financial team to ensure that the financial management systems inplace are generating the quality and level o f expenditure data desired; they will also participate in quarterly reviews to ensure that P M R information submitted i s clear and complete. With respect to procurement supervision, the MOU signatories have agreed that the Bank will perform the prior review function for purchase o f goods, works, and services over agreed thresholds. To ensure that the review of procurement documentation and issuance o f "no-objections'' does not become a bottleneck to timely implementation, the regular procurement team will be complemented by an additional procurement-accredited member hired o n a part-time basis to be available "on-call'' whenever reviews are needed. Inadditiontothisfiduciary supervisionrole, the BankMAPsupervisionteamwillalsoplayaproactive, facilitating role in areas where the Bank as an institutionhas a comparative advantage: engaging the private sector inthe fight against HIVIAIDS, facilitating access to international pharmaceutical products for Malawi HIVIAIDS programs, and ensuring coordination with related initiatives (such as fiduciary reforms inthe health sector under the health sector SWAP and community-driven programs supported by MASAF). The Country Office MAP team will be strengthened by the addition of a full time team - 98 - member, supported by DfID,to provide technical expertise related to workplace programs, functional mainstreaming, and organizational attrition. The Global HIV/AIDS Unit at the Bank i s providing technical support for in-country Monitoring and Evaluation systems through "IMEST" (International Monitoring and Evaluation Support Team); this support will be carefully coordinated with assistance from other partners with recognized expertise and important programs inthis field (CDC, USAID, UNAIDS). FY04MissionPlanning Bank supervision during FY03/04 will concentrate on working with N A C and donor partners on putting inplace the procedures and working relations necessary for the basket mechanismto work effectively. Three missions are planned to coincide with the quarterly reviews inNovember 2003, February 2004, and M a y 2004 and will be staffed by members o f the financial management and procurement fiduciary networks. Additional missions inthe areas o f private sector engagement, district-level mainstreaming, community-driven interventions, and the health sector HIV/AIDS response will be organized independently o f the quarterly review process to combine with other planned missions to Malasi. The supervision budget for FY04 i s $165,000. - 99 - - 100 -