Documentof The World Bank FOROFFICIAL, USEONLY ReportNo: 45064 - MG PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHEAMOUNTOFSDR40.5 MILLION (US$63 MILLIONEQUIVALENT) TO THE REPUBLIC OF MADAGASCAR FORA JOINT HEALTH SECTOR SUPPORTPROJECT February 3,2009 HumanDevelopmentI11 Country Department 1 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS (ExchangeRateEffective December31,2008) Currency Unit = Ariary 1.927Ar = USDl USD 1.55663 = SDR 1 FISCALYEAR January 1 - December31 ABBREVIATIONSAND ACRONYMS .. 11 FOROFFICIAL USEONLY HMIS I Health Management InformationSystem I sss I Single Source Selection IBRD IIInternational Bank for Reconstruction & I SWAP I Sector Wide Approach Development ICB I International Competitive Bidding - I UGPM I Unite'de Gestion de la Passation de Marche' (Procurement Management Unit) ICs Individual Consultant Selection UNFPA UnitedNations Fundfor PopulationActivities IDA International Development Association UNICEF UnitedNations Children's Fund IFR InterimunauditedFinancial Reports USAID US Agency for International Development IHP International Health Partnership USC Use o fCountry Systems IMF International Monetary Fund WHO World Health Organization Vice President: Obiageli Katryn Ezekwesili CountryDirector: RuthKagia Sector Manager: Lynne Sherburne-Benz Task Team Leader: Maryanne Sharp 1 I This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. M A D A G A S C A R Joint Health Sector Support Project C O N T E N T S Page I. STRATEGIC CONTEXT AND RATIONALE .................................................................. 4 A. Country and sector issues ..................................................................................................... 4 B. Rationale for Bank involvement ........................................................................................... 8 C. Higher level objectives to which the project contributes ................................................... 8 I1 ProJECT DESCRIPTION . .................................................................................................... 9 A. Lendinginstrument ............................................................................................................... 9 B. Project objective and Phases ............................ .................................................................... 9 C. Project development objective andkey indicators ............................................................. 9 D Project components . ............................................................................................................... 9 E. Lessons learned and reflected inthe project design ......................................................... 11 F. Alternatives considered and reasons for rejection ........................................................... 12 I11 IMPLEMENTATION . ......................................................................................................... 13 A. Partnership arrangements .................................................................................................. 13 B. Institutional and implementation arrangements .............................................................. 13 C. Monitoringand evaluation of outcomes and results ........................................................ 14 D Sustainability . ........................................................................................................................ 15 E Critical risksand possible controversial aspects . .............................................................. 15 F Loadcredit conditionsand covenants . ............................................................................... 18 IV APPRAISAL S U M M A R Y . .................................................................................................. 18 A. Economic and financial analyses ........................................................................................ 18 B. Technical ............................................................................................................................... 20 iv C. Fiduciary ............................................................................................................................... 21 D Social . ..................................................................................................................................... 23 E Environment . ......................................................................................................................... 24 F Safeguardpolicies . ................................................................................................................ 24 G PolicyExceptionsandReadiness . ........................................................................................ 25 Annex 1:Country andSector Background ............................................................................... 26 Annex 2: MajorRelatedProjectsFinancedbythe Bankand/or otherAgencies ..................34 Annex 3: ResultsFrameworkandMonitoring ......................................................................... 37 Annex 4: DetailedProjectDescription ...................................................................................... 42 Annex 5: ProjectFinancing ........................................................................................................ 48 Annex 6: ImplementationArrangements .................................................................................. 49 Annex 7: FinancialManagementandDisbursementArrangements ..................................... 52 Annex 8: ProcurementArrangements ....................................................................................... 66 Annex 9: EconomicandFinancialAnalysis .............................................................................. 76 Annex 11:SafeguardPolicyIssues ............................................................................................. 89 Annex 12: ProjectPreparationand Supervision ...................................................................... 92 Annex 13: Documentsinthe ProjectFile .................................................................................. 93 Annex 14: Statementof Loansand Credits ............................................................................... 97 Annex 15: Countryat a Glance .................................................................................................. 