Document of The World Bank Report No: ICR00001131 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H1130) ON A GRANT IN THE AMOUNT OF SDR 3.5 MILLION (US$ 5 MILLION EQUIVALENT) TO THE KINGDOM OF LESOTHO FOR A HIV AND AIDS CAPACITY BUILDING AND TECHNICAL ASSISTANCE PROJECT June 30, 2009 Human Development 1 Southern Africa Country Department 1 Africa Region CURRENCY EQUIVALENTS Exchange Rate Effective June 1, 2009 Currency Unit = Lesotho Maloti 1.00 = US$ 1.557 US$ 1.00 = 7.9553 LSL FISCAL YEAR April 1- March30 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CBO Community Based Organization CCM Country Coordinating Mechanism CSO Civil Society Organizations GFATM Global Fund to Fight AIDS, Tuberculosis and Malaria GFCU Global Fund Coordination Unit HCTA HIV and AIDS Capacity Building and Technical Assistance Project LAPCA Lesotho AIDS Program Coordinating Authority LYFe Lesotho Youth Federation LIRAC Lesotho Inter-Religious AIDS Consortium MAP Africa Multi-Country AIDS Program MDG Millennium Development Goal MOFDP Ministry of Finance and Development Planning MOHSW Ministry of Health and Social Welfare NAC National AIDS Commission NDSO National Drugs and Supplies Organization NGO Non-Governmental Organization PAU Project Accounting Unit PU Procurement Unit TB Tuberculosis LCN Lesotho Council of Non-Governmental Organizations LENEPWHA Lesotho Network of People Living with HIV and AIDS TRP Technical Review Panel Vice President: Obiageli Katryn Ezekwesili Country Director: Ruth Kagia Sector Manager: Christopher J. Thomas Project Team Leader: Feng Zhao ICR Team Leader: Feng Zhao Principal Author: Musonda Rosemary Sunkutu KINGDOM OF LESOTHO HIV AND AIDS Capacity Building and Technical Assistance Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design........................................................... 2 2. Key Factors Affecting Implementation and Outcomes........................................................... 8 3. Assessment of Outcomes ...................................................................................................... 14 4. Assessment of Risk to Development Outcome..................................................................... 24 5. Assessment of Bank and Borrower Performance.................................................................. 24 6. Lessons Learned.................................................................................................................... 26 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners....................... 23 Annex 1. Project Costs and Financing...................................................................................... 29 Annex 2. Outputs by Component.............................................................................................. 30 Annex 3. Economic and Financial Analysis ............................................................................. 34 Annex 4. Bank Lending and Implementation Support/Supervision Processes......................... 36 Annex 5. Beneficiary Survey Results ....................................................................................... 38 Annex 6. Stakeholder Workshop Report and Results............................................................... 39 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ................................. 40 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ................................... 57 Annex 9. List of Supporting Documents .................................................................................. 59 MAP A. Basic Information HIV and AIDS Capacity Building and Country: Lesotho Project Name: Technical Assistance Project Project ID: P087843 L/C/TF Number(s): IDA-H1130 ICR Date: 06/29/2009 ICR Type: Core ICR KINGDOM OF Lending Instrument: TAL Borrower: LESOTHO Original Total XDR 3.5M Disbursed Amount: XDR 3.0M Commitment: Environmental Category: C Implementing Agencies: Ministry of Health and Social Welfare Cofinanciers and Other External Partners: B. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 01/30/2004 Effectiveness: 01/31/2005 Appraisal: 05/04/2004 Restructuring(s): Approval: 07/06/2004 Mid-term Review: 06/30/2006 09/25/2006 Closing: 12/31/2008 12/31/2008 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Substantial Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Not Applicable Quality of Supervision: Satisfactory Implementing Agency/Agencies: Not Applicable Overall Bank Overall Borrower Performance: Satisfactory Performance: Satisfactory i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Performance Indicators (if any) Rating Potential Problem Project No Quality at Entry None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 7 5 Health 60 58 Other social services 23 34 Sub-national government administration 10 3 Theme Code (as % of total Bank financing) Decentralization 13 13 HIV/AIDS 25 25 Health system performance 24 25 Other accountability/anti-corruption 13 13 Participation and civic engagement 25 24 E. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E. Madavo Country Director: Ruth Kagia Pamela Cox Sector Manager: Christopher J. Thomas Dzingai B. Mutumbuka Project Team Leader: Feng Zhao Julie McLaughlin ICR Team Leader: Feng Zhao ICR Primary Author: Musonda Rosemary Sunkutu ii F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The project's development objective is to increase the capacity of government and non- governmental institutions responsible for the national response to HIV and AIDS to utilize and assess the impact of funds received for HIV/AIDS. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 1 : Eighty (80) percent of the Global Fund grant has been disbursed by the end of the Project. Value 87 percent quantitative or 45 percent 80 percent (US$32.25M of Qualitative) US$34.31M Round -2 grant) Date achieved 12/01/2003 12/31/2008 12/31/2008 Comments The percentage of GFATM round 2 disbursements increased by 93 percent (incl. % between 2003 and 2008 as a result the overall rating by the GFATM improved achievement) from Unsatisfactory to Satisfactory making Lesotho the only country in Southern Africa with this rating. Indicator 2 : Thirty (30) percent of the Global Fund grant has been disbursed through Civil Society Organizations. Value quantitative or none 30 percent 47 percent Qualitative) Date achieved 12/01/2003 12/31/2008 12/31/2008 Comments (incl. % The project achieved more than 150 percent above the set target. achievement) (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Percent of established posts filled in the MOHSW Directorate of HIV/AIDS. Value (quantitative none 100 percent 56 percent or Qualitative) iii Date achieved 12/01/2003 12/31/2008 12/31/2008 Comments (incl. % This indicator was not met this was mainly due to high staf turnover and most achievement) positions in the BCC Unit in MOHSW were not filled. Indicator 2 : Percentage of posts filled in LAPCA (or its successor as Secretariat to the National AIDS Commission). Value (quantitative none 75 percent 92 percent or Qualitative) Date achieved 12/01/2003 12/31/2008 12/31/2008 Comments (incl. % The indicator was achieved by more than 120 percent above the set target. achievement) Indicator 3 : Fifty (50) percent of HIV/AIDS sub-projects financed through the Global Fund grant, have been implemented in a satisfactory manner. Value (quantitative none 50 percent 99 percent or Qualitative) Date achieved 12/01/2003 12/31/2008 12/31/2008 Comments (incl. % The indicator was achieved by more than 190percent above the set target. achievement) Indicator 4 : Annual reports on all key HIV/AIDS program indicators are produced and disseminated. Value (quantitative none 5 5 or Qualitative) Date achieved 12/01/2003 12/31/2008 12/31/2008 Comments (incl. % This indicator was achieved fully (100) and information was used to inform achievement) policy and strategy development as well as for programming. G. Ratings of Project Performance in ISRs Actual No. Date ISR Archived DO IP Disbursements (USD millions) 1 11/29/2004 Satisfactory Satisfactory 0.00 2 05/12/2005 Moderately Moderately Unsatisfactory Unsatisfactory 0.00 3 10/19/2005 Moderately Satisfactory Moderately Satisfactory 0.25 4 05/08/2006 Moderately Satisfactory Moderately Satisfactory 0.42 5 10/26/2006 Satisfactory Satisfactory 1.05 6 05/03/2007 Moderately Satisfactory Moderately Satisfactory 1.73 7 12/28/2007 Satisfactory Satisfactory 2.82 8 05/30/2008 Satisfactory Satisfactory 3.58 9 12/22/2008 Satisfactory Satisfactory 4.22 iv H. Restructuring (if any) Not Applicable I. Disbursement Profile v 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. In 2003, Lesotho with a population of 2.2 million1 was one of the worst-affected countries by the HIV/AIDS epidemic. HIV prevalence was unacceptably high at 31 percent2 of the adult population - the third highest HIV adult prevalence rate globally after Swaziland and Botswana. The epidemic was generalized with 330,000 adults and 27,000 children aged 0-14 years infected with HIV by 2002, the majority of the children having contracted the virus through mother to child transmission. HIV/AIDS was the leading cause of morbidity and mortality in the country, resulting in about 90,000 orphaned children aged between 0-15 years. Traditionally at- risk groups, such as commercial sex workers and their clients, truckers and migrant workers were no longer the only vulnerable groups. The majority of those infected had no easily identifiable risky behavior. The risk factors for the rapid spread of HIV infection included unprotected sex with multiple concurrent partners, especially among young adults, but the underlying reasons were multi-faceted, encompassing socio-cultural, behavioral, economic and biological factors. The key drivers of the epidemic included the social vulnerability of young people (mainly as a result of intergenerational sex and peer pressure) and women, migrant workers returning from South African mines and a continued culture of silence which did not speak out against stigma and discrimination. Stigma associated with the disease was high and a large proportion of those infected were still in denial. 2. The epidemic was firmly established in all segments of society leading to an unprecedented national disaster. The cohesive and communal tradition of the Basotho was being eroded as families disintegrated and unbearable burden was placed on communities due to premature deaths. The negative effects on economic development were already being felt as a result of decreased workforce productivity, increased absenteeism from work and school and spiraling poverty. Compared to neighboring countries like South Africa, Botswana, Namibia and Swaziland which all had similarly high HIV prevalence rates, Lesotho had limited national financial and human resources to effectively tackle the epidemic, which threatened to further undermine national development. The human resource constraint in Lesotho is a major source of concern. Lesotho has the worst health worker to population ratio in Sub-Saharan Africa with less than one health professional per 1,000 people. 3. In 2000, the Government adopted a National HIV/AIDS Strategic Plan and National AIDS Policy Framework. The Government embraced a broad partnership to the national response. However, there was minimal response at the time from the Government and private sector. Very few CSOs were engaged in HIV/AIDS, majority of whom were international NGOs, with the exception of the Lesotho Red Cross. In 2001, the Lesotho AIDS Program Coordinating Authority (LAPCA) was established with a mandate to coordinate, monitor and evaluate implementation of the national response. Unfortunately, LAPCA's ability to fulfill its mandate was limited by many factors, including a lack of autonomy, its inability to recruit a full complement of staff, and the dismissal of its Executive Director which left the institution leaderless for more than a year and the unclear legal status of LAPCA. Similarly, the HIV/AIDS Unit under the Division of Disease 1The population of Lesotho is now 1.7 million based on the 2006 Census. 2UNAIDS 2002 2 Control in the MOHSW did not have the status required to assume the level of responsibility to effectively lead the sector's response, despite its engagement in the fight against HIV/AIDS since the late 1980s. 4. In 2002, the Lesotho's proposal was successfully approved under Round 2 of the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) for a US $34 million grant ($29 million for HIV/AIDS and $5 million for tuberculosis) to scale up its fight against HIV/AIDS and TB over the next five years. The amount of the grant was more than the government overall annual spending in HIV and AIDS at that time. The Principal Recipient of the GFATM resources was the Ministry of Finance and Development Planning (MOFDP) with two sub-recipients as the main implementing agencies: LAPCA and the Ministry of Health and Social Welfare (MOHSW). LAPCA and MOHSW which were the main implementing agencies under the GFATM Round 2 grant as well as responsible to channel resources to other implementing agencies such as the CSO and the public sector. 5. By July 2003, the country's political leadership started giving greater attention to the HIV/AIDS crisis, and a strategy for "Scaling up the fight against the HIV/AIDS epidemic in Lesotho" was approved, followed by a decision to create a National AIDS Commission (NAC) that would oversee the national response to HIV/AIDS in Lesotho to replace the ineffective LAPCA. 6. Although the GFATM Round 2 grant was signed in October 2003, implementation was delayed due to problems in setting up implementation arrangements. Specifically, the restructuring of LAPCA and delay in recruitment of the Chief Executive as well as poor understanding of procurement procedures by the user departments postponed the effectiveness of the grant. The Lesotho's capacity to meet fiduciary requirements under the GFATM was not given a satisfactory rating by the Local Fund Agent (LFA). In addition, the institutional capacity of both the recipients and implementing agencies for the GFATM (within and outside government) needed targeted support and development in order to receive, manage, disburse and account for funds, implement effective interventions, and monitor the implementation and results of the GFATM. It was clear that effective implementation would need substantial capacity building and development of innovative ways to manage the grant. Rationale for Bank Assistance: 7. The support from the GFATM focused mainly on financing HIV/AIDS activities since GFATM is a financier and did not provide the kind of supervision or implementation support typically provided by the Bank or a bilateral donor. The challenges facing the Government of Lesotho at the time was how to effectively implement the large GFATM Round-2 grant given limited experience and capacity of the national institutions, which were still being defined at that time. There were only a few development partners in Lesotho, and many of them were not supporting HIV/AIDS. The Bank was seen as the only option to assist the implementation of the GFATM Round-2 grant. This project was a result of the Bank's response to the request of the Government and partners to provide technical and implementation support to ensure effective implementation of the GFATM grant. 8. It was clear that additional financial resources from the World Bank to directly support HIV interventions were not what was most needed, but that what was necessary was targeted support that could facilitate the effective utilization of the GFATM resources as well as leverage additional external financing. The most compelling justification for Bank involvement was its vast experience with project implementation and project oversight, something that is noticeably 3 absent in GFATM support. Therefore, the support to be provided both through the proposed project and Bank supervision was designed to respond to a critical gap in implementation capacity. 9. The project directly supported the Government of Lesotho's priorities as set out in the 2001 Poverty Reduction Strategy Paper, the Vision 2020 and the Millennium Development Goals (MDGs). The main objectives of the Vision 2020 include (i) the establishment of a long term vision for Lesotho beyond short-term plans and adjustment programs; (ii) exploring options for economic, political and human development to the year 2020; (iii) identifying alternative development strategies suitable for Lesotho; and, (iv) promoting open dialogue and consultation with socio-economic groups country-wide to create an environment in which the Basotho will actively participate in achieving the Vision. At the time of the HCTA project preparation, the 1998 Country Assistance Strategy (CAS) was 5 years old and didn't recognize the HIV/AIDS issue. However, there was acknowledgement in the subsequent dialogue of the devastating impact of HIV/AIDS in Lesotho and the implementation constraints faced in utilizing the Global Fund grant. Project preparation carried out in November 2003 was therefore responsive to the country context while still being detailed and technically robust. 10. The Bank's 2004-06 CAS had two overarching objectives: to achieve sustainable poverty reduction and to improve the country's competitiveness in order to support employment creation. A basic principle behind the design of the Bank's strategy was the sufficient resources that would be made available to Lesotho by donor partners and through direct investments if sound policies and improved management systems were in place. Achievement of the CAS objectives was dependent on the success of Lesotho's efforts to prevent and respond to the HIV/AIDS epidemic. The HCTA project fit in very well with the underlying principle of the CAS in that it focused on building capacity and would contribute to more effective mobilization of resources in Lesotho's national response to the epidemic. National HIV/AIDS Response: 11. The objective of the national HIV/AIDS program in Lesotho was to control the spread of HIV/AIDS and mitigate its impact on vulnerable groups, individuals, families, communities and the nation as whole. GFATM support to Lesotho was aimed at supporting the scaling up of interventions for prevention, care, treatment and impact mitigation, including the expansion of training and education, provision of basic care to those infected and affected by the epidemic, home based care, community mobilization and promoting civil society and public-private partnerships in the fight against HIV/AIDS. Disbursements of the GFATM grant were based on satisfactory performance in implementation. The HCTA project provided targeted support to enable the recipient and implementing agencies to effectively receive, manage and assess the impact of these funds. 1.2 Original Project Development Objectives (PDO) and Key Indicators 12. The project development objective is to increase the capacity of government and non- governmental institutions responsible for the national response to HIV/AIDS to utilize and assess the impact of funds received for HIV/AIDS. 13. The key project outcome indicators included: (a) Eighty (80) percent of the Global Fund 4 grant has been disbursed by the end of the Project, (b) Thirty (30) percent of the Global Fund grant has been disbursed through civil society organizations, (c) Fifty (50) percent of HIV/AIDS sub-projects financed through the Global Fund grant, have been implemented in a satisfactory3 manner, (d) Annual reports on all key HIV and AIDS program indicators are produced and disseminated. 14. Since this is a technical assistance project with a focus on supporting the implementation of the GFATM Round 2 grant, the key performance indicators (KPIs) were output oriented and designed to focus on the implementation status of the GFATM grant, which proved to be practical and easy to monitor. Specifically, Indicator (a) and (b) focuses on the quantity of disbursement, while (d) focus on reports produced rather than on the quality or impact of the disbursements or the use of data or information from the reports for policy or program design and implementation. KPI (c) focuses on quality. 1.3 Revised PDO and Key Indicators, and reasons/justification 15. There was no revision to the PDO and Key indicators. 1.4 Main Beneficiaries 16. As the project is a TA project, the beneficiaries included: (a) The Ministry of Finance and Development Planning as the PR, (b) Secretariat for the National AIDS Commission, (c) The Ministry of Health and Social Welfare, (d) Other government agencies, (e) Civil Society Organizations, and (f) Private sector. The ultimate beneficiaries are the people at risk of HIV or those affected by HIV/AIDS. 1.5 Original Components Component 1- Part A of the project: Strengthening the Ministry of Finance and Development Planning (MOFDP) Capacity for Overall Management of External Grant Funding for HIV/AIDS Programs. 17. The component supported the MOFDP to discharge its fiduciary and program management responsibilities as PR of the HIV/AIDS and tuberculosis grants from the GFATM. The project would finance technical assistance to strengthen the capacity of the Coordination Office in MOFDP to perform its oversight role under the GFATM grant agreement. In addition, MOFDP was supported to fulfill its accountability function with regards to the money disbursed to the sub-recipients, i.e. contracting long term technical assistance to strengthen coordination between the PR and its sub-recipients and ensuring timely submissions of annual work programs, approval of those work programs by the Country Coordinating Mechanism (CCM), facilitating disbursement of funds to the sub-recipient's account, ensuring adequacy of the financial controls and audits and timely reporting on the agreed M&E indicators to the GFATM. Specifically the project supported: (a) Enhancement of MOFDP's capacity to enable it to discharge adequately fiduciary responsibilities vested in MOFDP regarding the use of external resources granted to the Recipient to support implementation of HIV and AIDS programs within Lesotho; (b) Carrying out training activities, including workshops and seminars aimed at enhancing technical expertise within MOFDP for management of external financial resources 3B1 to A grant rating: optimal performance noted up to grant performance exceeding expectations. 5 granted by the GFATM to support the implementation of HIV and AIDS programs; and (c) Technical advisory services, equipment, acquisition of computers and related software, materials and supplies for the carrying out of the activities referred to in paragraphs 1 and 2 above. Component 2 - Part B of the project: Strengthening Ministry of Health and Social Welfare (MOHSW) Capacity for Adequate Implementation of HIV/AIDS Programs. 18. The component supported MOHSW to fulfill its role as a sub-recipient of the GFATM resources for implementation of HIV/AIDS and Tuberculosis interventions in the health sector. Specifically, the project would support: (a) Acquisition of technical advisory services to be deployed within the following MOHSW's units to enable it to deliver on its responsibilities through: (i) technical assistance to establish the new HIV/AIDS Directorate, (ii) provision of equipment and training to the Monitoring and Evaluation Unit, (iii) technical assistance to the Procurement Unit, (iv) strengthening of the Project Accounting Unit (PAU) with the provision of additional accounting staff and computers, and (v) support for leadership training to enhance the management capacity within the Ministry at all levels. (b) Enabling the National Drugs and Supplies Organization (NDSO) to fulfill its role for procuring and distributing health sector goods through: (i) medium term technical assistance to enable NDSO to conduct procurements using international competitive bidding, (ii) support to strengthen drug inventory management and security, (iii) expansion of warehousing capability of NDSO; and (c) Support the creation of a strong logistics system for laboratory services. Component 3 - Part C of the project: Strengthening LAPCA's Capacity for Adequate Coordination, Monitoring and Evaluation of National HIV/AIDS Programs. 19. Under this component the project was to finance engagement of a firm to provide technical advisory services to: (a) Strengthen LAPCA's capacity to evaluate HIV /AIDS programs submitted through LAPCA for financial support to be provided by the Recipient; (b) Strengthen capacity for District AIDS Task Forces to monitor implementation of HIV/AIDS activities supported with external funding and being implemented by Civil Society Organizations; (c) Increase capacity to: (i) monitor and evaluate HIV and AIDS activities being implemented at the district and sub-district levels and at the community level; and (ii) design and implement effective strategies aimed at changing behavior related to HIV/AIDS; and (d) Support technical ministries and other relevant public sector agencies to develop and implement activities aimed at combating the spread of HIV/AIDS within the Recipient's territory. Component 4 - Part D of the project: Strengthening Involvement of Civil Society and Private Sector Entities in Combating the Spread of HIV/AIDS. 20. This component was expected to support capacity building to enable civil society and faith based organizations, traditional institutions and communities to develop viable proposals implement such proposals and fulfill the reporting requirements for disbursements under the GFATM agreement. The formal and informal private sector would also be supported to increase their capacity to implement HIV/AIDS activities with resources provided through the national 6 program. Specific activities included: a) Formulation and implementation of programs designed to spur the involvement of civil society organizations and private sector entities established within the Recipient's territory in the fight against the spread of HIV/AIDS in an adequate and sustainable manner; and b) Establishment of an adequate coordination mechanism to monitor implementation of the programs referred to in paragraph 1 above. 1.6 Revised Components 21. There was no revision of the project components. 1.7 Other significant changes 22. A number on institutional changes occurred during the life of the project. These changes included: (a) the disbanding of LAPCA and establishment of the National AIDS Commission (NAC) to oversee the national response to HIV/AIDS by a 2005 Act of Parliament as well as establishment of the National AIDS Secretariat of NAC; (b) the upgrading of the HIV/AIDS Unit under the MOHSW Disease Control Division to a fully fledged directorate that will guide the technical aspects of the national response; (c) establishment of positions for HIV/AIDS, TB, Data Management and Information Officers at district level; and (d) increased participation of development partners and implementing partners in the HIV/AIDS response. 23. Lesotho received more resources for the national response for HIV/AIDS, Tuberculosis and Health Systems Strengthening from the GFATM with seven grants totaling US$133.71million 4 and further financial support from the US Government and CDC. The additional available resources further accentuated the importance of the project since implementation capacity, not money, was increasingly the binding constraint to the HIV/AIDS response. 24. A reallocation of funds was done in November 12, 2007 from the unallocated category to civil works. The reallocation was justified to take into account the increase in construction costs for the NDSO Warehouse and procurement of consultancies which were initially funded. As a result of currency fluctuation, implementation of planned activities under the project proved to be a challenge since most of the planning was done during the preparation stage. Most activities, especially consultancies were not adequately budgeted for. In addition, fluctuations in the exchange rates led to gross under-budgeting of activities especially activities requiring implementation through consulting services as well as capital expenditures such as rehabilitation of NDSO. This negatively affected implementation, however flexibility in reprogramming under the project helped to move resources where they were needed. 25. Most of these changes impacted positively on program implementation except for the currency fluctuation. By strengthening the capacity of various institutions, a number of programs were scaled up significantly. For example, there was rapid expansion and scaling up of implementation of major HIV/AIDS interventions such as the number of orphans registered in primary schools, Prevention of Mother to Child Transmission (PMTCT), number of people testing for HIV and receiving ART, number of people receiving Home Based Care (HBC), 4Total amounts include approved funding as at 23 June 2009. 7 workplace programs, life skill programs in schools and condom distribution (see table 1). 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Preparation: 26. During project preparation, the project team conducted a sound analysis of the financial support to the national response and technical capacities existing in government, civil society as well as the technical assistance needed from the development partners to the Lesotho national HIV/AIDS response. While Lesotho was to receive substantial support from the GFATM, it did not have sufficient implementation capacity. The extensive collaboration between various external partners providing HIV/AIDS support during the pre-appraisal mission allowed participation of partners based on their comparative advantages at the time. The joint mission defined the project scope and content, and partners continued to support preparation through contributing to the draft Terms of Reference for technical assistance consultancies. Development Cooperation Ireland (DCI) and the UK Department for International Development (DFID) supported institutional capacity assessments of LAPCA while WHO supported institutional capacity assessment of the MOHSW HIV/AIDS Unit. These assessments informed the TORs for the technical assistance provided under the project. Design: 27. The project design was innovative, simple and practical. The design (a TA project to complement GFATM funding to a country) preceded the dialogue between GFATM and the Bank to find complementary ways to work at country level -- a similar design to that under the HCTA project is being considered. The HCTA project design is uniquely different from all other World Bank HIV/AIDS projects. It exclusively focused on using the Bank's comparative advantage to complement the GFATM grants. The innovative design reflected a new partnership model which was never done before in the Bank and has been considered as an exemplary model both inside and outside the Bank. The project team was strategic in that they adapted the project design to the country situation. 28. The HCTA was a technical assistance grant with a medium-term focus to finance services, training, and goods in support of implementation of HIV/AIDS interventions to facilitate use of financial resources from the GFATM as well as to respond to Lesotho's peculiar human resource challenge. As a result, the project was designed to strengthen institutional capacity, address critical gaps in implementing capacity in government and civil society and provide technical support for implementation of external financial support to the country. However, the project design did not take into consideration the human resource attrition as a result of poor conditions of service and hence did not assess the human resource challenges in relation to retention of staff although this was beyond the scope of the project. 29. The development of the HCTA project took into consideration lessons learnt and experiences from Bank-supported projects in Lesotho such as the Second Population, Health and Nutrition Project that supported the establishment of the MOHSW HIV/AIDS Unit, and the Health Sector Reform Project (HSRP) Phase I- a health, nutrition and population project approved in June 2000. The HSRP phase 1 identified the needs within civil society for additional skills in HIV/AIDS project design, proposal writing, and performance monitoring and accounting, as well as supporting an assessment of pharmaceutical management. The results of these 8 assessments informed the HCTA project design. The project team also included examples and experiences from the region that assisted the government in clarifying implementation arrangements and responsibilities under the GFATM program. 30. However, the preparation and design of the HCTA project did not do a critical analysis of the TB program despite the fact that the financial support from the GFATM under Round 2 had a TB component including the recognized synergies between TB and HIV/AIDS, and that TB at the time was a major public health problem in Lesotho. In spite of this omission, the project team provided support and monitored implementation progress of the TB program during supervision missions. Subsequently, the TB program benefitted from technical assistance from the USAID- funded University Research Company (URC) Quality Assurance Project (QAP) and the Centers for Disease Control (CDC). Organization: 31. The implementing arrangements of the HCTA project were practical, which was aligned with the implementation arrangements of the GFATM grant. The project used and built capacity of existing structures and capacities within the Principle Recipient, the GFCU, in the MOFDP and the two sub-recipients, NAC and MOHSW. For example, GFCU was the implementing agency for the project. The GFCU was also responsible for overseeing both HCTA project and GFATM implementation and monitoring. The Project Accounting Unit (PAU) and Procurement Unit (PU) within the MOHSW, responsible for managing the funds of multiple, external financiers under the Health Sector Reform Program, also managed the IDA Grant while the procurement of contractual services and goods under the project was managed by the Procurement Unit of the MOHSW. The PAU and PU also provided financial management, disbursement and procurement services to the GFATM. 32. The implementation of the project and the GFATM grants experienced coordination problems between the different agencies during the initial stages. This contributed to the delay in procurements and disbursements under the project. Despite these challenges, the simplicity of the institutional arrangements, were appropriate and worked very well once capacities in the various components were built and the roles of the key agencies (i.e., the MOHSW, NDSO and NAC) were clarified. The improved coordination contributed to the acceleration of project implementation and improved rating of the overall project implementation. Government ownership, stakeholder involvement and a participatory process 33. The Project team consulted with key stakeholders and development partners. This facilitated Government ownership of the HCTA project and participation of key national stakeholders. The pre-appraisal mission was a joint mission undertaken together with UNDP, WHO, UNICEF, GFATM, DCI and DFID. The joint collaboration enabled participation from partners and subsequently, acceptance of the HCTA project by all partners. 34. The project team also worked with the United States Government (USG) and the Policy Project financed by USG that was supporting local NGOs working on HIV/AIDS, as well as other NGOs represented in the UNAIDS Expanded Theme Group and the CCM. The activities to be financed under the project complemented those supported by USG, DCI and the African Development Bank (AfDB). Risk and mitigation measures 35. There were no anticipated controversial aspects to the project. However, the overall risk rating was modest. The main risks identified at preparation and rated substantial related to the ongoing debates over the role of LAPCA, the NAC and the Secretariat's delay in appointments of 9 staff who would both manage and benefit from the technical assistance as well as the delay in procurement of consultant services that would address GFATM implementation challenges. These were important given the capacity gaps that were identified in the implementing agencies. The identified mitigating measures were appropriate. However, the risk of staff attrition after capacity development was not adequately assessed and has proven to be a challenge during project implementation. 36. Quality at Entry: There was no Quality at Entry assessment by the Quality Assurance Group of the World Bank (QAG). 2.2 Implementation 37. Although the first Implementation Status and Results Report was rated Satisfactory in November 2004, the project was rated Moderately Unsatisfactory in May 2005. Implementation of the project was delayed mainly as a result of delays in setting up implementation arrangements. The restructuring under LAPCA was delayed. The project effectiveness was not met by the initial deadline November 3, 2004 and was only attained by January 31, 2005 because of the delay in recruitment of the Chief Executive of the NAC. In addition, there was poor understanding of procurement procedures by the user departments. By May 2005 there had been no disbursements under the project resulting in the Moderately Unsatisfactory5 rating. However, the pace of implementation had picked up since then and the project ratings improved significantly subsequently. The mid-term review (MTR) was however conducted on schedule in September/October, 2006 and concluded that the HCTA had significantly contributed to the country's efforts in fighting HIV/AIDS and that the institutional arrangements were appropriate and had started to work well. There were no major adjustments and restructuring was not needed. The project development objective (PDO) was found to be relevant, appropriate, and practical. Further, it was clear that the project had begun strengthening the critical capacity gaps in the implementing agencies. Further, the fact that the PAU, PU and GFCU jointly managed HCTA and GF grants was instrumental in ensuring successful implementation of the project. Positive factors and events which influenced the project's achievements 38. A capable Project Coordination Team (GFCU): The long-term Technical Advisor to the GFCU helped to strengthen capacity of the GFCU to perform its oversight role and strengthen coordination capacity. GFCU is now able to engage constructively with sub-recipients such as the NAC and the MOHSW. 39. Effectiveness of long term Technical Assistance: The technical assistance was well integrated in the hosting agencies and helped to strengthen capacity of the agencies in coordination, program implementation, fiduciary issues as well as M&E. Consequently, the GFCU and the procurement and financial management units in MOHSW were more coordinated in their work than before although they fall under different ministries. The approving procedure and communication lines are clearer and more effective. The improved coordination contributed to acceleration of project implementation and disbursements under the GFATM and the HCTA project. 5Implementation Status Results Report (ISR) May 12, 2005 10 40. Successful model coordination between the CCM and the Bank: The GFATM parallel design of the GFATM and the HCTA helped to align the project to the GFATM support. In addition, there was good effective coordination between the CCM and World Bank task teams. The Bank team was kept informed on all issues that were discussed in the CCM and this helped the Bank to address project related issues in good time. In addition, the Government as well as development partners especially GFATM appreciated the Bank's flexibility in reallocation of resources between activities and tasks. 41. Use of Existing Implementation Fiduciary arrangements through the Sector Wide Approach (SWAp): The project used a SWAp arrangement. In particular, the fiduciary arrangements through the Project Accounting Unit (PAU) and Procurement Unit (PU) are jointly supported by the SWAp partners and implement procurement and financial management for all SWAp partners. Overall, the benefits of using these SWAp arrangements exceeded the opportunity cost for the GFCU to establish a separate PU and PAU. The two units played such unique roles when there were no implementation arrangements in place. However, creating separate systems within GFCU was not the answer particularly at that time. Negative factors and events which influenced the project's achievements 42. Poor coordination among the various components: The HCTA as well as Global Fund implementation experienced coordination problems during the early phase of the project, which contributed to the delay in procurements and disbursements under the project. The problems were mainly due to (a) the overall organizational changes in Lesotho which required adjustment and role-defining among the project agencies; (b) lack of staff and weak capacity as well as lack of clarity in roles. Even after their establishment, there were challenges of coordination because of the lack of clarity on roles among others; and (c) lack of experience in dealing with World Bank procedures. For example, GFCU was responsible for overall coordination but responsibility for financial management and procurement were in MOHSW. Time was lost trying to make a decision on who should take up leadership until the Operations Manager in MOHSW was appointed to coordinate the project activities and a Steering Committee with representation from the components was established (although it was later dissolved after fulfilling its mandate). Staffing challenges remain a pressing matter for Lesotho. The HIV/AIDS Directorate in the MOHSW has been unable to fill the behavior change communication (BCC) positions. In addition, the rate of staff turnover for the position of Director was very high. There were also challenges in coordination of capacity building in grant management for through the consultant. It was not clear whether Consultant was to provide TA to both NAC and MOFDP. Subsequently, MOFDP took a parallel capacity building approach. 43. Delay in Recruitment of the Chief Executive for the Secretariat of the National AIDS Commission. The only effectiveness condition was not fulfilled by the initial deadline of November 3, 2004; the deadline was subsequently extended to February 1, 2005 and the condition was met on January 31, 2005. The project however, lost three to four months of implementation6. 44. Weak capacity in Planning: Initially, lack of capacity in planning and budgeting including fluctuations in exchange rates led to gross under-budgeting of activities especially those which required consultancy services. In addition, resources allocated to capital expenditures such 6HCTA Aide memoires 11 as rehabilitation of NDSO were not adequate. 45. Inadequate capacity in Procurement: There were delays in procurements of Technical Assistance due to the lack of capacity in user departments to generate TORs acceptable to all stakeholders, reviewing Expressions of Interest (EOI) and Request for Proposals (RFPs), and the absence of clear institutional mechanisms to link and coordinate the various implementing agencies. This affected all tenders under the project leading to the Government losing the benefit of technical assistance for the first year of the project. 46. Staff shortage and high turn-over: This is a major problem for Lesotho that goes beyond the project and implementing agencies. The Government efforts have however paid off in maintaining the availability of key skills including: (i) replacement of international TAs with local TAs in the PAU and PU; and (ii) ensuring that the key staff remained unchanged during the implementation period. 47. The delay in creating implementation arrangements ­The HIV/AIDS Directorate in MOHSW, NAC Secretariat and GFCU were not in existence at project effectiveness. The delay in establishing these institutions greatly affected project implementation. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 48. Design - The first M&E plans to monitor Lesotho's national response were developed with support from GFATM mainly to monitor Global Fund support. Release of funds under the GFATM was performance-based. Although, the M&E system had a narrow focus, it worked well. The indicators that were needed to monitor the progress of the HCTA project were also available. The KPIs of the HCTA were deemed practical and appropriate. 49. Subsequently, with support from partners, a National HIV/AIDS Monitoring and Evaluation Plan was developed in 2004 and later the National HIV/AIDS Monitoring and Evaluation Plan 2006-2011 was developed with support from the project, Global AIDS Monitoring and Evaluation Team (GAMET) and other development partners. Capacity to implement the plans was built through: (a) establishment of the M&E Unit in NAC with key staff. International technical advisors supported through the GFATM and USAID helped to greatly enhance capacity in NAC while technical support through GAMET helped the Government to collect reliable data; (b) establishment of an M&E Unit under the HIV/AIDS Directorate in the MOHSW; (c) development of an electronic database system to improve management of the M&E system as well as strengthened M&E capacity at district level by training and recruiting a data officer for each district under NAC and an HIV/AIDS officer position in each district to coordinate HIV/AIDS activities and help with data collection under the HIV/AIDS directorate in MOHSW. In addition, ten information officers were recruited under the M&E Unit in MOHSW. Initially, coordination proved to be a challenge as several M&E systems were created without proper plans for coordination and integration of the existing M&E systems under NAC, GFCU, AIDS Directorate (MOHSW) and M&E Unit under MOHSW. Similarly, the support to M&E from development partners was uncoordinated and various vertical programs had their own systems that were not well integrated with the overall M&E system. Implementation: 50. Understanding among the partners to support one M&E plan prevailed. This strengthened the M&E component primarily within MOHSW. The M&E division under the MOHSW now comprises four units: Statistics, Epidemiology and Research, M&E, and Information, Communication and Technology (ICT). The division now has qualified staff. There is a coherent 12 team that works together and there has been an improvement in the quality of data from unacceptable to high quality data that can inform policy and program implementation. However, challenges of capacities in M&E still exist, with inadequate numbers of skilled people in the country. Utilization: 51. M&E guidelines and instruments for data collection that were developed are used effectively for data collection. The strengthened capacity has enabled the NAC together with MOHSW to fulfill their reporting tasks regularly on all key HIV/AIDS indicators including producing the Quarterly Progress Reports as well as Annual Joint Review Reports7. The capacity to assess impact has increased. For example, information and data from these reports has been used to inform development of key policy and strategy documents to guide the national response such as the National HIV/AIDS Policy, the National HIV/AIDS Strategic Plan (2006-2011) and the National HIV/AIDS Coordination Framework. 2.4 Safeguard and Fiduciary Compliance Safeguards: 52. The project was classified as Category C with regards to environmental impact because it was a capacity and technical assistance operation. There were no Bank safeguard policies triggered by the project. The project was not expected to generate substantial adverse environmental effects. The only work envisaged was to expand an existing warehouse on the grounds of the NDSO and the civil works that were done was in compliance with the safeguard requirements. Financial Management: 53. The Country Financial Accountability Assessment (CFAA) for Lesotho had not yet been done at the time of appraisal. Although the overall financial risk assessment was low, based on country experience, Lesotho was handicapped at the time by a serious lack of capacity in financial management. Support under the project to strengthen the PAU in the MOHSW was of the utmost importance. An accountant was recruited and on-the-job training in World Bank Procedures was conducted for project accounting staff to enhance their proficiency in accounting for the project funds. A computerized accounting system was put in place and quarterly financial monitoring reports were produced. Although, there were delays in finalizing the financial statements, no internal audits were produced during the life of the project. It is, however, encouraging to note that the annual external audit reports under the project were unqualified especially in the last four years and Management was committed to implement the recommendations from the external audit aimed at the improving the internal controls. Despite good progress in financial management, there are still problems especially in raising invoices and booking expenditures as well as errors in reporting especially among sub-recipients. The absorptive capacity is still low with high balances of unspent resources under the GFATM. This is still a challenge that requires optimal capacity building with constant follow up. Procurement: 54. The Country Procurement Assessment Report (CPAR) for Lesotho was carried out in 1997. However there was no progress in implementing the CPAR recommendations apart from 7The Author had an opportunity to review some of the annual progress reports and was satisfied with the quality of the reports. 13 increasing the Central Tender Board (CTB) prior review threshold. The CPAR had recommended several actions to be taken by the Government to make the national procurement systems more economic, efficient, transparent, and accountable. The procurement function was the responsibility of the Procurement Unit housed in the MOHSW which benefited from the existing systems and procedures supported by IDA, DCI and the AfDB. The capacity built in procurement through on-the-job training had a positive effect. The staff complement in procurement was increased, the procurement manual was revised to include operations of the HCTA project, and the hardware and software necessary for procurement processes was put in place. The tender panel meets regularly, good quality contracts are produced, the storage space in NDSO was increased and distribution of drugs changed from a push to pull system with timely deliveries, although forecasting still remains an issue. The contribution of the procurement technical assistance resulted in major improvements in management of procurement and the pace of implementation highlighting the value added by the TA. There have been no major issues on procurement picked up by the audit. Most procurement issues are easily resolved now. Capacity building for procurement has been highly successful. 2.5 Post-completion Operation/Next Phase 55. The design of the HCTA project was sound. At the time of the ICR, the Government of Lesotho and the Bank were developing a new HIV and AIDS Capacity Building Project which continues to focus on capacity building for both national and local level institutions. The project will have three components; capacity support to the national response, capacity support for the health sector, and capacity support for the decentralized response. The new project will also support a more intensive HIV/TB control and HIV/Sexual reproductive health (SRH) policies and programs to maximize impact. The approach that has been taken to broaden the focus and open up to wider capacity building to include more actors and other thematic areas is justified, and takes into consideration existing capacity gaps, lessons learnt under the HCTA project and best practices from other countries within the region. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Objectives: 55. The relevance of objectives is rated high. The objective of the project was highly relevant when the project was approved and is still highly relevant today for the following reasons: 56. (a) There is an increase in resources to the Government of Lesotho from the GFATM and other development partners and human resource challenges still remain a major area of concern. This calls for improvements in coordination and planning of the national response as well as an urgent need to improve efficiency of HIV/AIDS expenditures through the use of harmonization of donor support and joint systems and continuous skills improvement. 57. (b) Lesotho remains a hyper endemic country and continues to face a mature, severe and generalized HIV/AIDS epidemic with high case­fatality ratio. HIV population prevalence in adults has stabilized at 23.2 percent8. Lesotho currently has the fifth highest tuberculosis incidence in the world with 635 cases per 100,000 people. Eighty percent of HIV positive patients 8Lesotho UNGASS Country Report (2008) 14 are co-infected with tuberculosis, making it the leading cause of death for those with HIV9. An estimated 62 new infections and 50 deaths due to AIDS occur each day. The HIV prevalence level is still unacceptably high although on the positive side, the adult prevalence rate has not continued to increase even after the roll-out of the treatment program. More promisingly, the HIV incidence rate has shown sign of declining. The consequences of HIV/AIDS continue to be felt in all sectors and HIV/AIDS remains a major threat to national development. Productivity has declined affecting the national economy with high demands on the health care system. Mother-to- child transmission is high resulting in increasing numbers of OVCs. Life expectancy has decreased to almost 37 years10. The HIV/AIDS impacts are still felt, with 270,000 people estimated to be living with HIV, of whom 12,000 are children11 and about 110,000 orphaned children in 2007. This is very high for a total population of about 1.8 million12. The drivers of the epidemic include13: (i) a high frequency (24%) of adults with partners having concurrent multiple partners. Twenty (23) percent of new infections arise from sex with single marital or cohabiting partners while casual sex contributes to 65 percent of all new infections in adults; (ii) unprotected sex, especially among long term partners; and (iii) low male circumcision estimated at 15 percent. 58. (c) Sustaining the capacity built remains a major challenge. The staff turnover is very high. Almost every national is looking for greener pastures and to move on once they are capacitated. This has been compounded by the ease of movement between Lesotho and South Africa. Many of the staff that have been empowered with skills have either gone outside the country or have joined International Agencies and NGOs. Design: 59. The relevance of the design is rated high. The supporting pillars that included Grant Management, Procurement, Financial Management and M&E are still relevant today but need to be broadened beyond the GFATM to account for the fact that there are more development partners. The design was innovative in that it was directly in response to capacity constraints (as opposed to financial constraints) which many other AIDS project sought to address. Given this, the design was a departure from the usual MAP design but was fully appropriate for the country context. In comparison to other MAP projects the project was relatively simple although not without challenges. The project design remains relevant to meet the unique human resource challenges in Lesotho through providing the technical assistance required to implement the national HIV/AIDS program supported by the GFATM program as well as other development partners. However, the design did not take into consideration synergies between HIV/AIDS and TB to inform integrated implementation arrangements for HIV/AIDS/TB programs. Further, although staff retention was beyond the scope of the project, the project design could have incorporated an assessment on staff retention issues to provide guidance to Government on human retention strategies. Despite these weaknesses the relevance of design is rated "high". Implementation: 60. The MTR was done according to schedule and no changes to the project implementation institutional arrangements were made. The project closed on December 31, 2008. Cumulative expenditures by the closing date amounted to US$ 4.88 million of the original grant of US$5.0 9Ibid. 10National HIV/AIDS Strategic Plan 2006-2011 11UNAIDS, Report on the Global AIDS Epidemic, 2008 12Census 2006 13Gender and multiple and concurrent sexual partnerships in Lesotho, Preliminary report and findings, November 2008 15 million representing a disbursement rate of 98%. Most contracts have been fully executed and completed and achieved their intended purpose although there were significant delays in initial implementation. The HIV/AIDS context in Lesotho as stated above has evolved rapidly bringing new capacity building requirements and there is need to go beyond national level institutions and include local councils and district level CSOs and private sector organizations, which were not covered previously. Implementation of the project was faced with some challenges. These included (i) delay meeting the effectiveness condition, (ii) and problems of parallel implementation arrangements at district level, with NAC, Ministry of Local Government and Chieftainship (MOLGC) and MOHSW recruiting M&E Officers which need to be addressed and harmonized. The relevance of implementation is rated Substantial. 3.2 Achievement of Project Development Objectives 61. The overall achievement of the PDO is rated Substantial. The project has met all of the project development objective indicators. The capacity to implement and utilize resources under the GFATM and assess the impact of resources for the national response substantially increased for both Government and non-government institutions. The project support was complementary to other partners that were supporting the Lesotho national response. The project helped to put in place systems to ensure that funds disbursed were used for intended activities and that results were monitored, reported agreed as well as used for policy and program management. Capacity for utilization of funds: 62. The GFATM Round 2 HIV/AIDS grant aims to support the scaling up of interventions for prevention, care and mitigation in support of and in addition to the existing ongoing interventions being implemented as part of the National HIV/AIDS Strategic plan. The goal of the grant is to contribute to the reduction of HIV incidence among the Basotho particularly the youth and improve the care and support of the People Living with HIV/AIDS and those affected by the epidemic. 63. The grant aimed to reduce HIV prevalence by 15% in the population aged 15-49 in Lesotho from 31% to 25% by 2007. To achieve the objective, the grant included interventions that focused on three thematic areas (prevention, care and impact mitigation) as well as strengthening the coordination and administration of the various programs being supported Specifically, the following interventions were being scaled up: Prevention activities among youth through peer education Capacity of communities to respond to HIV ­ training of community health assistants, establishment of Voluntary Counseling and Testing sites in all 10 districts, comprehensive program for orphaned children Access to full spectrum of HIV care -- home care, psychosocial support, and provision of antiretroviral drugs (to 50% of those who need them by year 5 of implementation) Expansion of Prevention to Mother to Child Transmission activities to 18 health service areas Mitigating the impact of infection on people living with HIV by training programs on HIV and human rights, supporting networks of PLWAs Support to national and local government structures ­ coordination units set up at each Ministry and each district 64. The GFATM program experienced implementation problems. There was little activity before 2005 and GFATM Secretariat was going to issue a "No Go" recommendation for Round 2 grants. There were major issues relating to grant performance including: (a) The GFCU had demonstrated an inability to coordinate implementation efforts and failed to adequately absorb the 16 funds; (b) the Youth Education results were poor despite their importance to the goals of the program; (c) Implementation of the M&E plan was delayed for 2 years, the results were not properly verified and were therefore unreliable, and there was no Data Manager or M&E Specialist in place; and (d) there was no clearly defined procurement strategy, and procurement capacity was still weak. 65. Against this background, the HCTA project helped to build capacity by: (a) establishing and strengthening umbrella organizations to strengthen coordination among the CSOs and increase participation of the civil society in HIV/AIDS, (b) strengthening the NAC and the HIV/AIDS Directorate in the MOHSW through capacity building at district level and ensuring the appointment of the NAC Secretariat Chief Executive in 2005, (c) refurbishment of the NDSO warehouse to increase the storage capacity, (d) strengthening financial management, procurement and logistics management for drugs and other medical supplies in MOHSW, NAC and NDSO, (e) strengthened M&E systems in MOHSW and NAC at district and sub-district levels, (f) established the Grant Management Unit in NAC that helped to accelerate the disbursement of GFATM funds to CSOs. These capacity building activities resulted in increased capacity of the various implementing partners to utilize the GFATM resources and led to tremendous improvement in the implementation and scale up of the HIV interventions discussed above (see paragraph 63) and an increase in the coverage of key programmatic indicators (see Table 1). Table 1: Progress on Key Programmatic Indicators under GFATM Round 2 by December 2007 1. Key Programmatic Indicator Baseline* Target Progress % of the December 2007 target met 2. Total # of young people out of school taught life skills education 2,164 242,439 482,648 199% 3. # of condoms distributed to youth corners and general population 100, 000 14,000,000 22,174,675 158% 4. # of babies put on PMTCT treatment course 0 90% 71% 79% 5. HIV infected pregnant women receiving a complete course of antiretroviral n.a. 8,260 8,054 98% prophylaxis to reduce the risk of MTCT 6. # of pregnant women visiting an Antenatal PMTCT site counseled & tested n.a. 32,308 53,127 164% for HIV 7. # of PLWHA with access to community home-based care and support 16,500 65,000 109,748 169% 8. Establishment of ARV program and # of people receiving ARV treatment n.a. 20,000 22,728 114% 9. # of sites with functional VCT centers 3 55 102 185% 10. # of people counseled and tested for HIV n.a. 350,000 323,101 92% 11. # of registered OVC receiving basic package of care and support n.a. 73,500 70,198 96% 12. Total # of orphan and vulnerable children provided with financial support to attend n.a. 1,000 1,873 150% high school Source: GFATM Grant Performance Report August, 2008 * Baseline data provided is from 2002, except for indicators 3, 11, and 12, which are from 2003. 17 66. As a result, the project contributed to a sharp turnaround in the Global Fund portfolio from poor performance to very good performance. The Government nearly lost funding from the GFATM due to the noted delays in implementation during the initial phase of the GFATM support. It took two months for Government to re-negotiate the two grants under GFATM Round 2. The overall Grant by December 2007 had an "A" performance rating for programmatic achievements. More specifically, GFCU was required to report on 13 targets. Out of these, only 2 indicators achieved less than 80% of the targets. The average results achievement was excellent, reaching 115% based on the GFATM assessment. Although these achievements were seen during the latter part of project implementation, it was clear from the interviews that the HCTA project was appreciated by the country and all stakeholders. 67. The capacity to mobilize resources for the national program also increased as exemplified by the seven GFATM approved grants totaling US$ 133.71 million in support of Lesotho's HIV/AIDS, Tuberculosis and Health Systems Strengthening programs14 in addition to resources from the USG/PRPFAR totaling US$55 million. Ninety-four (94) percent of Round 2 GFATM Grants was disbursed by end of the project and 35 percent (US$46.94 million) of the total (US$133.71) approved GFATM funding to Lesotho was disbursed. The partnership brought in expertise that has greatly contributed to expanding and scaling up of the national response leading to the marginal improvements in some national outcome indicators. 68. There has also been noticeable movement of some national indicators in the positive direction. In 2004, the HIV prevalence rate in the 15-49 age group was 31 percent, compared to the 2008 population-based prevalence rate of around 23.2 percent15 -- stabilized at a high rate. However, the data cannot be directly compared since the 2004 data was from the antenatal sentinel surveillance while the 2008 data is from the demographic and health survey (DHS). There has been some modest achievements in other national indicators such as the decline in the annual HIV incidence in adults from 3.6 percent in 1995 to 1.7 in 200716 (a 53% change), the decrease in incidence in children by half in the last 8 years to 0.17 percent as well as the decrease in HIV prevalence among youth aged 15-24 years from 11% in 2005 to 8.9% in 200717. However, the female youth continue to be more susceptible to infection at 14.9% compared to male youth at 5.9%. These successes are due to the efforts of the Government of Lesotho with support from the development partners supporting the National response in Lesotho. Capacity to assess impact: 69. The project helped to build national capacity to respond to the HIV/AIDS epidemic and monitor and evaluated the status and trends in the epidemic in Lesotho. The main achievements included: (a) strengthening the national monitoring and evaluation systems by building capacity in MOHSW and the NAC as well as strengthening the community based M&E systems at district and sub-district levels; (b) Developing an integrated national HIV/AIDS Monitoring and Evaluation Plan (2006-2011) with a complement of qualified M&E staff. Annual reports with key indicators are now regularly produced; (c) improved capacity to conduct research studies and 14US$ 34.3 million under Round 2 (US$ 29 million for HIV/AIDS and US$ 5 million for Tuberculosis); US$ 39.8 million under Round 5 for HIV/ AIDS including health systems; US$ 3.8 million under Round 6 for Tuberculosis; and US$10.6 million under round 7 for HIV/AIDS and orphans and vulnerable children; and two grants totaling US$45.2million under Round 8 for HIV/AIDS including Health Systems Strengthening ($35.6 million) and Tuberculosis ($9.6 million) 15Lesotho UNGASS Country Report (2008) 16Analysis of HIV Prevention, Response and Modes of HIV Transmission (2007). 