99 V MADAGASCAR MG-JOINT HEALTHSECTOR SUPPORT PROJECT PROJECT APPRAISAL DOCUMENT AFRICA AFTH3 Date: February3,2009 Team Leader: Maryanne Sharp Country Director: RuthKagia Sectors: Health(100%) Sector ManagerDirector: Lynne D. Themes: Childhealth (P);Other Sherburne-Benz communicable diseases (P);Health system performance (P);Population andreproductive health (P);Nutrition and food security (S) Project ID: P106675 Environmental screeningcategory: Partial Assessment [ ]Loan [XICredit [ ]Grant [ 3 Guarantee [ 3 Other: For Loans/Credits/Others: Total Bank financing (US$m.): 63.00 ProDosedterms: 40 vears including 10Years grace Source Local Foreign Total BORROWER/RECIPIENT 0.0 0.0 0.0 International Development Association 39.1 23.9 63.0 (IDA) FRANCE: FrenchAgency for 17.5 2.0 19.5 Development Total: 56.6 25.9 82.5 FY 10 11 12 13 14 Annual 15.00 14.00 12.00 12.00 10.00 Cumulative 15.00 29.00 41.00 53.00 63.00 Is approval for any policy exception sought from the Board? [ ]Yes [XINO Doesthe project include any critical risksrated "substantial" or "high"? Ref: PAD III.E. [ ]Yes [XINO Does the project meet the Regional criteria for readiness for implementation? Ref: PADI K G. [XIYes [ ] N o Project development objective Re$ PAD II.C., TechnicalAnnex 3 The development objective o fthe JHSSP i s to contribute to strengthening o fthe health system to increase utilization o fhealth services, particularly among mothers and children. Project description[one-sentence summary of each component] Ref: PAD II.D., Technical Annex 4 Based on the challenges facing the health sector, the JHSSP will support the following components: (i) strengthening delivery o f health services; (ii) demand side interventions for pilot basic health services; (iii)development and management o fhumanresources; and (iv) institutional strengthening and monitoring and evaluation. Component 1:Strengthening Delivery o f Health Services (US$41.3 million equivalent): The objective o fthis component i s to strengthen the delivery and availability o f health services at the primary and first referral levels. Component 2: Innovative Demand-Side Interventions for Basic Health Services (US$16.9 million equivalent): The objective o f this component i s to support pilot testing o f different approaches designed to increase the utilization o f basic health services by stimulating demand. Component 3: Development and Management of HumanResources (US$7.4 million equivalent): The objective ofthis component i s to improve human resource management inthe health sector and strengthen capacity o f the HumanResource Department o f the MoH. Component 4: Institutional Strengthening and Monitoring and Evaluation(US$16.9 million equivalent): This component will continue to support a number of system development and institutional strengthening activities at the central and decentralized levels. 2 Which safeguard policies are triggered, ifany? Ref. PAD IKl?, TechnicalAnnex 10 The only safeguard triggered i s OP 4.01 Environmental Assessment, due to potential risks inthe ineffective medical waste management inhealth centers. As such, a Medical Waste Management Plan (MWMP).is required.The project does not trigger any o fthe World Bank's social safeguard's policies, since landwill not be acquired and civil works will be limited to rehabilitation o fexisting infrastructures. To addresspotential impacts on the environment and public health effectively, the MoHadopted the National Policy for Medical Waste Management inSeptember 2005. This Policy was approved anddisclosed onMarch23,2007 inthe Infoshop andbetween March20 and26,2007 in-country. The relevant detailed MWMPwas providedto the Bank inSeptember 2008 andjudged satisfactory. Significant, non-standard conditions, if any, for: Re$ PAD III.F. Boardpresentation: None Loadcredit effectiveness: Adoption o f a revised P I M and a Project Accounting Manual o f Procedure, satisfactory to IDA, to reflect the revised Chart of accounts, the new models o f Interimnon-auditedFinancial Reports (IFRs) and financial statements, and all policies andprocedures to be applied to the project. Covenants applicable to project implementation: Financial covenants are the standard ones as stated inthe Financing Agreement Schedule 2, Section I1(B) on FinancialManagement, Financial Reports and Audits and Section 4.09 o f the General Conditions. Inparticular, the proceeds o fthe credit shall be used (a) exclusively to finance Eligible Expenditures under the Annual Action Plan; and (b) inthe case o f Pooled Activities inaccordance with such percentages as shall be determinedeach year. Inaddition, the existingcomputerized accounting system will be upgraded to ensure timely production o f all financial and technical informationrequired by IDA andAFD, to be completedno later than two months after effectiveness. The project financial statements shall be audited on a six monthly basis by independent auditors acceptable to IDA. Independent auditors will be appointed within three months after the effectiveness date. Three additional covenants are included inthe project: (i) organization o f at least one Joint Health Sector Reviewannually; (ii) adoption o fthe the national Human Resource Development Planby December 31,201 0; and (iii) co-financing the deadline for effectiveness o f the Co-Financing Agreement o f AFD i s September 30,2009. Finally, no disbursements will be made (i) for bonuses under Component 2.1 untilthe manual establishing the system for such bonuses, satisfactory to the Association, has been adopted; (ii) for performance based allocations under Component 1.1 untilthe manual establishing the system o f such allocations, satisfactory to the Association, has been adopted; and (iii) the from components under the Pooled Fundinguntilthe Co-financing Agreement o f AFD i s made effective and the Collaboration Agreement has been signed. 3 I. STRATEGICCONTEXTANDRATIONALE A. C o u n t r y and sector issues 1. Poverty inMadagascar is widespread, with over two-thirds o fthe population living below the poverty line, andis heterogeneous amonggeographical regions, withthe eastern and southern coastal regions with poverty rates o f 80 percent. There are also significant urban-rural differences (52 percent versus 74 percent), although between 2001 and 2005, poverty declined more rapidly in rural areas than in urban areas. The last decade however, has witnessed marked improvements in basic social indicators, albeit from a low base. Today, more children are in school and net primary enrolment rates have increased from 70 percent in2002 to 85 percent in 2006/07. Child mortality rates have also declined significantly, from 159 deaths per 1,000 live births in 1997 to 94 in 2003/2004, and immunization rates significantly improved from 53 percent of all children 12-23 months fully immunized in 2003/2004, to 71.5 percent in 2008'. Chronic malnutritionrates of children under the age of three decreased from 43 percent in 1997 to 32 percent in2007. The prevalence of HIV/AIDS inthe country remains low, but has rapidly increased amonghighrisk groups and there are an estimated 180,000 persons livingwith HIV in the country. Madagascar's health indicators are better than other African countries at a similar income level, but they still remain low, particularly amongst the rural population and the urban poor. For example, the maternal mortality ratio in 2004 was still high at 469 deaths per 100,000 live births. Population growth inMadagascar i s 2.7 percent while the fertility rate is 5.2 children per woman, and children under-five make up around 17.5 percent of the population. Contraceptive prevalence in women aged 15-49 was only 24 percent in 2006. Thus, although there are encouraging developments, there i s still a long way to go given where Madagascar is today relative to the rest o fthe world. 