172005 and 2007 Antenatal surveillance survey 18 surveys such as the HIV/AIDS workplace and drug stock surveys, the antenatal epidemiological sentinel surveillance, survey on gender and multiple concurrent partnerships and the HIV prevention response, and the modes of HIV transmission study; (d) increased use of information and data from the M&E reports as well as the analysis of research and survey information to develop key policy and strategy documents; (e) development of guidelines on acute care and participant training manual that supports acute care short courses on opportunistic infections, provider-initiated testing and counseling, mental health and neurological problems, STI's and other genitourinary problems; and (f) development of ARV Treatment guidelines and guidelines on palliative care as well as symptom management and end-of-life care. The Principal Recipient and Sub-recipients have also been able to collect data on key indicators and prepare quarterly and annual including joint annual reviews reports. Key performance indicators: 70. Eighty (80) percent of the Global Fund grant has been disbursed by the end of the Project: This PDO indicator was achieved. The project disbursed 94 percent (US$ 32.25 million) of the Round 2 GFATM Grants18 by December 31, 2008, easily surpassing the 80 percent target for this indicator. Of these, 98.50 percent (i.e., US$28.88 million of US$ 29.31 million) for HIV/AIDS, and 67.4 percent (US$ 3.37 million of US$ 5 million) for TB was disbursed by the end of the HCTA project. The overall performance of the GFATM Round 2 grants was rated satisfactory by the GFATM Secretariat. The closing date for the Global Fund Round 2 Grants was extended from December 31, 2008 to June 30, 2009 to acknowledge the fact that it took extra time (eight months) to negotiate grant extensions following the threat by the Global Fund to discontinue grants due to poor performance in the first two years of the grant implementation. By June 22, 2009, US$ 46.94 million (35 percent) out of the overall total amount approved GFATM to Lesotho of US$ 133.71 million was disbursed19. 71. Thirty (30) percent of the Global Fund grant has been disbursed through Civil Society Organizations (CBOs, NGOs, FBOs and the Private sector for HIV/AIDS): This was met on target, 30 percent of the GFATM Round -2 grant disbursed to Civil Society Organizations. 72. Fifty (50) percent of HIV/AIDS sub-projects financed through the Global Fund grant have been implemented in a satisfactory20 manner: A total of fifteen (15) sub-projects were financed by the GFATM Round 2 grants by December 31, 2008, twelve of which were implemented by NGOs. Ninety-three (93) percent, i.e., 14 of the sub-projects were rated satisfactory during implementation. 73. Annual reports on all key HIV/AIDS program indicators are produced and disseminated (and used to inform allocation decisions): NAC together with MOHSW produced and disseminated annual and biannual reports as well as Joint annual review reports and M&E quarterly reports for the year 2008-2009 on all key HIV/AIDS indicators. These reports have been posted on the GFATM website and have been used to inform the development of key policy and strategy documents to guide the national response such as the National HIV/AIDS Policy, the 18The GFATM Round 2 grants (totaling US$ 34.31 million) are the basis for the assessment of the HCTA project performance. 19Total approved funding under all GFATM Rounds for Lesotho as of June 22, 2009. 20Satisfactory rating is B1 to A grant rating: Optimal performance noted up to grant performance exceeding expectations. 19 National HIV/AIDS Strategic Plan (2006-2011), the National HIV/AIDS Coordination Framework, and amending the labor code to take account of HIV/AIDS and the Legal Capacity of the Married Persons Act to guide the national response based on the principle of the "Three Ones". 74. Other Key indicators: (a) Percent of established posts filled in the MOHSW Directorate of HIV/AIDS. This KPI was not achieved. Only 56 percent of positions were filled against the set target of 100 percent. This is mainly because all three staff of the Behavior change communication (BCC) Unit moved to NAC at their own preference. (b) Percentage of posts filled in LAPCA (or its successor as Secretariat to the National AIDS Commission). The target for this KPI was achieved. Ninety-two (92) percent of were filled against the 80 percent target. Achievements by Component Component I: Support to the Ministry of Finance and Development Planning. 75. The project helped to capacitate MOFDP to take up the role of Principle Recipient. The long term technical advisor was very effective and helped to enhance the capacity of the Ministry. The Ministry took charge of the GFCU which originally was temporarily housed by the NAC. MOFDP through the GFCU is now able to perform its oversight role under the GFATM grant agreement and to discharge its fiduciary role as the GFATM Principal Recipient. In addition, the Ministry is able to engage constructively on a regular basis with the Sub Recipients, the MOHSW and NAC. Component 2: Support to the Ministry of Health and Social Welfare. 76. The project brought in positive changes to fulfill MOHSW's role as a sub-recipient of the GFATM resources in the health sector. Implementation of procurement, monitoring and evaluation, financial management as well as capacity building for NDSO was successful. The project was instrumental in upgrading the AIDS control unit into the HIV/AIDS Directorate with five units: Clinical Services, Behavior Change Communication, Disease and Program Monitoring, Health Informatics, and Counseling and Home Based Care. The Directorate now has the necessary staff, technical knowledge and inputs to lead and guide the health sector response as well as provide technical guidance to the national response. Ten HIV/AIDS officer posts were created at district level to coordinate HIV/AIDS activities and to help data collection. The HIV/AIDS Directorate still lacks critical staff on M&E and behavior change communication. The project provided equipment such as computers, transport as well recruitment of M&E staff and training of information officers. The project was instrumental in strengthening the capacity of the Procurement and Project Accounting Units. MOHSW is now able to provide periodic financial reports to the partners who pool funds under the health SWAp. Strengthening of management capacity worked well but could have performed better since most of the recommendations on improving management capacity were not implemented. 77. The capacity of the NDSO has been strengthened to fulfill its role for procuring and distributing health sector goods. The Warehouse was expanded by 1000m2 for storage of ARVs and is now fully functional with a total capacity of 3000m2 and the distribution of drugs changed from a push to pull system with timely deliveries although forecasting still remains an issue. The technical assistance has enabled NDSO to conduct procurements using international competitive 20 bidding. Specifically, NDSO has developed procurement manuals, has capacity in preparing bidding documents, and the tender board meets regularly and produces good quality contracts. The project helped to strengthen drug inventory management and security. Standard operating procedures and the drug supplies manual for health facilities have been developed as well as bin cards to monitor drug consumption patterns. Component 3: Support to Secretariat of the National AIDS Program. 78. The HCTA project helped to build capacity through the Grant Management Services Technical Assistance that assisted NAC to establish the Grant Management Unit as well as develop and coordinate the implementation of grant management services for HIV/AIDS. Specifically, the consultancy provided expertise to establish and operationalize procurement, disbursement and accounting aspects of the Grant Management Unit as well as building the necessary capacity for NAC and National AIDS Secretariat staff in development of policies and procedures for finance management, procurement and disbursement of funds to all stakeholders including CSOs, the Private and Public sectors; development of the behavior change communication strategy including training manuals and guidelines as well as building capacity of implementing agencies to move the strategy forward; development of financial and program monitoring tools including community-based M&E system; development of a procurement manual as well as project operations manual that have been in use by NAC staff and implementing agencies. 79. Although the timeframe for the consultancy was reduced to two years, the contract was successfully executed and completed as originally planned by August 2008. As a result of this TA, civil society organizations and line ministries have now been able to develop fundable proposals. The line ministries have mainstreamed HIV/AIDS implementation within the line ministries' plans. NAC is fully staffed and has put in place the necessary organizational systems. NAC is now able to evaluate proposals for funding, disburse resources to implementing agencies, monitor and supervise implementation and account for funds made available to implementing organizations. The sub- grant proposals tools and procedures have been institutionalized within the NAC systems. The district AIDS committees' have been strengthened and are now able to facilitate, coordinate as well as appraise proposals from the communities and line ministries. Component 4: Support for Civil Society and Private Sector Capacity Development. 80. This component supported provision of technical assistance to improve capacity of civil society organizations to assist in the implementation of GFATM programs. Although at the start of the project, there was evidence of civil society activity to improve the welfare of individuals, families and communities and to collectively confront and address the range of development challenges the country was facing, in many respects CSOs faced a lot of challenges including fragile engagement in developmental activities, fragmented implementation coupled with low capacity, unstable funding as well as a lack of an overall policy and legislation framework for civil society partnership with Government. 81. The civil society support consultancy was designed to improve the implementation of Global Fund grants in Lesotho. The consultancy helped to expand the range of CSOs partners at the district and local levels participating in GFATM programs and to improve the ability of these partners not only to receive and manage GFATM grants, but also to play a stronger, and more effective role in responding to the overwhelming burden of HIV/AIDS. Specific activities included: (a) building the capacity of the Lesotho Council of Non-Governmental Organizations (LCN) to undertake a Principal Recipient (PR) role under the GFATM Round 8 grant, (b) 21 providing support to the Lesotho Network of People Living with HIV/AIDS (LENEPWHA) to implement the capacity-building program as outlined in the organizational capacity assessment report, (c) providing support and advice to national umbrella bodies such as Lesotho Youth Federation (LYFe), Lesotho Inter-Religious AIDS Consortium (LIRAC) and the Lesotho Business and Labor Coalition on HIV/AIDS to assume leadership roles in implementation of GFATM grants, (d) providing assistance to the CCM Secretariat and the GFCU with preparations for the GFATM round 8 proposals and the new implementation arrangements required to support multiple PRs under the dual-track financing arrangements, and (e) facilitating a number of networking and exchange opportunities to solidify a common vision for civil society development amongst all stakeholders. 82. As result of this support, there is stronger recognition and support for civil society in the national response to HIV/AIDS; participation of non-governmental representatives in CCM deliberations significantly improved; and there was improved management and leadership capacity in national umbrella bodies involved in HIV/AIDS. For example, there was substantial involvement of NGOs and private sector entities in the development of the Global Fund Round 8 funding proposal. This was cited by the Global Fund Technical Review Panel (TRP) as a key strength of the Lesotho proposal. 83. To address the challenges of the HIV/AIDS epidemic in Lesotho, strong partnerships need to be built. The NGOs and private sector have shown the potential and have a very large role to play to expand and improve on the Government's efforts. The full potential of these partners will only be realized with continuous capacity development, maintaining the momentum that has been built, and strengthening networking and collaboration amongst all stakeholders towards a true multi-stakeholder response to HIV/AIDS. 3.3 Efficiency 84. Efficiency of implementation: The project experienced implementation delays at the early phase of implementation mainly due to: (a) the delay in restructuring LAPCA, (b) delay in recruitment of the NAC Chief Executive which was a condition of project effectiveness, (c) poor understanding of procurement procedures by the user departments, and (d) inadequate capacity to develop TORs for TA due to differences in opinion on the roles and functions to be performed under the TA contracts. However, the project helped to improve efficiency of public spending by strengthening implementation capacity of existing fiduciary institutions such as PU and PAU and outsourcing implementation to civil society organizations. Specifically, capacity was built in financial management, procurement and M&E within the NAC and MOHSW as well as strengthening individual capabilities for quality service delivery thereby obtaining better value for money. The GFCU is now able to easily review technical and financial reports from the sub- recipients and monitor their performance. Improved utilization of resources has helped to ensure sustained financing and use of cost-effective standards by the national program. However, there are still concerns on the adequacy of these resources to sustain people on ARV Treatment. 85. Efficiency of the returns to the investment: Prior to the HCTA project, disbursement of the funds under the GFATM Round 2 accomplished very little. In April 2005, when the World Bank funds became accessible, the GFATM grants had only disbursed US$4.42 million. The country was going to lose these GFATM approved grants unless implementation picked up. As stated above, with an investment of US$5 million the project provided technical assistance to build the capacity of key functions required for successful implementation of HIV/AIDS programs. Proper systems to ensure that funds were disbursed and used for intended activities including monitoring and reporting of results based on agreed plans were put in place. This 22 resulted in significant improvements in the utilization of funds as well as improving project performance and ability to access additional funding from the Global Fund totaling US$133.71 million for HIV/AIDS, TB and health systems strengthening. Although the project provided assistance towards implementation of interventions for HIV prevention and impact mitigation focusing on vulnerable groups using the GFATM Round 2 grant, due to the nature of the project design, the net present value of this specific investment aspect cannot be adequately represented in financial terms. Several benefits would however accrue to the nation from controlling the HIV/AIDS epidemic and mitigating its impact as demonstrated by the modest improvements in some national outcome indicators stated earlier (see paragraph 68). The economic productivity would be enhanced if the population was healthier and free of HIV/AIDS. 86. It is very clear that the project, at modest cost, helped to accelerate implementation and increase disbursements under the GFATM Round 2 grants. The overall efficiency is therefore rated Substantial. 3.4 Justification of Overall Outcome Rating 87. The project achieved its objective. Capacities in key functional areas in MOFDP, NAC, MOHWS and Civil Society organizations were considerably increased. The project focused on the beneficiary groups identified at appraisal. In addition, implementation focus was on achieving the development objectives and this has yielded demonstrable results. The capacity built has enabled the government to submit successful fundable proposals and additional resources under GFATM Rounds 5, 6, 7, and 8 have been mobilized. Lesotho now has seven approved grants with implementation under Round 2 having moved from an Unsatisfactory rating to a Satisfactory rating. The project outcome is rated Satisfactory based on High relevance, Substantial efficacy and Substantial efficiency. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 88. The HIV and TB epidemics have adversely impacted all aspects of national development. The demographic structure of the country is changing as large numbers of people die in their productive years creating a high dependency ratio. Economically, the epidemic disrupts capital optimization by striking at a quarter of adult Basotho who are critical labor inputs. Critical skill shortages were being felt in government services as well as business enterprises. One example is the lack of skilled manpower at district level for implementation of the ART program. The large burden of orphans and vulnerable children (OVCs) and other people living with HIV/AIDS has strained the social networks. The inter-generational spillovers are immense, as the OVCs are often deprived of access to education; and of good nutrition and health care that will equip them to deal with challenges in the future. Due to the nature of the design and activities, the project had no direct impact in these areas. (b) Institutional Change/Strengthening. 89. Institutional capacity strengthening contributed by the project was substantial through several organizational changes. These developments improved coordination among project agencies and had a positive impact on the implementation of the HIV/AIDS interventions. 90. Although the project has helped to build institutional capacity which had demonstrated effectiveness in key functions of procurement and financial management, M&E including capacities built in the Department of Social Welfare of the MOHSW and civil society organizations that has enabled these organizations to better serve vulnerable populations in line 23 with the Government's Social Welfare Policy, there are still institutional challenges that need to be addressed as given in the explanations throughout the report. (c) Other Unintended Outcomes and Impacts (positive or negative) 91. Increased numbers of partners and resources for HIV/AIDS Control: During HCTA implementation, the resources for HIV/AIDS increased significantly and the number of partners in the HIV/AIDS fight increased. For example, GFATM resources to the national response increased from US$34 million at project conception to US$133.71 million by the end of project closing. 92. The high turnover of staff for greener pastures within the country to international NGOs or international agencies or outside the country after capacity building reflects the project's success in building their individual capacity but may undermine the gains made in the national HIV response capacity building. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 93. Not Applicable. This is a core ICR 4. Assessment of Risk to Development Outcome 94. The risk to development outcome is rated Moderate. Although, there are major overall human resource challenges in Lesotho because of the high turnover of doctors and nurses migrating outside the country, especially to neighboring South Africa, the rate of migration for staff trained under the project has been very low at about 5 percent. Many staff empowered through the project have moved within the country to international organizations, other organizations within the public sectors or NGOs. For example, all the staff recruited under the BCC Unit in MOHSW moved to NAC because the conditions of service were better. This has weakened the capacity in MOHSW built under the project to support the fight against HIV/AIDS and has created capacity constraints which have been a challenge. Not all positions in the BCC Unit to date have been replaced. There is a need for commitment from the Government of Lesotho to harmonize the conditions of service to curtail this movement of staff between government institutions. Following an analysis on existing capacity gaps, the follow-on project (HCTA-II) has broadened capacity building to include more actors and thematic areas. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry 95. The Bank performance is rated Satisfactory. The project team prepared a well designed project in collaboration with Government, Donors and other Stakeholders. The project design addressed the need to strengthen the implementation of external funds. The Bank played a catalytic role in supporting an innovation of institutional capacity development i.e., for adequacy of systems, procedures as well as individual capabilities to improve service delivery. The team did a good analysis of the technical, social, environmental, fiduciary, economic and financial analyses as well as lessons learnt from other projects and countries with similar programs. The project objectives were responsive to the Government's National HIV/AIDS strategic plan and the institutional and implementation arrangements were aligned to the GFATM project. The purpose was to build capacity both within the Government and civil society to better target and 24 serve vulnerable groups. The team was inclusive in their consultations and collaborated very well with other partners in deriving evidence to feed into project preparation. (b) Quality of Supervision 96. The quality of supervision is rated Satisfactory. The supervision missions were issues and results oriented. The project team's collaboration efforts with the CCM helped to indentify and proactively manage emerging implementation problems. The midterm review which was carried out in September/October 2006 as scheduled was well prepared and highly participatory. The review focused on clarifying the roles of the various components to improve coordination and implementation among other things. (c) Justification of Rating for Overall Bank Performance 97. With an innovative project coupled with sound preparation and proactive supervision, the overall Bank performance is rated Satisfactory. 5.2 Borrower Performance (a) Government Performance 98. Credit is given to the Government of Lesotho who demonstrated commitment and provided an enabling environment for successful implementation of the HCTA project and GFATM program. Although, initial implementation of the project was delayed, this picked up once the roles were clarified and capacity built through the various components of the project. The Government has been able to put in place policy documents and strategies to guide the response as well as conduct surveys and analytical studies to generate evidence to inform the response. Government, however, has been slow to respond to the high staff turnover as well to try to curb the migration of skilled manpower although there are important developments and attempts to address these challenges through training, recruitment and improved remuneration as well as initiation of quality assurance mechanisms. The performance of Government is rated Satisfactory. (b) Implementing Agency or Agencies Performance 99. GFCU: The project capacitated the GFCU to provide the oversight and coordination role as Principle Recipient under the GFATM by ensuring that; (i) annual work programs are submitted on time and approved by the Country Coordinating Mechanism (CCM), (ii) disbursements of funds to the sub-recipients are facilitated, (iii) financial controls and audits are adequate, and (iv) reporting on the agreed monitoring and evaluation indicators is timely. The GFCU coordinated the implementation of both the GFATM grants and the HCTA project very well and was dedicated to achieving the objectives. The staff performance was excellent. The performance of GFCU is rated Satisfactory. 100. MOHSW: The project with additional support from other development partners successfully built capacity within the PAU, procurement Unit and M&E Unit and upgrading of the HIV/AIDS Unit as well as strengthen fiduciary systems. This enabled MOHSW to provide quality treatment and care to those infected by HIV/AIDS and to fulfill its role as a sub-recipient of the GFATM resources for implementation of HIV/AIDS and TB interventions in the health sector. The performance of MOHSW is rated Satisfactory: 101. NAC: The consultancy successfully capacitated NAC through the establishment of the NAC Grant Management Unit, which is now fully staffed and operational, development of National Behavioral Change Communication Strategy, strengthened capacity in community M&E at district and sub-district levels and mainstreaming HIV/AIDS in public sector ministries. NAC 25 has evolved into one of the leading stakeholder in the national response. The performance of NAC is rated Satisfactory. 102. CSO: Helped to improve coordination of civil society activities at the national level through dedicated NGO and private sector focal persons located in LAPCA. The project helped to build the capacity of the umbrella organizations such as LCN to take up the role of Principal Recipient under the Global Fund Round 8 and the LIRAC executive committee to take on the role of coordinating the Business and Labor Coalition on HIV and AIDS. The effectiveness in disbursements and efficiency in implementation to the CSO was quite high as demonstrated by the 30 percent of the GFATM Round -2 grant disbursed to Civil Society Organizations and the number of sub-projects (14 out of 15 sub-projects funded) with satisfactory implementation based on the GFATM rating as well as the expansion and increased coverage of key interventions (see table 1). The performance of CSO is rated Satisfactory. 103. The overall rating for implementing agencies is rated Satisfactory. (c) Justification of Rating for Overall Borrower Performance 104. Considering (a) and (b) above the overall performance of the Borrower is rated Satisfactory. 6. Lessons Learned 105. Use of established country-led systems is a good recipe for success: The successful strengthening of capacity in the project accounting and procurement units underscores the value of building on and use of existing systems. Strengthening procurement and financial management capacity had a positive impact and helped to accelerate project implementation. Moreover, it is commendable that the project worked with other health SWAp partners to use common fiduciary systems. 106. Effective management of technical assistance is an important ingredient to ensure achievement of sustained results in countries with human resource capacity constraints: The HCTA project has demonstrated that with limited resources, capacity building and leveraging resources from other development partners a lot can be achieved. However, caution should be taken to ensure that countries do not become over dependent on TA. In making a decision whether to import expertise or build capacity, the local context and ability of the country to employ or transfer skills from TA to local staff should be taken into consideration. 107. Streamlining institutional arrangements and roles of various components at design stage is a necessity for avoiding implementation delays: The project experienced effectiveness and implementation delays that resulted from poor understanding of procurement procedures by the user departments as well as differences in opinion on actual functions to be performed under the TA contracts. These can be addressed if capacity building needs are clarified before commencement of implementation, and procurement plans are developed during project preparation which clearly define the specific functions and expected results for proposed TA contracts. Individual TA provision should be evaluated for effectiveness in terms of capacity built in the process by the client entity (for example by MOFDP, NAC, NDSO, PAU, etc.). It is important to clarify roles among the players at design stage and provide for a steering body that would assist in addressing implementation challenges that may arise during project implementation. 108. Building successful partnerships at project preparation and appraisal stage is critical to 26 successful implementation of the project. Strong partnership between the Bank and other development partners was a critical factor in the design and delivery of the project. For example, the partnership between the CCM and the Bank facilitated problem solving during project implementation. 109. Sustainable Human Resources Retention requires long-term planning and ownership: Like many other countries in the region, shortage of skilled manpower is one of the biggest challenges facing the Government of Lesotho. Although, the project has helped to build capacity in government and non-government institutions, staff that are critical to delivery of services, i.e., nurses and doctors, migrate freely to neighboring South Africa. In addition, staff under the project that have been empowered have left those positions, moving internally to other institutions and staff at the district level have also moved to the capital city. The question that needs to be addressed for future support is how the Bank can support the Government to put in place innovative and affordable manpower development and retention policies and strategies to address the broader human resource challenges Lesotho is facing. 110. Create an enabling environment for long-term civil society development. The World Bank has tremendous influence and leverage in a country like Lesotho that is highly reliant on its support for sustainable development. The World Bank has greatly assisted the private sector in Lesotho by working for regulatory changes and other adjustments to create a more enabling environment for business development and growth. In contrast, the civil society sector appears neglected and its potential to contribute to economic growth in Lesotho is unacknowledged. This is a particularly large gap when one considers the amount of donor funds flowing to Lesotho to support the response to HIV and AIDS and the growing proportion of these funds that is now supporting local, non-governmental organizations and other civil society entities. These funds create employment opportunities and alternative futures for Lesotho's young people. Creating a more enabling environment for civil society growth and development, by, for exampling, reviewing and revising laws and policies governing such entities, would significantly improve the ability of the sector to provide effective responses to Lesotho's development challenges and to provide meaningful employment and professional development opportunities for Lesotho's future generations. 111. The HCTA project has clearly demonstrated that the technical assistance approach can achieve a lot with very little financing and what the Bank can do in a country like Lesotho with capacity challenges to improve the efficiency and effectiveness of donor financing. Under the current environment with a number of global initiatives providing substantial resources for HNP outcomes, this approach could be a valuable lesson that could be extended to other priority development areas such as climate change. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners 112. (a) Borrower/implementing agencies: (a) Borrower/implementing agencies: The Coordinator for the GFCU sent written comments on the draft ICR. It agreed with the assessment. She indicated that the support that was provided was not sufficient especially for the Civil Society to build capacity the community to assists the chronically ill as well as the OVCs. More efforts should have been made to strengthen logistics for communities to carry out their work effectively. While we agree with this assessment, this was beyond the scope of the HCTA project. 113. (b) GFATM: The Global Fund Portfolio Manager for Lesotho sent her comments on the project. She indicated that the GFATM was in agreement with the key findings expressed in the report, including the way forward for the future capacity building support by the World Bank to 27 Lesotho and that they endorse the ratings of the ICR, which are well deserved considering the whole period of the HTCA project. She made the following suggestions to improve the report: (a) To capture the extraordinarily huge challenges around the Round 2 grant implementation during the first 18 months (2004-2005), partly co-relating to the delays/conditions precedent to the commencement of HTCA as described (b) To provide more in-depth analysis of possible underlying causes for the variance in the HTCA financial allocations where the civil society did not manage to utilize the expected/planned funding by a significant margin. (c) The financial component of the HTCA grant does not appropriately capture the MOFDP lead modification of the grant support structure in Lesotho for the Global Fund, i.e. moving the financial management of the Round 2 grant away from the PAU in 2008 and establishing its own financial management structure within the GFCU of the MOFDP. Most comments have been taken into account in the revised version (c) Other partners and stakeholders ­ No comments received (e.g. NGOs/private sector/civil society) 28 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) 1. THE MINISTRY OF FUNANCE & DEVELOPMENT 0.37 0.24 0.65 PLANNING (MOFDP) 2. THE MINISTRY OF HEALTH & SOCIAL WELFARE 2.14 2.84 1.33 (MOHSW) 3. SECRETARIAT OF THE 1.38 1.65 1.20 NATIONAL AIDS PROGRAM 4 CIVIL SOCIETY & PRIVATE SECTOR CAPACITY 1.11 0.15 0.13 DEVELOPMENT Total Baseline Cost 5.00 4.88 0.98 Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.00 0.00 0.00 Total Project Costs 5.00 4.88 0.98 Front-end fee PPF 0.00 0.00 .00 Front-end fee IBRD 0.00 0.00 .00 Total Financing Required 5.00 4.88 0.98 (b) Financing Appraisal Actual/Latest Type of Co- Estimate Estimate Percentage of Source of Funds financing (USD (USD Appraisal millions) millions) Borrower 0.00 0.00 .00 IDA GRANT FOR HIV/AIDS 5.00 4.88 0.98 29 Annex 2. Outputs by Component Component 1- MOFDP: The MOFDP as the PR received funds from GF since 2004. The first disbursement received was $1,271,000 in January, 2004, and by December 2004, GF had disbursed US$4,419,252 out of the 1st year budget of US$4,177,000. The 2nd disbursement was received in December 2004 and PR had to accelerate implementation in order ensure that funds were absorbed and according to quarterly budget allocation. By end of 2005, the second year of Phase I, funds disbursed from Global Fund was to tune of US$7,984, 731 and commitments of US$912,926 making a total of spent by Phase I of US$8,897,659, out of the allocated total of US$10,557,000. However, due to the delays in implementation in Year 1 of Phase I, and other issues such 1) unsatisfactory capacity within the PR and therefore resulted inability to coordinate the SR and implementation; 2)data not being reliable due to M&E Plan not being implemented by PR, 3) PSM Plan role and responsibilities not clearly defined as a results activities being implemented not in a smooth and satisfactory way. Because of these issues, Lesotho nearly lost remaining funds for Phase II. In September, 2006, PR was able to address all issues and managed to sign Phase II agreement. To date funds disbursed by GF had reached 90% at US$ 22, 978,342.13 out of the budget allocated by end of December 2008 at US$27,597,789. By end of 2008, 30% of funds were distributed to NGOs, CBO, and Private Sector and the major part of funds went to the support of MOHSW supporting ARV treatment and OVC. It is worth to mention that the projects that were being financed through the support of GF had performed satisfactory , in terms of meeting their targets as agreed with PR, and reporting on a timely manner in order for the PR report to LFA. There had been challenges in relation to reports received from SR , but through trainings and bi-annual meetings between PR and SR these challenges were always addressed. In addition, capacity within the GFCU was strengthened. An overall M&E Coordination Plan, with manuals, systems, procedures, tools and data base; flowcharts for data clearly specifying institutional roles and responsibilities; an implementation plan and budget; and a plan for Orphans and Vulnerable Children (OVC) were developed. Equipment (2 computers with printers and a sedan motor car) were procured. 25 percent of office furniture were procured by the project. Component 2- MOHSW: The project strengthened MOHSW to provide access to quality care and treatment people living with and affected with HIV, implement the TB and to effectively fulfill its role as sub-recipient of the GFATM resources. Key outputs included: 1. Technical assistance to establish the new HIV/AIDS Directorate ­ Directorate is fully staffed with; Director ­ HIV/AIDS, Program Manager ­ Counseling and Home Based Care, Program Officer ­ Counseling, Program Officer ­ Home Based Care, Program Manager ­ HIV Treatment and Care, Program Officer ­ HIV Care, Program Officer ­ Pediatric HIV, Program Officer ­ ART, Prevention and Management of Opportunistic Infections. Training of staff at central and district level: Staff now able to effectively responding to the various challenges in the prevention, control and care of HIV/AIDS. Development of guidelines i.e., integrated Management of Adolescent and Adult Illness (IMAI), Acute Care Participant Training Manual, which supports acute care short courses on opportunistic infections, provider-initiated testing and counseling, mental health and neurological problems, and STI's and other genitourinary problems, Chronic HIV Care with ARV Therapy (Guidelines for health workers at health centre or clinics at district 30 hospital outpatients), ARV Treatment guidelines, guidelines on palliative care: symptom management and end-of-life care. Development of capacity in Planning: An HIV/AIDS Policy, National AIDS Strategic Plan and Annual Operational Plans. Provision of equipment and training to the Monitoring and Evaluation (M&E) Unit Training of staff in the M&E Unit through TA. Provision of Equipment ­ a vehicle for supervision of district health information offices. 2. PAU/PAU - initially established within the MOHSW to manage funds and procurements of multiple external financiers under the Health Sector Reform Program. Strengthening of the finance function in PAU: Recruitment and retention of qualified key staff i.e., Finance Manager and currently six Project Accountants On-the-job training Accounting procedures manual, customized to include the operations of the HCTA project. PAU capacitated and producing Financial monitoring reports (FMRs) such as Special Account Reconciliation Statement, Maloti Bank Account Reconciliation Statement, Project Sources and Uses of Funds, Uses of Funds by Project Activity, Contract Status Report, Project Progress Reporting, Procurement Reports although these were only produced during the field visits by the financial Management specialists and World Bank Missions. Production of project summary reports by category and monitoring and evaluation reports every quarter. Computerized Accounting Systems ­FINPRO accounting software Internal/External Audit - Although no internal audits were produced during the life of project, the external audits under the project were unqualified for the last 4 years. Strengthening of the procurement function in PU Recruitment of staff in Procurement Unit. No staff turnover for Procurement Manager , a Senior Procurement Officer, 3 Procurement Officers , an Administrative Secretary, a driver and a messenger. PU further strengthened by an additional eight storekeepers to cater for additional procurement of contracts. There are further plans to strengthen the Unit. Hands on training on procurement provided. Procurement Manual for health sector program customized to include the operations of the HCTA project. Improved Record Keeping System as well as Procurement Documentation Support for leadership training to enhance the management capacity within the Ministry at all levels 3. Leadership Training to senior management within the MOHSW provided through a consulting firm. A detailed cultural management analysis on senior management of the MOHSW, and recommendations to improve management practices made but were not implemented. Support to the National Drug and Supplies Organization The project successfully supported the National Drug and Supplies Organization to fulfill its role of procuring and distributing health sector goods. This has enabled the procurement department to operate more efficiently. 31 1. Capacity to procure health sector goods using international competitive bidding strengthened through the Research for Action (HERA) consulting firm 2. Creation of a Procurement Department was created fully staffed with Procurement Manager, 2 Assistant Managers, 4 Procurement Officers and a Procurement Clerk. 3. Development of a procurement manual and bidding documents. 4. Training of staff on procurement of health sector goods as well as continuous on-the-job training to the procurement staff through a Resident Procurement Advisor for one year. 5. Expansion of warehousing capability of NDSO an additional 1000 square meters was constructed in NDSO fitted with air conditioners, and is now fully functional. Additional warehousing facility of 1000 square meters provided some relief to the already constraint warehousing facilities of the organization. Support to strengthen inventory management and security at all hospitals Development of the Drug Supply Manual and the Lesotho Standard Operating Procedures (LESOPS) These procedures have provided guidance as to how health sector goods are to be received and distributed, e.g., an "Internal Requisition Voucher" was designed to facilitate the distribution of goods. Development of Supervision Tools to assist supervision teams in reviewing inventory management and security arrangements at the various hospitals. All hospitals both Government and CHAL now have the systems of Drugs Supply Management and the Standard Operating Procedures in place. Component 3- NAC Secretariat: The project successfully supported the National AIDS Commission in the following areas through a consulting firm Crown Agents by strengthening the NAC's monitoring systems so as to ensure sound output and process monitoring. Key outputs included: 1. Generated and managed proposals submitted for funding through LAPCA Establishment of the NAC Grant Management Unit, which is fully staffed and operational. Development of procurement manual (with the help of a part-time procurement specialist provided by the firm) 2. Strengthened the District AIDS Coordinators and the District AIDS Task Forces through regular training activities Provided assistance to develop community based monitoring and evaluation capacity for implementers at the district and sub-district levels by capacitating district staff and communities on the management of M&E systems as well as producing the Geographical Information System and distributing it to all stakeholders and districts. 