2. Health i s a key goal o f Madagascar's poverty reductionstrategy, the Madagascar Action Plan (MAP) 2007-2012. In line with the MAP, the Ministry o f Health and Family Planning (MoH) developed a National Health Sector and Social Protection Development Plan (Plan de De'veloppementdu Secteur Sante' et de la Protection Social - PDSSPS) for the period 2007-201 1, which articulates and translates the M A P commitments into specific strategies and activities and identifies a number o f bottlenecks to increased access and use o f health services, includingfour key areas o fweakness: (0 Low levels of healthfinancing and inefficiencies in resource allocation: Madagascar spent aroundUS$6 per capita on health care in2005, significantly lower thanthe average of US$15.4 per capita for sub-Saharan Africa2. Despite increases o f the resource envelope of the M o H between2005 and 2008, the current budgetin2008 of aroundUS$144 million, or 1.6percent o f GDP, i s not sufficient to adequately finance the implementationo f the PDSSPS. Moreover, the budget execution rate, although improving, has remained weak with preliminary estimates at 73.4 percent in 2007. This low utilization of existing resources does not encourage the Ministry of Finance and Budget (MFB) to increase the allocation of domestic resources to the health sector. Furthermore, even when resources are available, they have been allocated inways that do not necessarily favor the poor, are not sufficiently directed to basic health centers, and the * Enguzte sur la Couverture Vaccinale, February 2008 excluding SouthAfrica 4 formula for allocating health resources does not take into account demographic or socio- economic differences across the regions. As a result, highimpact health interventions, especially those needed to improve maternal and child health, are not targeted to where they are most needed. For instance, the mortality rate among children and infants among the poorest 20 percent o fthe population i s more thanthree times higherthan for children among the richest 20 percent. (ii) Inadequate demandfor health services and low levels of utilization: only 10 percent o f the population reports an illness annually, and o f this, only 40 percent seeks care from qualified medical personnel. Financial barriers to access are the main reason for the low utilization o f health services and are often related not only to the direct cost o f the services, but also to other related expenditures, such as transportation costs and the opportunity cost o f seeking care. Moreover, geographic access to health care facilities is limited in rural areas, and about 10 percent o f those needing care live very far from a health facility and are unable to utilize health services when ill.A health mapping exercise done in 2007 showed that only about 58 percent o f the population lives within5 kilometers ofaprimary healthcenter. (iii) Uneven staffing of health facilities, especially in rural and remote areas: a fundamental problem underlying the unevenproduction and delivery o f health services in Madagascar is the huge variation in the allocation as well as training and competency levels o f medical and paramedical personnel. There are major imbalances inthe distribution o f doctors across rural and urban areas, with 28 percent of doctors serving 75 percent o f the population living in the rural areas and the remaining 72 percent inthe urbancenters. Moreover, an estimated 40 percent o f all primary health centers do not have doctors. In addition, the relatively low productivity o f medical personnel inthe public sector poses a major problem. Besides shirking and absenteeism documented in the 2007 Public Expenditure Tracking Survey and the Absenteeism Survey, low productivity o fthe medical personnel is also a result o f low levels o f remuneration. (iv) Poorly equipped health centers and low levels of capacity to produce and deliver health services, especially in rural and remote areas: health centers, especially those in the most isolated areas, often lack essential goods and equipments to facilitate diagnosis and treatment. Also, as demonstrated inthe 2007 Survey on Bottlenecks in Functioning o f the Supply Chain o f Drugs, there continue to be extensive delays inthe distribution o f drugs and medical supplies to the health facilities, taking, on average, up to one and a half months, and regions continue to have difficulties in efficiently managing their medical supplies. Managerial and implementation capacity at decentralized levels also continues to be weak. Finally, there are other indications o f low quality o f services at public facilities. In2007, only 65 percent o f public basic health centers had access to water, 31 percent had electricity, and only 56 percent had a means o f transportation. 3. To address these issues, the PDSSPS seeks to strengthen the health system and increase its capacity to provide the necessary production, financing, delivery and management support for improved service delivery to reduce neonatal, child and maternal mortality, and control illness such as malaria, tuberculosis, sexually transmitted infections (STIs), and HIV/AIDS. A new sector policy was adopted in June 2005, in which emphasis was placed on re-orienting health resource allocations to underserved areas and improving public expenditure management. Accordingly, ongoing efforts are being targeted to strengthen the delivery o f health services, develop and manage human resources in the health sector, introduce innovations in health 5 financing including resource mobilization and resource allocation, and improve demand for, and utilization of, health services. All development partners support the PDSSPS and are financing activities inscribed in the sector plan, albeit through parallel projects. There is, however, a general consensus among the development partners that a transition phase o f sector-specific support and sustained improvement inpublic resources i s necessary before the Ministry can fully benefit from general budget support. The M o H i s also in the process o f updating its Medium- Term Expenditure Framework (MTEF) for 2009-2011 and in parallel, the PDSSPS 2007-2011 will be updated for the period 2009-2011 based on the MTEF and to take into account lessons learned, further prioritizing activities andresults expected based on different financial scenarios. 4. The PDSSPS and the MTEF are the key anchors o f the Sector-Wide Approach (SWAP), the first phase o f which was put inplace in early 2007. The SWAP is contributing to increasing country ownership and leadership, fostering coordinated and open policy dialogue, putting greater focus on results, and guiding the allocation o f resources based on priorities. Finally, it is supporting enhancing sector-wide accountability with common fiduciary standards, and strengthening the country's capacity, systems and institutions. The SWAP is a critical step for Madagascar, especially since it became a member country for the International Health Partnership and related initiatives (IHP+) in May 2008. IHP+ i s a renewed global effort to support countries in achieving their health MillenniumDevelopment Goals (MDGs) with scaled up financial, technical and institutional support for activities and mechanisms designed to achieve results on the ground. A key element o f the IHP+ is the development o f results-focused, country-led Compacts that rally all development partners around one costed national health strategy, one Monitoring and Evaluation (M&E) framework, and one review process, thus improving harmonization, alignment, focus on results and mutual accountability. As such, the SWAp can act as the catalyst for the preparationo f this Compact for Madagascar. 