3. Supported implementation by the civil society, private and public sector grant-recipients 4. provide assistance to public sector line ministries to develop fund-able proposal for mainstreaming HIV/AIDS and support their implementation 5. ensure that appropriate fiduciary safeguards and procedures are in place without constraining implementation 6. Development of the Behavioral Change Communication Strategy (BCC Strategy) whose goals were to: (i) Reduce the spread of HIV in Lesotho through prevention interventions; (ii) Provide equitable care and support for those infected by HIV; (iii) Mitigate the impact of HIV and AIDS such that it is no longer of public health, social and economic concern; and (iv) ensure that all Basotho will be able to achieve socially and economically productive lives free of the infection and its effects. Component 4 - CSO and Private Sector Development: The project supported capacity building to enable civil society and faith based organizations, traditional institutions and 32 communities to develop viable proposals implement such proposals and fulfill the reporting requirements for disbursements under the GF agreement. Specific outputs: Improved coordination of civil society activities Improved capacity in developing proposals and in implementation. Improved organizational capacities in implementation of HIV/AIDS programs supported by the Global Fund grants. Strengthened capacity for LCN Board and staff to take the role as Principal Recipient under the Global Fund Round 8. Strengthened capacity of umbrella organizations such as LIRAC and Business and Labor Coalition on HIV and AIDS. This facilitated a number of networking and exchange opportunities to solidify a common vision for civil society development amongst all stakeholders. (b) Results Framework and Monitoring Key performance indicator Baseline Target Best estimate YR-1 YR-2 YR-3 YR-4 Y R - Data Value at December (2004) (2005) (2006) (2007) 55 Source 31, 2008 OUTCOMES ­ PDOs 1. Percentage disbursements N/A 75% 94% 31% 73% 100% 49% 90% EFR 2008 of GFATM resources (monitored each quarter and cumulatively) 2. Percentage and amount of N/A 30% 30% 1% 32% 7% 14% 8% EFR 2008 financing disbursed through Civil Society (CBOs, NGOs, FBOs and the Private sector for HIV/AIDS) 3. Percentage of projects N/A 100% 93% 90% 79% 71% 86% 93% EFR 2008 financed under the GFATM which are judged to be implemented satisfactorily. 4. Annual reports on all key 0 5 5 1 2 3 4 5 Cumulative HIV/AIDS program indicators are produced and disseminated (and used to inform allocation decisions). 33 Annex 3. Economic and Financial Analysis The economic impact of HIV AIDS has been widely recognized in both low-income and middle income countries. The estimates of the macroeconomic costs of AIDS in African countries where the epidemic has been severe range between 0.3 to 1.5 percent of GDP annually. While specific analysis of the macro-economic impact of HIV and AIDS in Lesotho has not been conducted, the impact of the epidemic, in view of the high prevalence of the disease, increased vulnerability of the migrant miners returning from South Africa, and relatively small pool of human capital, is likely to be high. HIV/AIDS affects the most productive sectors of the population; young adults who are beginning to contribute to the economy. High adult mortality as a result of the epidemic would make households more vulnerable, stretch family and community coping mechanisms and lead to deteriorating living standards and perpetual poverty. The disease also weakens the mechanism through which knowledge and abilities are transmitted from one generation to the next by killing parents and leaving the children of its victims without one or both parents to love, raise and educate them. HIV/AIDS increases the risk and spread of other communicable diseases such as Tuberculosis in the larger population thus expressing a negative externality. A recent study21 using an overlapping generation's model applied to South Africa found that in the absence of AIDS, economic growth is likely to be modest with universal and complete education attained within three generations. Without addressing the spread of AIDS, however, the study found the "a complete economic collapse" will occur within three generations. Fighting HIV/AIDS by promoting behavior change to reduce transmission and improving access to care and support for those infected and affected is central to any effort towards poverty reduction in a country with high HIV prevalence, such as Lesotho. This project provided assistance towards implementation of interventions for HIV prevention and impact mitigation focusing on vulnerable groups and using the GFATM approved resources. As a result of the nature of the design of the project, the net present value of the specific investment cannot be adequately represented in financial terms. Several benefits would accrue to the nation from controlling the HIV/AIDS epidemic and mitigating its impact. Economic productivity would be enhanced if the population is healthier and free of HIV/AIDS. Households will be more likely to generate and preserve wealth when the scourge of HIV/AIDS is eliminated or mitigated. The HCTA project financed only technical assistance, limited goods to support institutions and the expansion of the warehouse at the National Drug and Supply organization. The inputs financed were time-limited and should not generate additional recurrent costs. The total financing was limited to US$ 5million. The project would improve the efficiency of public expenditure by strengthening implementation capacity, by improving procurement procedures in order to obtain better value for money, and by 21The Long-run Economic Costs of AIDS: Theory and an Application to South Africa, by Clive Bell, Shantayanan Devarajan and Hans Gersbach, June 2003. 34 outsourcing implementation to civil society. The project was expected to enable Lesotho to mobilize additional financing for HIV/AIDS. GFATM financing was not subject to economic and financial analysis. The engagement of the Bank through the proposed project should facilitate a more robust consideration of the existing GFATM and other potential financing. Particular concerns relate to sustainability of financing for treatment. The proposed project was intended to help ensure sustained financing (through improved utilization of resources), and TA financed under the project will help ensure that the national program employs cost-effective standards. 35 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Julie Mc Laughlin Senior Health Specialist - TTL AFTH1 Sheila Dutta Senior Health Specialist. AFTH1 Andrew C. Follmer Senior Country Officer LCC7A Edmund Motseki Operations Officer AFCO1 Jonathan Nyamukapa Financial Management Specialist AFTH1 Helen Tadesse Team Assistant AFTH1 Pascal Tengwa Senior Procurement Specialist LEGAF Muhammad Ali Pate Country Sector Coordinator EASHD T. Mpoy Kamulayi Lead Counsel LEGAF Supervision/ICR Feng Zhao Senior Health Specialist AFTH1 TTL Julie McLaughlin Sector Manager SASHD Henri A. Aka Procurement Specialist AFTPC Andrew Osei Asibey Senior Monitoring & Evaluation Specialist AFTRL Andrew C. Follmer Senior Country Officer LCC7A Lori A. Geurts Senior Program Assistant AFTH1 Wedex Ilunga Procurement Specialist AFTPC Jonathan Nyamukapa Senior Financial Management Specialist AFTFM Peter Okwero Senior Health Specialist. AFTH1 Muhammad Ali Pate Country Sector Coordinator EASHD Helen Tadesse Team Assistant AFTH1 Oscar Picazo Senior Economist (Health) AFTH1 Joel C. Spicer Senior Health Specialist. AFTH1 Musonda Rosemary Sunkutu Senior PHN Specialist AFTH1 Joao Tinga Financial Management Analyst AFTFM Christopher D. Walker Lead Specialist AFTH1 Kanako Yamashita-Allen E T Consultant AFTH1 36 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY04 19 118.99 FY05 5 17.07 FY06 0.00 FY07 0.00 FY08 0.00 Total: 24 136.06 Supervision/ICR FY04 0.00 FY05 5 28.07 FY06 18 80.66 FY07 24 100.65 FY08 25 100.92 FY09 15 0.00 Total: 87 310.30 37 Annex 5. Beneficiary Survey Results Not Applicable 38 Annex 6. Stakeholder Workshop Report and Results Not Applicable 39 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR (a) BORROWER'S ICR MINISTRY OF FINANCE AND DEVELOMENT PLANNING GLOBAL FUND COORDINATION UNIT Implementation Completion Report 1 BACKGROUND The Government of Lesotho (GOL) obtained assistance from the Global Fund Round 2 in financing the HIV/AIDS activities in response to the fight against HIV in the tune of US$ 34,312,000 to be disbursed over five years. The program contributes to the partnership against HIV/AIDS in Lesotho by supporting the Government's program as articulated in the Global Fund proposal and the National HIV/AIDS Strategic Plan. In Round 5 another Global Fund grant to the amount of $40.3 million was made available for implementation starting in 2006. The GOL received US$5 million from the World Bank to support the implementation of the Global Fund grants. The funds were meant to be used to finance the additional institutional capacity and technical assistance required to manage the implementation. The World Bank project has four components namely, Ministry of Finance and Development Planning (MOFDP) Component, Ministry of Health and Social Welfare (MOHSW) component, National AIDS Commission (NAC) component (including M&E) and civil society, public and private sector capacity development component. The project became effective in 2004. The World Bank conducted a mid-term review followed by an external evaluation which is still in progress. The client is also required to do its own internal evaluation at completion of the project. This report reflects the client's internal evaluation of the HCTA project. Lesotho is among the countries with the highest HIV/AIDS prevalence globally, estimated at 23.2% by GOL/UNAIDS. This has a negative impact on almost all aspects of the society, from economic growth to population health status, hence a great development challenge for the country. To meet this challenge the country developed a National AIDS Policy Framework, which would guide different interventions to counter the HIV/AIDS epidemic. The interventions are articulated in the National HIV/AIDS strategic Plan. One of the strategies was to establish the Lesotho AIDS Program Coordination Authority (LAPCA), which has since been replaced by the National AIDS Commission (NAC). The GOL also rearranged other institutions such as the upgrading of the HIV/AIDS Unit under the Disease Control Unit of MOHSW to Directorate level. In the process Lesotho secured 5 Five-year grants to the tune of approximately US$ 113 million, for the fight against AIDS and Tuberculosis. The grants consisted of: US$ 34 million under round 2, US$ 40 million under round 5, US$ 6 million under round 6, and US$ 33 million under round 7 Due to limited institutional capacity to manage and monitor the funds the HCTA project was 40 proposed to increase the capacity of government and non-governmental institutions responsible for the national response to HIV/AIDS to utilize and assess the impact of funds received for HIV/AIDS. In this regard, the project has achieved its aim and was implemented successfully as further discussed in paragraph 3.2 to 3.9 below. The project was highly relevant to the HIV and AIDS strategy in the Lesotho country context and achieved its objective to the extent of increasing capacity of government and non-governmental institutions responsible for the national response to HIV/AIDS, as it relates to the Global Fund grants. The project was designed to complement the use of GFATM approved resources in Lesotho through provision of technical assistance and capacity building activities. The GFATM support to Lesotho is aimed at supporting the scaling up of specific HIV/AIDS interventions and preventions, care, treatment and impact mitigation, including the expansion of home based care, community mobilization, and promoting civil society and public-private partnerships in the fight against HIV/AIDS. In light of the above, from interviews and literature review, it has been concluded that the project was appropriately designed and achieved its objectives of providing technical assistance and equipment to the identified stakeholders. However a few challenges were experienced, such as the following: The prerequisite condition that funds earmarked for NAC would only be disbursed once the Chief Executive was appointed. NB: appointment of the CE was delayed by up to twelve months Delay in preparing procurement documents and slow disbursement of funds At the onset the project did not have a concise project institutional leader and consequently experienced some decision-making problems. The above challenges were overcome by the good working relationships between, MOFDP, MOHSW, NAC and Civil Society and also the flexibility of the project design in allowing for changes to be made to the project goals to meet the overall objectives. For example, where it was felt that a consultancy was no longer needed due to alternative resources being identified or financed by other partners then the appropriate changes were made. These types of changes arose due to the contextual changes that the project experienced since its inception as a result of the new national strategy, new GF grants and support from other partners. 2. IMPLEMENTATION OF THE HCTA PROJECT: In its initial stages the pace of project implementation was slow due to weak coordination among the three key implementing agencies (MOHSW, MOFDP and NAC), and also due to prolonged negotiations with candidates for vacancies, over salary packages. Nevertheless, despite its one- year delay, the project has been successfully completed, having spent approximately 99.9% of its funding (Refer to Annex 2 ­ Project Financial Summary by Category). Of all the procurement items only three items will be completed after the project completion date, and will be financed by GOL. These relate to employment contracts of the Procurement Officer and the Project Accountant and a short-term M & E Technical Advisor consultancy. The project appraisal documents set out that the implementing agency for the HCTA project would be the GFATM Coordination Office within the MOFDP Debt Management Office. It would be responsible for overseeing project implementation and monitoring. However, as with the implementation of the GFATM, the PAU within the MOHSW would manage disbursements 41 of funds against expenditures, account for, and submit Financial Management Reports to draw down against the IDA Grant; and the procurement of contra actual services and goods under the proposed HCTA Project would be managed by the Procurement Unit of the MOHSW. The above arrangement ultimately proved effective in that the project employed existing GOL structures and capacities within the principal recipient and the two sub-recipients, without adding huge demand on the existing structures. For example: The PAU, which was established within the MOHSW to manage funds of multiple external financiers under the Health Sector Reform Program. This unit was used to manage disbursements of the TCTA funds. Staff of the Health Sector Reforms, e.g. Operations Manager assisted in coordination of activities especially in the MOHSW component. Regular meetings of the representatives of the four components were also held to track implementation, especially since there was no particular component designated to lead implementation. Implementation issues were also discussed through the Country Coordinating Mechanism whenever Global Fund was being reviewed. Missions from the World Bank were also regularly undertaken to assess implementation issues to do with quality, e.g. financial and procurement management. As a result of the above, the project was executed successfully and met its objectives. Nevertheless some challenges were experienced (as discussed in section 3.2 above) in respect to coordination among the several implementing agencies, in the initial stages of the project implementation delay. Financial Management: Strengthening of the finance function at the PAU in the MOHSW was considered of vital importance. It was therefore considered necessary to recruit an additional accountant to handle directly the issues relating to the HCTA project. Additional training on World Bank Procedures was also considered necessary for all project accounting staff to enhance proficiency in accounting for the grant funds. Adequate staff were recruited to handle the finance function. In particular, a project accountant was recruited specifically for the HCTA project. However, this accountant resigned after being on the job for one and a half years, and was duly replaced. Despite this resignation, staff turnover has been generally low within the accounting function. At the beginning of the project, the finance function was manned by a qualified Finance Manager and three Accountants. Currently, the finance function has been strengthened and is now manned by the Finance Manager, who is currently handing over to a local Finance Manager, and Project Accountants have now been increased to six. There was no formalised training for the project accounting staff. However, on-the-job training was provided. The PAU has an established accounting procedures manual, which was customised to include the operations of the HCTA project. It had been suggested that this manual be reviewed to include general administrative procedures, financial management procedures, staffing requirements, identification of accounting and auditing standards to be adhered to by the project, project reporting and monitoring, procurement procedures, procedures for banking, and procedures for the management of cash. A review of the procedures manual revealed that it was dated November 2001 and that it lacked 42 evidence of having been subsequently reviewed and updated. As a result, it did not include some of the issues identified, e.g. staffing requirements, identification of accounting and auditing standards to be adhered to, procedures for banking, etc. Financial Covenants and Supervision Plan directed that the PAU would be responsible for designing appropriate Financial Monitoring Reports and producing and submitting them on a quarterly basis, starting with the first quarter after effectiveness. These reports should be reviewed on a quarterly basis by the field based Financial Management Specialists (FMS) and the results or issues followed up during the World Bank supervision missions. The minimum reports would included: Special Account Reconciliation Statement Maloti Bank Account Reconciliation Statement Project Sources and Uses of Funds Uses of Funds by Project Activity / budget v actual Contract Status Report Project Progress Reporting Procurement Reports. From the results of the project completion evaluation it would appear that: In general, Financial Monitoring Reports were not being issued quarterly as requested, but only on an ad hoc basis, e.g. during field visits by the FMS and World Bank missions. A special US$ account was opened with the Central Bank of Lesotho for the HCTA project. A Maloti account was also opened with Nedbank Lesotho for processing payments in local currency. Bank reconciliation statements were being prepared monthly for both accounts. Project Sources and Uses of Funds were not prepared on a quarterly basis but only annually for external audit purposes. Current Project Summary By Category reports were being prepared on a quarterly basis. These reports reflect Budget v Actual per category, and the contract procurement status. Quarterly Monitoring and Evaluation Reports were being issued. These reports show project progress for support services, progress on the core components of the essential service packages, and district health clinics. Internal and external Audits: No internal audits were performed during the life of the HCTA project. Internal audits would have complemented physical project monitoring efforts. The Accountant General has a long established internal audit department that has responsibility for internal audits of all government ministries. However, this department did not audit the HCTA project. The MOHSW is itself intending to create an in-house internal audit unit, which has been on the drawing board for the past few years. It was encouraging to note that the past four-year's annual external audit reports had been unqualified as regards the HCTA project. It was also encouraging to have noted management's commitment to implementing external audit recommendations aimed at the improvement of internal controls. It was however noted that financial statements had not always been issued on time to meet the 30th September deadline, e.g. March 2006 financials were signed on 12th October 2006 and the March 2007 financials signed on 17th October 2007. The deadline for the latest March 2008 43 accounts was however successfully met. The main reason for delays has been identified as delays in finalizing the financial statements ready for audit. At the commencement of the HCTA project, the PAU was operating under a Microsoft Access driven system, which was not an accounting system by definition and as such had several inherent weaknesses. During 2005/06, the PAU migrated to FINPRO Accounting Software, which appears to be a much better system with good access controls. Migration had its few problems, as such some take-on delays were encountered. The new system is now operating satisfactorily. FINPRO is however being gradually updated to be able to produce some information