5. The World Bank is supporting the SWAP through the Sustainable Health System Development Project (SHSDP), inthe amount o f the US$lO million, which became effective on August 30, 2007. The project was designedto lay the foundations for the SWAP and build the budgetary, implementation and monitoring capacity o f the MoH. The SHSDP seeks to provide support for strengthening the national health system, including financing, delivery and management, so as to improve the access and utilization o f health services, especially in rural and remote areas. Three other Bank-financed projects are also supporting the health sector: the Second Multi-sectoral STI/HIV/AIDS Prevention Project (MSPP II), the Poverty Reduction Support Credit (PRSC) and the Governance and Institutional Development Project (PGDI). The objective o f the MSPP I1 i s to support the Government o f Madagascar's efforts to promote a multi-sectoral response to the HIV/AIDS crisis and contain the spread o f HIV/AIDS. To do so, the project i s building capacity to carry out the national response to HIV/AIDS and STIs, a key risk factor for and contributor to the spread o f HIV/AIDS. The MSPP I1also seeks to improve the quality o f life o f persons living with HIV/AIDS through increased access to quality medical care and to non-medical support services. The PRSC Series and the PGDI are supporting improvements in financial management, including budget preparation and execution, implementation o f the new procurement code, improvements in human resource policy and decentralization o f service delivery in the health sector. In particular, the PGDI finances technical assistance to the key sectoral Ministries, including the MoH, on budget and public expenditure management, institutional capacity building, and support to improving governance and transparency in Government operations. 6 6. The World Bank i s collaborating closely with development partners in their respective support to the M o H to ensure implementation o f effective strategies for the development o f the health sector. The complementarity o f the respective contributions o f development partners in addressing the main public health issues and in institutional strengthening is exemplary, for example, with respect to the Expanded Program o f Vaccination (Global Alliance for Vaccination Initiative - GAVI, UNICEF, the World Bank), the malaria control program (USAIDPresident's Malaria Initiative, Global Fundto fight AIDS, Tuberculosis and Malaria - GFATM, the World Bank), the family planningprogram (USAID, UNFPA, the World Bank), and finally, support to improving o f the national health management and information system (European Union-EU and the World Bank).The proposed Joint Health Sector Support Project (JHSSP) will build upon the implementation experiences o f the various partners inMadagascar; for example, the introduction o fthe minimumpackage o f basic health services to mothers and children, initially developed and costed inpartnership with UNICEF. 7. Experience from Bank projects in the sector, including the SHSDP and the former Second Health Sector Support Project (CRESAN II), has highlighted certain bottlenecks in health service delivery but also demonstrated advances in certain areas o f the health system. With respect to financial management and reporting, disbursement o f project funds are made in advance andbased on bi-annualestimates presented ina financial management report as opposed to payments contingent on the presentation o f statements o f expenditures for disbursements. The internal audit capacity o f the M o H has been developed with the creation o f an internal audit body that has undertaken a number o f audits o f regional hospitals, developed actions plans for improvements in financial management, and overseen implementation o f these plans. With continued technical assistance, it should be able undertake high-quality, comprehensive financial and technical audits o f the PDSSPS acceptable to all SWAPpartners (thus eliminating the need for audits carried out by each individual agency). With respect to procurement, two o f the weaknesses identified during implementation o f the SHSDP have been addressed. Firstly, the unit responsible for procurement within the MoH has been institutionalized in conformity with the recommendations o f an international audit, and receives funding from a dedicated budget line. Secondly, the central and the regional procurement units have been trained to use the newly adopted Procurement Code, as well as on the various procurement requirements o f the development partners. Furthermore, the MoH, with the support of key health partners, such as UNICEF and WHO, i s also in the process o f putting in place an integrated procurement and logistics system for health and nutrition commodities. 8. The M o H has made significant progress on participatory annual work plan and budget planning inthe last few years. The planning process has been decentralized whereby work plans are prepared from the bottom-up, consolidated and validated at each level, and integrated at the central level into a national annual work plan. In addition, budgets are prepared at the district, regional and central levels based on each level's work plan. The overall budget is then adjusted based on the final envelope received from the MFB. Regions have also received assistance from the MFB for putting in place the appropriate financial software. As a result, although budget management i s still weak, especially at the regional and district levels, annual programming o f activities, budget planning, and monitoring at the local levels continue to show marked improvements. In an effort to facilitate inter-regional exchanges o f experience and lessons learned, the M o H i s putting place different mechanisms, such as creating coaching teams to support the regions and districts in public finance reforms, utilizing the "learning by doing" 7 methodology in conducting internal audits at the regional levels, and holding staff meetings in well-performing regions so that the best performers can serve as examples and role models. Finally, the practical design o f the bi-annual Joint Health Sector Reviews, with joint field missions to learn from experiences on the ground, and open and honest dialogue on constraints, bottlenecks and potential solutions, not only serves as an innovative and learning forum but fosters a certain measure o f healthy competition among the regions and districts. 