requested, for example, a contracts management system to track contracts. Procurement: Lesotho has in the past experienced cases of foreign companies convicted of fraud and corruption involving donor funds. The area that had been identified as most susceptible to corruption was procurement, as such, it had been recommended that regular procurement audits be made a formal requirement. There were however no formal regular procurement audits undertaken. Apparently, such reviews had been carried out as part of World Bank mission visits. However, the Bank did not provide the Procurement Unit with results of such reviews. As a result of an assessed increase in workload due to the HCTA project, it had been recommended that initially the MOHSW recruits two additional Purchasing Officers to enhance capacity. Secondly, the Procurement Unit was only responsible for procurements of donor funded contracts, and not procurements of contracts financed by the Government of Lesotho's own budget, which were done by the stores department. It had been agreed within the MOHSW that the Procurement Unit would handle the entire procurement. This would also entail additional workload, and thus a need to restructure the Procurement Unit. At the beginning of the project, the Procurement Unit was manned by a Procurement Manager, and two Procurement Officers who were all considered adequately qualified for their positions. In 2006 a Senior Procurement Officer was recruited specifically for the HCTA project. With the exception of the Senior Procurement Officer whose contract was not extended when it expired in August 2008, there has been no staff turnover within the procurement unit. From March 2007, the procurement staff compliment was increased to be as follows: Procurement Manager (one) Senior Procurement Officer (one) Procurement Officers (three) Administrative Secretary (one) Driver / Messenger (one) From March 2008, it became mandatory for all procurement to be handled by the procurement unit. The procurement unit was therefore strengthened by an additional eight storekeepers to cater 44 for additional procurement of contracts financed from the Government of Lesotho's own budget. This staff compliment is however not able to handle work demands. A proposal to further increase staff was therefore made and approved by the Government of Lesotho's Public Service. The newly approved structure is as follows: Procurement Manager (one) Senior Procurement Officers (three) Procurement Officers (five) Assistant Procurement Officers (eight) Procurement Assistants (twelve) Administrative Secretary (one) Driver / Messenger (one) Despite initial identification of training needs in the areas of contract administration and contract dispute handling, no formalised training took place for the procurement staff. Management however resorted to on-the-job training due to workload and the unavailability of such training facilities in the country. NB: such training is only available in neighbouring South Africa. In February 2007, the MOHSW finalised a Procurement Manual for the Health Sector Reform Programs. This manual was revised in October 2007, and customised to include the operations of the HCTA project. At the beginning of the project, it was determined that the filing of procurement documentation was poor, with retrieval of information being difficult. In order to improve filing and record keeping, it had initially been considered necessary that the MOHSW should hire a short term consultant ­ about six months duration ­ to review the system and install a system ­ manual or electronic ­ which would enable ease of retrieval of information. However, with the appointment of a fully qualified and experienced Procurement Manager, management decided not to hire the consultant. A cursory assessment of the system of filing has shown great improvement, with all related procurement documentation being filed together, to enable ease of retrieval. The procurement unit will shortly be designing a checklist to be placed in front of each procurement file, and performing an audit of each file content against the checklist. In terms of the procurement and financial management of the project, the overall assessment is that the procurement and financial management systems supported the project adequately. 3. PROJECT ACHIEVEMENTS: The Key indicators for the HCTA project are: 1. Percent of the Global Fund grant disbursed by the end of the Project 2. Percent of the Global Fund money disbursed through Civil Society Organizations 3. Percentage of HIV and AIDS sub-projects that have been implemented in a satisfactory manner 4. Annual reports on all key HIV and AIDS program indicators are produced and disseminated In respect to the above project indicators the project achievements are as follows: (a) Percent of the Global Fund grant disbursed by the end of the Project: The percentage of Global Fund grant disbursement by the end of the project was as follows; R2 HIV/AIDS - 83% and R2 TB - 68%. 45 (b) Percent of the Global Fund disbursed through Civil Society Organizations: There are 15 sub-recipients supported under the HIV project components, twelve of which are NGOs. The percentage of the Global Fund grant disbursement through civil society was 30%. (c) Percentage of HIV and AIDS sub-projects that have been implemented in a satisfactory manner: The percentage of HIV and AIDS sub-projects that had been implemented in a satisfactory manner was 99%. (d) Annual reports on all key HIV and AIDS program indicators are produced and disseminated: Project annual/bi-annual reports on all key HIV and AIDS program indicators have been prepared and posted to the Global Fund Coordination Unit's website. In addition to these reports, among others, the following supplementary reports have been prepared by MOHSW and provided to the consultant: (i) Ministry of Health and Social Welfare Monitoring and Joint Review Reports prepared annually. (ii) Ministry of Health and Social Welfare Monitoring and Evaluation Report First and Second Quarter of 2008/09 FY Project indicators are good towards the achievement of the project objective. 4. EVALUATION THE EXTENT TO WHICH THE PROJECT HELPED TO BUILD LOCAL CAPACITY: Support to MOFDP Under Component One, the project's objective was to specifically finance technical assistance to strengthen the capacity of the Coordination Office in the MOFDP so that it performs its oversight role under the GFATM grant agreement. The MOFDP would be supported to fulfil its accountability function with regard to the money disbursed to the sub-recipients through the same technical assistance and by providing it with computers and equipment. The technical assistance would assist the MOFDP in coordination with the sub-recipients and ensure annual work program are submitted on time, approved by the Country Coordinating Mechanism, disbursement of funds to the sub-recipients' account facilitated, ensure adequacy of the financial controls and audits and to ensure timely reporting on the agreed monitoring and evaluation indicators. The project has successfully supported the MOFDP, in this regard the following were achieved: Provision of technical assistance to strengthen the capacity of the Coordination Office in the MOFDP A Technical Assistant was appointed on a two-year contract. The Technical Assistant was able to carry out his Terms of Reference successfully during his term of office, which included the strengthening of capacity within the GFCU. With the remaining balances earmarked for the TA under MOFDP, who resigned before completion of his extension contract in 2008, the MOFDP engaged Technical Assistant to further assisted the Monitoring and Evaluation section of the Department of Social Welfare, by assisting in the development of an overall M&E Coordination Plan, with manuals, systems, procedures, tools and data base, flowcharts for data and clearly specifying institutional roles and responsibilities, an implementation plan and budget. The Technical Assistant also reviewed and revised the plan for Orphans and Vulnerable Children (OVC), and also assisted in strengthening the National Aids Commission's monitoring systems so as to ensure sound output and process monitoring. 46 Provision of computers and equipment. The Project provided the following equipment to the MOFDP: Two computers with printers One sedan motor car 25% of office furniture procured by the project Support to MOHSW Under Component Two, the aim of the project was to ensure that MOHSW would be better able to provide access to quality care and treatment to those infected by HIV/AIDS and fulfill its role as sub-recipient of the GFATM resources. The project has successfully supported the MOHSW to fulfill its role as a sub-recipient of the GFATM resources for implementation of HIV/AIDS and tuberculosis interventions in the health sector. The support had originally been planned as assistance to the central MOHSW to enable it to deliver on its responsibilities through: Technical assistance to establish the new HIV/AIDS Directorate A Technical Assistant (Public Health Specialist) was appointed on a two-year contract. This specialist however resigned after one and half years into the contract in February 2007. Despite the resignation, the specialist had successfully carried the terms of reference assigned to him, which included the establishment of a new HIV/AIDS Directorate. Initially at the beginning of 2004, the HIV/AIDS function was managed by a small division under the Director Primary Health Care within the MOHSW. This division was inadequate to carry out the expanded functions of the HIV/AIDS activities, especially with the requirements of the implementation of the Global Fund grant. This function has now been restructured. The revised organogram currently has the following posts: Director ­ HIV and AIDS Program Manager ­ Counseling and Home Based Care - Program Officer ­ Counseling - Program Officer ­ Home Based Care Program Manager ­ HIV Treatment and Care - Program Officer ­ HIV Care - Program Officer ­ Pediatric HIV - Program Officer ­ ART, Prevention and Management of Opportunistic Infections With the assistance of the Technical Assistant, all staff was trained and is by and large now capable of effectively responding to the various challenges in the prevention, control and care of HIV/AIDS. The Technical Assistant contributed to the capacity building of staff at both central and district levels by conducting training based on training material he assisted in developing, which included the following: Integrated Management of Adolescent and Adult Illness (IMAI) Acute Care Participant Training Manual, which supports acute care short courses on opportunistic infections, 47 provider-initiated testing and counseling, mental health and neurological problems, and STI's and other genitourinary problems. Chronic HIV Care with ARV Therapy (Guidelines for health workers at health centre or clinics at district hospital outpatients). Palliative Care: symptom management and end-of-life care. The Technical Assistant further assisted in the development of: An HIV/AIDS Policy for the MOHSW A National Aids Strategic Plan Annual Operational Plans ARV Treatment Guidelines. Based on progress achieved, it is concluded that the HCTA project's input towards the establishment of a new HIV/AIDS directorate, with its expanded function, has been successful. Provision of equipment and training to the Monitoring and Evaluation M&E) Unit The project completion evaluation has concluded that strengthening of the M&E unit has been successful under the HCTA funding. This funding was utilized as follows; a) Technical Assistance: Initially, it had been planned to engage the services of a Monitoring and Evaluation firm on a two-year contract to provide support to the M&E function. However, it was later decided in consultation with the World Bank that the services of a firm were no longer necessary, since a strong M&E unit had been established within the MOHSW through the Health Sector Reform Programs, and also to save on costs. The M&E unit has been receiving training in Health Management Information Systems by funding from other development partners, which included the Irish Aid. The training was provided by an M&E Technical Advisor. This M&E advisor was funded by the Irish Aid on a long-term contract. When the contract ended, the services of this consultant were still deemed necessary. To this effect, the HCTA project was flexible enough to offer a short-term contract to the advisor so that he could complete his work in strengthening the M&E unit. b) Provision of Equipment: One four-wheel drive vehicle was provided for supervision of district health information offices under the HCTA project funding. NB: The HCTA project was complemented by the Health Sector Reform (Phase II), with the provision of computers for each of the ten district health information officers, and long-term contracts for them. Technical assistance to the Procurement Unit Initially, it had been considered necessary for the MOHSW to hire a short-term consultant (about six months duration) to assist with a record keeping system for the procurement unit, and to provide formalized training for the procurement staff especially in contract administration and contract dispute handling. However, with the appointment of a fully qualified and experienced Procurement Manager, management decided not to hire the consultant. NB: The procurement unit appears to be robust. A cursory assessment of the procurement function has shown that the project objectives were still met despite the decision not to hire the consultant. 48 Strengthening of the Project Accounting Unit (PAU) with the provision of additional accounting staff and computers At the beginning of the project, the finance function was manned by a qualified Finance Manager and three Accountants. Currently, the finance function has been strengthened and is now manned by the Finance Manager, who is currently handing over to a local Finance Manager, and the Project Accountants have now been increased to six, of whom one was supported by the HCTA project. The others being supported by other development partners such as, Global Fund and the Irish Aid. The HCTA project has contributed to the strengthening of the PAU by financing the procurement of six computers, three printers, upgrading of the accounting system to the FINPRO Accounting System, and other sundry assets such as, mobile filer, office chairs and a fridge. Other financial management issues have been dealt with in more detail under section 3.5 above. Support for leadership training to enhance the management capacity within the Ministry at all levels In order to implement the Global Fund grants, competent leadership was required to plan and manage the project appropriately. To ensure this a consulting firm was appointed to provide Leadership Training to senior management within the MOHSW. To this effect, the consultant performed a detailed cultural management analysis on senior management of the MOHSW, and recommendations to improve management practices were discussed and agreed. The training provided was generally good, however, the impact of the training and follow-up on the cultural management analysis, had not been that effective possibly due to resistance to change as evidenced by a general lack or delay in the implementation of the consultant's recommendations. Support to the National Drug and Supplies Organization The project has successfully supported the National Drug and Supplies Organisation (NDSO), by enabling it to fulfil its role of procuring and distributing health sector goods as follows; Medium term technical assistance to enable NDSO to conduct procurement using international competitive bidding Initially, the project appraisal had identified that there was a general lack of expertise in the procuring of health sector goods where international competitive bidding was to be used. As a result, the HCTA project financed the appointed of a consultant to strengthen the procurement department. To this end, Health Research for Action (HERA) was engaged on a consultancy contract. HERA advised structural changes to be made to the procurement function. A separate Procurement Department was created, and is currently fully manned as follows; One Manager Two Assistant Managers Four Procurement Officers One Procurement Clerk. HERA has successfully developed a procurement manual and bidding documents specifically for the procurement of health sector goods. The procurement manual and the bidding documents have been found to be appropriate and are currently being used by the Procurement Department. HERA provided a seven-day general training workshop to all the procurement staff. This training was followed-up by placement of a Resident Procurement Advisor (from HERA), who was 49 assigned on a full time basis to NDSO for a period of eighteen months, and provided on-the-job training to the procurement staff. NB: The initial twelve month period was funded by the HCTA project, whilst the remaining six month period was funded by the Round 5 grant. The HERA consultancy came to an end on 28th February 2008. The procurement department has since been operating efficiently on its own. It is therefore concluded that the objective of capacitating the NDSO to enable it to conduct procurement by using international competitive bidding has been successfully met. Support to strengthen inventory management and security at all hospitals The HERA consultancy was utilized to provide support to strengthening of inventory management and security at hospitals. HERA successfully assisted in developing the following; Drug Supply Manual Lesotho Standard Operating Procedures (LESOPS) These procedures have provided guidance as to how health sector goods are to be received and distributed, e.g., an "Internal Requisition Voucher" was designed to facilitate the distribution of goods. Also, as part of LESOPS, "Supervision Tools" were developed as a checklist to assist supervision teams in reviewing inventory management and security arrangements at the various hospitals. The hospitals, both Government and CHAL now have the systems of Drugs Supply Management in place and the Standard Operating Procedures in place. As such, it is concluded that the project objective of strengthening inventory management has been successfully met. Specific recommendations were also made in providing security measures of health sector goods at hospitals. However, no formal assessment has yet been made to determine the effectiveness of security arrangements at hospitals, following implementation of the recommendations. Expansion of warehousing capability of NDSO Warehousing capability has been strengthened by an additional 1000 square meters, by the construction of a new warehouse at the NDSO. This new warehouse is fitted with air conditioners, and is now fully functional. The additional warehousing facility of 1000 square meters provided some relief to the already constraint warehousing facilities of the organization. In addition, NDSO has made another funding request towards the construction of additional 2800 square meters warehousing facilities. This additional funding request has been precipitated by the fact that NDSO continues to receive huge volumes of health sector goods funded by both the Government of Lesotho and the donors. The Consultant visited the NDSO warehouse in Mafeteng and observed that it was indeed functional and that the access road to the new warehouse has also been upgraded. There was however a six-month delay in the finalization of construction. It is possible that the contractor had been experiencing cash flow problems however, this cannot be independently confirmed. From discussions with management, appears that this weakness could not have been easily foreseen, since adequate procurement processes had been followed in the recruitment of the contractor. Support the creation of a strong logistics system for laboratory services The original intension of utilizing funding from the HCTA project was suspended, as the Central Laboratory had indicated that they would secure financing from other development partners. Support to the Secretariat of the National AIDS Commission The project has successfully supported the National Aids Commission in terms of its original 50 objectives. Under Component Three, the project's objective was to finance engagement of a firm to: Generate and manage proposals submitted for funding through LAPCA Strengthen the District AIDS Coordinators and the District AIDS Task Forces through regular training activities Monitor implementation by the civil society, private and public sector grant-recipients and Ensure that appropriate fiduciary safeguards and procedures are in place without constraining implementation In this regard the project appointed Crown Agents (the firm), on a two-year contract, for the grant management process. The consultants successfully completed their assignments, with the end result being: a) The establishment of the NAC Grant Management Unit, which is fully staffed and operational. b) preparation of procurement manual (with the help of a part-time procurement specialist provided by the firm) which was jointly developed and work-shopped by the consultants and NAC. c) Support of line ministries and civil society. In addition to the forgoing, a consultant was engaged to prepare the National Behavioral Change Communication Strategy (BCC Strategy). The overall goals of the National BCC Strategy were as follows: Reduce the spread of HIV in Lesotho through prevention interventions Provide equitable care and support for those infected by HIV Mitigate the impact of HIV and AIDS such that it is no longer of public health, social and economic concern Ensure that all Basotho will be able to achieve socially and economically productive lives free of the infection and its effects The strategy focused on the following outcomes: Create an enabling environment for behavioral change by increasing leadership and gender equality and by reducing stigma