9. These contributions are important but more needs to be done to support and strengthen the national health system to deliver better results on the ground. Thus, the proposed JHSSP will seek to consolidate results achieved under the SHSDP and intensify support to overall health system strengthening to improve utilization o f health services. B. Rationale for Bank involvement 10. The rationale for the Bank's continued involvement in the health sector i s strong. First, consolidation and scaling-up of support for basic health services i s essential for Madagascar to make progress in achieving the MDGs. The proposed JHSSP supports innovative results-based financing mechanisms for clear opportunities to `boost' progress on pro-poor and potentially highimpact activities, including the immunization o fchildren, control o fmalaria, andpopulation and family planning,which will contribute to the MDGs. Secondly, the current financial support provided by the SHSDP will be exhausted by end January 2009. The proposed JHSSP will be required to sustain the momentum o f the SWAP, consolidate results under the SHSDP, and provide the Government with more predictable financing through the end o f 2013. Finally, the Bank can play a catalytic role in leveraging additional resources for the health sector, such as through the IHP+ initiatives, within an agreed MTEF. The Bank is a key agency in a consortium o f development partners, including the African Development Bank (AfDB), AFD, the EU, French Cooperation, JICA, UNICEF, UNFPA, USAID and WHO. Moreover, the Bank plays an important role in bringing together the Government, civil society, and development partners around a common vision o f effective service delivery and improved governance and accountability through better public expendituremanagement. 11. The proposed project is included inthe Madagascar Country Assistance Strategy (CAS) for 2007-11on page 32. Key CAS goals supported include "improving services to people" (Pillar I1of the CAS) and "achieving better outcomes ineducation and health". Inhealth, the focus i s to helpthe Government make further progress on reducing neo-natal, child and maternal mortality by offering access to reproductive services, reducing malnutrition, improving the availability of clean water and sanitation services, and keeping HIV/AIDS and STI rates under control. The approach o f the proposed project - alignment with the government plan as enunciated in the MAP, harmonization and coordination with other development partners, and integrated sector- wide approach to health - is consistent with the CAS principles and approach. Finally, the JHSSP i s aligned with the World Bank health, nutrition and population strategy and the sectoral strategic priorities as laid out inthe Africa Action Plan. C. Higher level objectives to which the project contributes 12. The JHSSP is designedto support the implementation o fmajor parts o fthe Government's PDSSPS, which places an emphasis on maternal and child health with a key objective of 8 strengthening all aspects o f health systems, including the production, financing, delivery, stewardship and governance o f health services. The achievement o f the goals of the PDSSPS will, inter alia, include reduction in maternal, child and neo-natal mortality, fertility rate, and chronic malnutrition inchildren under the age o f five. The fiduciary dimensions and focus o f the JHSSP on strengthening public budgeting, financial management and procurement also fit with broader efforts in this direction and is supported by other Bank projects, especially the fifth PRSC. Activities under the JHSSP also emphasize transparency and predictability in budgeting and sectoral planning, thus in keeping with higher-level objectives in governance and public sector, and public expenditure management reform. The successful implementation o f JHSSP is expected to yield a number o f other development benefits as well, including coordinated and open policy dialogue, allocation o f resources based on priorities, sector-wide accountability with common fiduciary standards, and stronger country capacity and institutions. 11. PROJECT DESCRIPTION A. Lendinginstrument 13. The total cost o f the proposed JHSSP i s US$82.5 million equivalent. IDA's contribution to the JHSSP will be financed through a sector investment credit o f an amount equivalent to US$63 million, implemented over a four-year period from June 2009 to June 2013, with a closing date o f December 31, 2013. A portion o f IDA's support will be pooled with financing from AFD in a common account (US$19.5 million equivalent). This amount includes a contribution o f Euros2 million from KfW, who has entered into a silent partnershipwith AFD. B. Projectobjectiveand Phases NIA C. Projectdevelopment objectiveand key indicators 14. The development objective o f the JHSSP is to contribute to strengthening o f the health systemto increase utilization o f health services, particularly among mothers and children. To do so, the proposed JHSSP i s employing a two-pronged strategy: to provide financial and technical support to priority activities as identified in the PDSSPS, such as maternal and child health interventions; and to continue to strengthen the health system's ability to use resources more effectively, which in turn, should result in better results on the ground. Achievement o f the development objective will be monitored by the following key performance indicators: (i) percentage o f births attended by skilled health staff; (ii) percentage of women aged 15-49 using modern methods o f contraceptives; and (iii)percentage o f children under one immunized for DPT3lPenta. In addition, a series o f indicators will be used to monitor progress o f each component. For each indicator, the M o H has recorded the baseline value, confirmed the frequency o f monitoring and the institutions responsible for doing so, and set targets for achievement by 2013. These are summarized indetail inAnnex 3. D. Project components 15. The proposed JHSSP will directly support the sector by improving the supply o f health services, stimulating the use o f services, and strengthening the health system framework within 9 which these interventions are implemented through the following components: (i) strengthening delivery o f health services; (ii) innovative demand-side interventions for basic health services; (iii)development and management o f human resources; and (iv) institutional strengthening and monitoring and evaluation. Indicative allocations by component will be made for the project period; however, the actual allocations will be adjusted based on the Government's Annual Action Plan, as preparedby the MoH.The detailed project description by component i s inAnnex 4. The IDA credit would finance 100 percent o f eligible expenditures under Components 1.2,2.1 and 4.2 while the AFD grant would finance 100 percent o f eligible expenditures under Components 2.2 and 4.3 as described in Annex 4. IDA and AFD would jointly finance, at the respective percentages to be determined each year, 100 percent o f eligible expendituresunder all other project Components. 16. Component1:Strengthening Delivery of Health Services (US$41.3million equivalent): The objective o fthis component is to strengthen the delivery and availability o f health services at the primary and first referral levels. To this end, this component will support the strengthening o f the capacity o f the regions, districts and health centers to better organize, manage and deliver health goods and services to all, especially those living in rural and remote areas, but with continuing technical support and stewardship from the center. Efficient logistics and sustained availability o f pharmaceuticals, medical and laboratory equipment and supplies, critical for effective delivery o f basic health services, will also be supported by this component. Component activities will include: (1.1) allocations to regions, districts and health centers in part to cover fixed costs and in part based on achievement o f an agreed upon set o f results; (1.2) contracting- out o f basic health service delivery; and (1.3) support to the functionality o f health facilities, such as strengthening the distribution and management o f the pharmaceutical logistical supply chain, rehabilitation o fwarehouses, andprovision o f equipment, medical suppliesand medicines. Sub-components 1.1 and 1.2 would be financed by the pooled funds and sub-component 1.3 by 100percent IDA financing. The expected result o f this component would be the improvement o f delivery o fbasic health services at all levels. 17. Component 2: Innovative Demand-Side Interventions for Basic Health Services (US$16.9 million equivalent): The objective o f this component is to support the pilot testing o f different approaches designed to tackle financial and geographical barriers to access and introduce cost-effective interventions for mothers and children. One o f the ways to do this will be to expand coverage by encouraging health providers through performance bonuses to reach a higher number o f children and mothers (increasing supply) with a free-of-charge (which should increase demand) minimum package o f basic health interventions. A manual o f procedures governing the administration and monitoring o f the bonuses i s under preparation for each pilot region. The expected result i s therefore increased use o f basic health services especially those related to mother and child health. The component will finance technical assistance, training, goods and equipment to support activities aimed at (2.1) improving access and utilization o f basic health services; and (2.2) expandingenrollment in a social health insurance scheme for the formal sector. Sub-component 2.1 would be financed by 100 percent IDA and sub-component 2.2, 100percent AFD financing. 18. Component 3: Development and Management of Human Resources (US$7.4 million equivalent): The objective o f this component is to improve human resource management in the health sector and strengthen capacity o f the Human Resource Department o f the MoH. To this 10 end, this component will support the finalization and implementation o f the national Human Resource Development Plan as well as career plans for medical personnel. In addition, innovative and performance-based mechanisms will be developed and implemented to provide incentives to rural-based personnel and promote enhanced performance o f such personnel. This component will also support selective training o f health personnel on priority areas o f health service delivery, and inmanagement for results. This component will therefore finance technical assistance, training, small rehabilitation o f existing health centers, goods, medical supplies, medicines and equipment. This component would be entirely financed by the pooled funds. The expected results o f this component would be a more equitable distribution o f qualified medical andparamedical personnel inspecified rural regions. 19. Component 4: Institutional Strengthening and Monitoring and Evaluation (US$16.9 million equivalent): This component will continue to support a number o f system development and institutional strengthening activities at the central and decentralized levels, including the following sub-components: (4.1) improving technical and management capacity and district levels in areas such as public expenditure management and governance, procurement, financial management, internal auditing, and project oversight, which will complement and increase efficiency o f the continuing support provided through PGDI; (4.2) strengthening the national Health Management Information System (HMIS) and improving capacity in data collection, management, dissemination and use o f data for decision-making at all levels o fthe system; (4.3) strengthening epidemiological surveillance system; and (4.4) support to project supervision and execution. Sub-components 4.1 and 4.4 would be financed by the pooled funds, while sub- component 4.2 would be financed by 100percent IDA financing and sub-component 4.3, by 100 percent'AFD financing. The expected result o f this component would be the improvement o f planning, budgeting, management, implementation, andmonitoring capacity at all levels. E. Lessons learned and reflected inthe project design 20. The design o f the JHSSP draws upon a number o f lessons learned from international experience and from implementation o f a series o f health and STI/HIV/AIDS prevention projects in Madagascar. The following are the most important lessons that have been taken into account whilst developingthe JHSSP: 21. Alignment with Government's vision and priorities. The M o H has developed an integrated and common health sector strategy inthe form o f the PDSSPS, which i s based on the Government's vision as articulated inthe MAP. The development of this strategy along with the revised MTEF was the first step in towards a comprehensive and harmonized SWAp. The activities o f the proposed JHSSP are therefore based on the strategies and results expected outlined inboth the PDSSPS and the MTEF 2007-2011 and as such, clearly reflect the needs and priorities o f the MoH. This serves to strengthen Government ownership o f the JHSSP and guarantee its commitment to implementation, as well as ensures that it contributes to the achievement o f the objectives o fthe PDSSPS. 22. Maintaining support to decentralized levels of the health system is critical. Under previous Bank support, the implementation capacity o f key technical M o H departments has improved as a result o f technical assistance and capacity building in planning, financial management and procurement. However, a number of weaknesses remain, especially at the 11 decentralized levels. Thus, technical assistanceto these levels has beenintegrated into the project including all elements o f budget planning and execution, data analysis and use for decision- making, supply chain management and distribution, and medical waste management. Inaddition, external technical advisors andor consultants recruited will be required to not only provide technical support on specific issues, but will also be paired up with Government counterparts whom they will train on the issue-at-hand to buildthe technical capacity o f the MoH. 23. Keep maximum flexibility to allow for response to urgent needs. The evaluation and implementation completion report o fthe CRESAN I1showed the importance o f the flexibility o f project design to allow for a rapid response to national emergency needs during implementation. Given that public health context is constantly evolving and Madagascar is subject to frequent cyclones and public health outbreaks, the proposed JHSSP is being designed in such a way to allow the Ministry some flexibility to redirect resources to address urgent needs while protecting priority activities. While maintaining flexibility, however, performance indicators should reflect implementation progress as well as interventions actually financed to avoid any disconnect with achievement o fthe project development objective. 