associated with people living with HIV and AIDS. Increased adoption of safer sexual behavior and reduction in high-risk behavior. Increased use of HIV prevention services Enhanced national, district and organizational frameworks to address behavior change. Provide assistance to develop community based monitoring and evaluation capacity for implementers at the district and sub-district levels This assistance was provided through the National Aids Commission Directorate ­ Policy & Stakeholders, by; Capacitating district staff and communities on the management of M&E systems. Producing the Geographical Information System and distributing it to all stakeholders and districts. Provide assistance to public sector line ministries to develop fundable proposal for mainstreaming HIV/AIDS and support their implementation This assistance was provided through the Crown Agent's grant management consultancy. Evaluation of the above is that the project has managed to support the secretariat of the National AIDS Commission through provision of the above-mentioned consultancies 51 Support for Civil Society and Private Sector Capacity Development The object of this was to support capacity building to enable civil society and faith based organizations, traditional institutions and communities to develop viable proposals, implement such proposals and fulfil the reporting requirements for disbursements under the GF agreement. The formal and informal private sector would also be supported to increase their capacity to implement HIV/AIDS activities with resources provided through the national program. Specific activities for financing under this component included: (a) assistance to enable improved coordination of civil society activities at the national level through dedicated NGO and private sector focal persons located in LAPCA and (b) contracting a civil society consortium that has substantial grass-roots involvement to work with medium and small NGOs and CBOs in developing proposals and in implementation. To achieve the above objectives the Civil Society Support Consultancy was designed and Armstrong Associates Consulting (Pty) Ltd engaged to undertake it. The consultancy began in July 2007. The original period of engagement was 11 months to June 2008. The consultancy was originally intended to provide direct support to non-governmental entities to strengthen their involvement in the national response to HIV/AIDS and more specifically, to improve core organizational capacities related to development and implementation HIV/AIDS programs supported by the Global Fund grants. The specific deliverables included a rapid assessment of civil society response to HIV/AIDS in Lesotho, an inventory of organizations involved in HIV/AIDS, capacity assessment of umbrella bodies, program of work to strengthen capacity of selected umbrella bodies and guidance. By June 2008 the rapid assessment and the detailed capacity assessment of civil organizations were completed detailing specific challenges facing the civil organizations, ranging from unstable funding environment to gaps in organizational capacity. The consultancy was subsequently extended to December 2008 with modified terms of reference and work plan. During the extension period the consultancy achieved the following: Ongoing technical advice and support was provided to LCN Board and staff to assist the organization to prepare for its Principal Recipient (PR) responsibilities under the Global Fund Round 8 grant to Lesotho. governance training for LIRAC executive committee members and development of a Constitution and start-up work-plan for the Business and Labor Coalition on HIV and AIDS. Ongoing advice and support was provided to CCM, GFCU and other stakeholders on the preparations required to support multiple PRs under dual-track financing arrangements. Provision of additional support, including working with GFCU and CCM to revise the Round 8 funding proposal and to prepare for its final approval. The consultant also worked with FIDA and the Lesotho Law Reform Commission to develop a funding request for OSISA. Finally, the consultant facilitated a number of networking and exchange opportunities to solidify a common vision for civil society development amongst all stakeholders. Evaluation of the above is that the project has managed to support civil Society and private sector capacity development through the consultancy discussed above. It is also noted that the Consultant went further to provide technical assistance on other areas. Evaluate the status of government/partner coordination 52 The Government has shown strong commitment to achieving development objectives, together with the World Bank which has been involved in HIV/AIDS in Lesotho for almost two decades and, as such, it has very good institutional memory and has developed a very strong working relationship with the Government of Lesotho. The following mechanisms were developed to improve Government/Partner coordination: i. Quarterly joint review meetings with partners ii. Annual joint review meeting with partners iii. Sector wide approach in planning, procurement monitoring and evaluation and financial management through the PAU. There was evidence that annual joint review meetings were regularly held as scheduled and appeared to be very informative. In the past year quarterly review meetings had also been held however not that regular. The World Bank also undertook regular missions to monitor and advise project implementation. The above-mentioned mechanisms led to improved coordination and collaboration of all stakeholders and the attainment of set project development objectives and goals. Evaluation the Project Risks During the inception of the project the critical risks were identified as follows: 1. Risk to project development objective: Internal politics undermine decisions on how the GFATM will be managed. Potential conflict among partners. Risk Mitigating Measure: Preparation has engaged wide range of stakeholders and the approach utilises existing institutions. Risk Rating: Modest Observation: The risk rating has been proved to be modest. No major disputes on project management were experienced with the MOFDP being the key driver of the process, through the Global Fund Coordination Unit. 2. Risk to project development objective: The areas targeted for capacity support are not sufficient to support GFATM implementation. Risk Mitigating Measure: The project covers procurement, financial management, M&E, logistics management and the engagement of civil society. The project builds upon experience under the existing Health Sector Reform Project and its HIV/AIDS component. Risk Rating: Modest Observation: The Risk rating was evaluated appropriately as modest. Even though the project could not cover all areas of possible support, its focus was to finance services, training and goods in support of HIV/AIDS interventions using GFATM financial resources. In this regard it achieved its mandate. 3. Risk to project development objective: GFATM Resources become insufficient to meet demand Risk Mitigating Measure: IDA's involvement will ensure that additional HIV/AIDS funds are mobilised to support the national program in the event. Risk Rating: Low Observation: At the inception of the project it was noted that "in the Lesotho context, additional funds for implementation are not the priority, rather what is required is implementation support to facilitate the use of the GFATM resources. If additional gaps remain, the Bank can step in to provide traditional MAP grant funding". 53 At this point in time the GFATM resources appear to be sufficient to meet the short to medium-term requirements. To date the resources are US$ 113 million (see 3.1 above). Of this amount US$ 58.7 million has been approved, US$ 43 million disbursed and US$ 27.3 million utilised as reported in the June 2008 Bi-annual Report For the Global Fund Support to The Kingdom of Lesotho. 4. Risk to project development objective: Debates over the role of LAPCA, the NAC and the Secretariat. Delay in the appointment of staff who will both manage and benefit from the TA. Risk Mitigating Measure: Consultant TORs will indicate specifically which institutions and actors consultants are expected to work with. Hiring consultants will alleviate the staffing shortage in the short-term. Risk Rating: Substantial Observation: Indeed, there was delay in project implementation due to the establishment of NAC and phasing out of LAPCA during the project's conception hence the confirmation of the original risk rating. The prerequisite condition that funds earmarked for NAC would only be disbursed once the Chief Executive was appointed, is a case in point. 5. Risk to project development objective: Procurement of consultant services is delayed - and thus delays GFATM implementation. Risk Mitigating Measure: Partners will assist in the production of TORs, RFPs and short- listing. TORs and advertisements will be drafted prior to Negotiations. AfDB has financed a Procurement Manager for unit. Risk Rating: Substantial Observation: Due to the delay of project implementation procurement of Consultant's services was delayed, thus unavoidable delay of GFATM implementation. Despite these delays the HCTA project has been successful and appears to be completed within the anticipated time frame (Development Grant Agreement signed on 5 August 2004 and project completed on 31 December 2008). 6. Risk to project development objective: Qualified firms do not respond to the RFPs. Risk Mitigating Measure: Work has been bundled into large contracts, so as to attract experienced firms. Consultancies will be advertised in Development Business as well as through sector-specific avenues. Risk Rating: Modest Observation: This risk was indeed modest, but in one instance, namely appointment of a consulting firm for capacity building at NDSO and for the development of training manuals, guidelines, SOPs, logistics and training for Queen II laboratory, the risk became substantial. 5. LESSON LEARNED Lessons learned from the project can be summed up as follows: The use of existing GOL structures in managing the project proved valuable, rather than trying to set-up new structures for each new project. Flexibility of the project increased its chances of success. This was a unique project in the sense that it was designed specifically to support another, and proved effective. The HCTA supported the Global Fund grants successfully. At project design project leadership should have been clearly defined. 54 6 RECOMMENDATIONS To the Client a) Despite on the job training, there is need for more formalized training on a regular basis on bank procedures to enhance proficiency in accounting for grant funds. Also, there is need for regular formalized training for procurement staff especially in contract administration and contract dispute handling. b) The PAU should ensure that the Accounting Procedures Manual is reviewed and updated to include general administrative procedures, financial management procedures, staffing requirements, identification of accounting and auditing standards to be adhered to by the project, project reporting an monitoring, procurement procedures, procedures for banking, and procedures for the management of cash. c) In order to meet the 30th September deadline for submission of audited financial statements to the World Bank, financial statements should be finalized on time to provide external auditors reasonable time to perform a thorough audit. d) The establishment of an in-house Internal Audit Unit for the MOHSW should be accelerated. In the meantime, management should ensure the utilization of the existing internal audit department established by the accountant general, so as to compliment project monitoring efforts. e) The procurement unit should design a File Contents Checklist to be placed in front of each procurement file, and perform an audit of each file content against the checklist. f) Recommendations made by the Leadership Training consultant on the cultural management analysis should be revisited. Management should establish a timetable of implementation and follow-up of recommendations. g) Following recommendations to improve security measures at hospitals, management should consider performance of half-yearly reviews aimed at determining the effectiveness of security arrangements of health sector goods at the various hospitals. h) The PU must see to it that it receives copies of audits or reviews undertaken as part of World Bank mission visits (e.g. procurement review). Such reviews would enable the MOHSW Procurement Unit with feedback, which would enable it to take corrective measures as necessary. To the World Bank A second phase (Phase II) of the HCTA should be considered in order to successfully implement Round 6, 7 and 8. (b) BORROWER'S COMMENTS ON DRAFT ICR As highlighted in the document, the World Bank support came at the time when Lesotho was faced with tremendous challenges in the fight against HIV pandemic, and with few donors and Partners supporting the HIV interventions. Through the support from World Bank and complemented from other Partner's support, capacity strengthening from different stakeholders was achieved, taking into consideration more so, the Monitoring, supervision and evaluation systems which were very weak from central to district levels. The World Bank, Global Fund , Government of Lesotho and others managed to put in place Monitoring and Evaluation systems within the MOHSW, MOFDP/GFCU as well NAC in order to strengthen data collection , reporting and collation of data from district to central level in order to assist the management to make decisions for HIV interventions for Prevention, care, support and treatment as well as mitigating the challenges brought about by HIV pandemic.. Furthermore, capacity strengthening in terms of capacity skills, human resources were put in place at all levels from central to District level. Example is establishment of M&E Units with NAC and MOHSW which resulted in the 55 development of National M&E framework, Global Fund M&E Plan to mention but few. Moreover, the World Bank support came at the time when the Civil Society was in limbo and needed guidance in order to contribute meaningfully to fight the HIV. Through the engagement of the Civil Society consultant, umbrella bodies were engaged consultatively to discuss their needs, and the challenges in relation to their capacity building. It is through these consultations that Civil Society groups were able to contribute substantively in the development of R8 Proposal, outlining the needs of the communities and even managed to ensure that NGO was selected to be one of the PR for R8. One can therefore conclude that because of the support from World Bank, Lesotho has moved forward and achieved positive strives in terms of ability for resource mobilization for Funds to fight, treat and mitigate the impact of HIV/ AIDS to date; managed to strengthen Monitoring and evaluation systems throughout all levels. One can therefore agree with the findings that had been documented in the report. However, the support that was provided was not sufficient especially from the Civil Society perspective in strengthening the community to ensure that they have necessary requirement to assists the chronically ill as well as the OVC. More efforts were needed in terms of logistics as communities were trained to care for the sick, but not given the means to carry out their work effectively. They were further trained as carers, but unfortunately not trained and provided with tools to report their good work at community level, as a result, information was not properly documented which would be used to make decisions for interventions required at the lowest level. The weak coordination of the HTCA resulted in the slow implementation coupled with inconsistent inappropriate follow up in dealing with the challenges. Implementation by various coordinating bodies or beneficiaries of the grant posed critical challenges in relation to efficient and effective implementation of the grant. To this effect, the Steering committee which was put in place to monitor the implementation needed that individual (Person/Coordinator) to coordinate and ensure that meetings were held accordingly and that implementation took place as planned. It is against this background that for effective and efficient implementation for future grants, a person within any structure that may be identified either MOFDP or MOHSW should be engaged specifically and be mandated to fully coordinate the grant in order to avoid unnecessary delays that in resulted in slow and problems to absorb funds. Furthermore, careful consideration of priority of activities to be supported should be taken into account in order to avoid under budget on key activities in order to achieve quality and meaningful results. 56 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders Global Fund comments: We agree with the key findings expressed in this report, including the way forward for the future capacity building support by the World Bank to Lesotho. We also endorse the ratings of the ICR, which are well deserved considering the whole period of the HTCA project. The HTCA was first of its kind in the Southern Africa region for the Global Fund. At the end of the Round 2 HIV grant life cycle22, and at the World Bank HTCA evaluation stage, one can confidently conclude - from the evolution of the grant implementation and performance record (unsatisfactory to excellent) that the HTCA project has been highly successful. It followed thorough assessment of needs at the onset of the Global Fund portfolio in Lesotho back in 2003. Its design was appropriate and the interventions targeted to facilitate the absorption of the Global Fund grant funding for the purpose of HIV/AIDS scale up in program delivery and the systems strengthening around the HIV/AIDS response. The World Bank intervention concerned the key institutions coordinating and carrying the HIV/AIDS response, MOFDP, MOHSW and NAC, in addition to civil society organizations. All three named institutions' management considerably improved in the course of the grant implementation. However, and although one of the key interventions, Grant Management Services (Crown Agents placed in NAC Secretariat) was somewhat misaligned with the MOFDP needs for improved Global Fund grant management, we are positive that the capacity building investment in NAC grant management has contributed to the improved Round 2 grant management. We remain optimistic that it will result in NAC being increasingly involved in supporting the current and future Global Fund portfolio of grants (Round 5, Round 7, Round 8 and beyond), in addition to their proven active engagement and contributions in the workings of the Global Fund grant oversight body in the country, which is the CCM. It would also be prudent for the report to endeavor to capture the extraordinarily huge challenges around the Round 2 grant implementation during the first 18 months (2004-2005), partly co- relating to the delays/conditions precedent to the commencement of HTCA as described. These implementation challenges and weak systems lead to the Global Fund so-called "No Go" recommendation for Phase 2, which at the time meant that the HTCA was risking of being endangered as a result of the threat of discontinued funding ­ if the CCM/country partners had not provided compelling evidence of efforts made during the first two years towards improving grant performance. The threat of discontinued funding de-stabilized the grant cycle and lead to its extension, by 6 months, beyond the 5 year period. As can be seen from the variance in the HTCA financial allocations, the civil society did not manage to utilize the expected/planned funding by a significant margin. This is probably justified by country context but it is nonetheless regrettable. It would therefore be beneficial if the report could endeavor to provide more in-depth analysis of possible underlying causes for this variance. Finally, the financial component of the HTCA grant does not appropriately capture the MOFDP lead modification of the grant support structure in Lesotho for the Global Fund, i.e. moving the 22 5 and ˝ years, as the grant was approved 6 months no-cost extension 57 financial management of the Round 2 grant away from the PAU in 2008 and establishing its own financial management structure within the GFCU of the MOFDP. The move was due to the PR absorptive capacity problems and lower volume disbursements than those projected per years. This move improved the Round 2 grant financial management of the PR after decongesting the PAU of Global Fund non-MOHSW related transactions and improved the Round 2 grant absorption capacity which, at the closing of the grant is at 98.5%, where USD 28,884,104 have been disbursed against the budget of USD 29,312,000. The Round 2 HIV/AIDS grant is in the process of closing at the moment, with the program period end date being 30 June 2009. 58 Annex 9. List of Supporting Documents 1. Project supervision mission aide memoirs and ISRs 2. Background Paper on HIV/AIDS prepared for the 9th Round Table Conference 3. Annual report on the National Response to HIV/AIDS 2006 4. Analysis of HIV Prevention Response and Modes of HIV Transmission 2007. 5. Gender and multiple and concurrent sexual partnerships in Lesotho. Preliminary report and findings , November 2008 6. National HIV/AIDS Strategic Plan 2006-2011 7. National HIV/AIDS Monitoring and Evaluation Plan 2006-2011 8. Lesotho UNGASS Country Report (2008) 9. Project Appraisal Document of HIV/AIDS Technical Assistance and Capacity Building Project, 2009. 10. UNAIDS, Report on the Global AIDS Epidemic, 2008. 11. GFATM Round -2, Lesotho Grant Scorecard, December 2005. 12. GFATM Round -2, Lesotho Addendum to Grant Scorecard post receipt of CCM response to Secretariat proposed `No Go' recommendation. 13. GFATM Round -2, Lesotho Grant Performance Report, August, 2008. 14. GFATM Coordinated Country Proposal for Lesotho, September, 2002. 59