24. Reduce the transaction costsfor the Government. A key goal o f a SWAP inhealth is to reduce the burden and transactions costs for Government. As such, the proposed JHSSP implementation modalities are expected to improve allocative efficiency by reducing transaction costs at all levels o f the health pyramid, through common implementation, procurement, and disbursementplansas well as common simplified procedures. Moreover, the JHSSP will provide support to the HMIS to encourage one single M&E system, integrating the multiple tools currently used by development partners, similar to the "Three Ones" for the national HIV/AIDS prevention program. The creation o f an integrated and comprehensive health sector M&E system will be essential for project management, decision-making andmonitoringresults. F. Alternatives considered and reasons for rejection 25. There i s general consensus among development partners that a sector investment credit for financing the support to the health sector continues to be preferredto general budget support as the primary vehicle for financing. There i s widespread recognition that the challenges in health are too specific and the sector i s too fragmented to fully benefit from pure budget support. The World Bank's Independent Evaluation Group (which completed a country assistance evaluation inJuly 2006 o f IDA's involvement inMadagascar for 1995-2005) also recommended limiting the role of budget support until there is a sustained improvement in collecting and managing public resources. Limiting support to the health sector through budget support under the PRSCs was rejected because o f the relative fragility of the macro environment which would expose the sector to economy-wide shocks outside the control o f the Government. Although in recent years the Government has improved management o f these external shocks (such as cyclones and oil price increases), priority sectors cannot yet be insulated as necessary from such negative events. Based on this assessment, it was deemed critical to ear-mark funds for the health sector under the JHSSP. The use o f an Adaptable Program Loan was also considered given the phased programmatic approach. However, the development partners group did not want to condition subsequent phases o f investment.Thus a sector investmentcredit was considered to be the best option underthe current circumstances. 12 111. IMPLEMENTATION A. Partnershiparrangements 26. In line with the 2005 Paris Declaration on Aid Effectiveness, there is broad-based consensus between Government and development partners on the SWAP and on the PDSSPS. All donors are providing support to the PDSSPS but with many still providing parallel financing through specific projects. Furthermore, bi-annual Joint Health Sector Reviews will continue to be led by M o H with the participation o f all stakeholders and development partners as well as representatives from civil society, private sector and other relevant ministries. The Joint Health Sector Reviews have three components: (i) joint preparation o f critical questions in a number o f thematic areas; (ii) a joint field visit to a number o f different regions to better understand the problems in the field and undertake discussions with stakeholders at the regional, district and community levels on the critical questions; and (iii)plenary session o f two days to consolidate a the field work and prepare a prioritized action plan for the following six-month period. These Reviews have been successful in giving voice to the all levels o f health service providers and facilitating a constructive dialogue around bottlenecks and capacity constraints to service delivery. The Reviews will continue to provide a mechanism for monitoring progress on implementation o f the PDSSPS and serve as one o f the country's health sector coordination mechanisms. 27. A document outlining the Guiding Principles for a SWAP laying out the coordination, financing and monitoring principles governing the implementation o f the PDSSPS was signed by the MoH and development partners during the third Joint Health Sector Review in December 2008. These Guiding Principles serve as the foundation for the development o f a country Compact, a critical milestone o f IHP+, and which i s expected to be prepared in 2009. With respect to the pooled financing under the proposed project, a separate Collaboration Agreement outlines the organizational, institutional and coordination arrangements for implementation, the roles and responsibilities o f each partner pooling their resources as well as and arrangementsfor adding new partners during implementation, and will be signed initially by the Government, AFD and the World Bank. The goal is that participating donors will gradually expand the share o f their support that i s pooled and that other donors will switch from parallel to pooled funding as existing projects close. AFD will administer its own financing. B. Institutionaland implementationarrangements 28. The M o H will be responsible for the overall oversight o f PDSSPS as well as o f project activities. The Ministry's Management Team will continue to function as the Steering Committee for oversight o f implementation o f project activities and monitoring o f progress in achieving development objectives. A project coordination team (Cellule de Gestion de Programme - CGP),reporting directly to the Secretary General, will be responsible for the day- to-day coordination o f project activities. This CGP i s made up of experienced professionals who have beenresponsible for oversight o f Bank-financedhealth projects over the last ten years. This team has already demonstrated its capacity both to manage IDA'Sfinancial management and procurement procedures and to innovate effectively at all levels o f the health care system to improve the accessibility and quality o f health services. 13 29. In close collaboration with the Directorate o f Finance (DF) and the Directorate o f Planning and Studies (DEP) within MoH, the CGP will be responsible for annual project planningand budgeting. The CGP will also be responsible for project management including: (i) coordination and communication with all agencies involved inthe implementation o fthe Project, including all M o H technical departments at the central and decentralized levels, on the basis o f the Annual Action Plans; (ii)consolidation o f district-level work plans and budgets; (iii) maintenance o f records and separate accounts for all transactions related to the CGP; (iv) preparation, consolidation and production o f the project financial statements and other financial information; (v) management o f the three designated accounts; (vi) overseeing procurement; and (vii) M&E o f the various activities supported under the project. The CGP is currently headed by a National Coordinator nominated by MoH, and existing staff include specialists in accounting, procurement and M&E. An in-depth capacity assessment of the CGP and M o H undertaken during appraisal confirms that the CGP is adequately staffed and that appropriate resources have been earmarked to meet project implementation needs. 30. The MoH, through its Secretary General, will: (i) consistency o f project activities ensure with the Government's policy and strategy; (ii) approve the annual action plan and budget; and (iii)follow-up onproject performance andimplementation progress. The implementationof project activities will be entrusted to technical departments o f M o H and regional and district operating units, which will receive timely payments from the CGP based upon submission o f satisfactory quarterly budgeted action plans. The regional and district operating units will manage disbursements from their own bank accounts. Under the supervision o f the regional financial officer(s), they will maintain records and accounts for all transactions related to them, and prepare financial reports and other basic information on project management and monitoring as required by the CGP. The district operating units are also responsible for the accounting and payment o f all transactions o fthe health centers undertheir authority. 31. A portion o f the financing for this project will be placed in a pooled account with the remaining amounts in separate designated accounts. All project activities will be included in a common action plan, procurement plan and disbursement plan. A harmonized Project Implementation Manuel (PIM) and Project Accounting Manual o f Procedures will ensure that Government only has to use one set o f procedures for all donors participating inthis project. The IDA credit would finance 100percent o f expenditures under Components 1.2, 2.1 and 4.2 while the AFD grant would finance 100 percent o f expenditures under Components 2.2 and 4.3 as described in Annex 4. IDA and AFD would.jointly finance, at the respective percentages to be determinedeach year, 100percent o f eligible expenditures under all other project Components. C. Monitoringand evaluation of outcomesand results 32. The five-year PDSSPS includes a Results Framework which focuses on monitoring resources, processes and outputs directly related to actions and activities implemented by the MoH. Another set o f outcome indicators i s used for broad sector monitoring. JHSSP indicators have been selected on the basis that they are regularly monitored through the HMIS, which will track the specific inputs and results o f project activities. M&E o f the project will be undertaken by the CGP and the Directorateo fMonitoring and Evaluationwho will bejointly responsible for organizing the collection, analysis, presentation and dissemination o f these indicators, with technical support o f the development partners. Data collection will take place using existing 14 reporting mechanisms. The MoH's Management Team oversees the monitoring o f progress on the sector's Results Framework and is responsible for data analysis for decision-making, health policy analysis, and healthpolicy and management training. 33. Under the SHSDP, technical assistance is being provided to the Directorate of Monitoring and Evaluation and as a result, the M&E guide and the audit guidelines are now available. Each health center now has a monthly `tracking table' that records physical and financial activities. Indicators are monitored inthe monthly activity report which tracks progress on results indicators. Data i s also collected on human resources and equipment on an annual basis, financial flow data on a monthly basis, and services produced and delivered on a monthly basis. At the decentralized levels o f the MoH, the on-going SHSDP is providing assistance in enhancing the data collection capabilities, strengthening the institutional capacity o f the HMIS, andensuring the appropriate dissemination o fdata. D. Sustainability 34. Although the Government will continue to rely on external assistance for health sector financing in the foreseeable future, it will also need to take concrete steps to improve the financing o f recurrent expenditureswithin the national budget. To improve the budget execution rate, the M o H must increase its capacity to produce, finance, deliver and manage services. To this end, the project will build the capacity o f the central level in financial management, and clarify role and responsibilities o f the decentralized levels as well as strengthen regional and district level capacities inplanning, programming and budgetingto support enhanced budgetary execution and improved prioritization and rationalization o f activities. Putting in place a SWAP i s expected to increase ownership and leadership, reduce the fragmentation of financing provided to the sector, improve technical and allocative efficiency of public expenditures, and thus contribute to the sustainability o f investments. Finally, Madagascar joined the IHP+ in May 2008, the first milestone o f which i s the development o f a country Compact that will rally all development partners, and therefore increase alignment, predictability o f aid and mutual accountability. E. Critical risks and possible controversial aspects 35. There are no anticipated controversial aspects to the proposed project. The risks and risk mitigation measuresare outlined inTable 1. 15 Table1RI ks andRisk Mitigation Measures Risks Risk mitigation measures Riskrating whitigation To Project Development Objective: Weakpublic expendituremanagement within This risk is mitigated boththrough the institutional Moderate thesector: Poor public expenditure capacity buildingcomponent ofthe proposedproject and management is acritical constraintto efficient through parallel projects aimedat public finance utilization of existing resources at all levels of managementreforms and improvementingovernance, the healthsystem. Even ifmore financial such as the PGDI. Close collaboration with the public resourcesbecomes available, ifthe public sector managementgroup and PREM will also facilitate expendituremanagementis not improved, this work. Stronger coordinationwith the MFBwill be including the flow anduse ofresourcesby the facilitated through technical assistanceprovided by PGDI. regions, districts and health centers, results on While sector andnational fiduciary systems are being the groundwill continue to be slow. strengthened, the fiduciary aspects ofthis project will be entrusted to the CGP within the MoH. The CGP has a sound financial managementsystem and good experience inmanagingdonor funds.The 17financial management officers recruited under SHSDP will continueto provide supportto the regional operatingunits. Poor auditingcapacity: Audits maynot be A country action planhas beenpreparedby the authorities Moderate conductedincompliance with international to strengthenthe accountingprofession. An Institutional auditing standards dueto: (i) weak capacityo f DevelopmentFund grant is currently underpreparation the accountingprofessioninMadagascar; and for the implementationofthese actions.Inthe meantime, (ii) inadequatenumber of skilled and the audit ofthe project accountswill be carried out by an experiencedauditors at the "Chambre des international accountingfirm or by an international Comptes" inparticular. accountingfirm associatedwith local auditing f m s , with effective participation ofthe former inthe fieldwork. The selectedauditing fmwill be invitedto perform the audit jointly with the Auditor General. The PDSSPSis beingrevisedto take into account lessons Low sector developmentstrategy may lack adequate learnedand further prioritize activities and results focus on the most critical priorities resulting in expected basedon different financial scenarios as outlined a fragmentationof sector strategy activities and by the sectoralMTEF 2009-2013. The PDSSPSand the dilution ofresults on the ground. MTEF have servedas key inputs into the designofproject activities. Inaddition, IHP+ and the development of a country Compact require a strongly prioritizedsector plan in line with afour-year MTEF, focused on afew select results. As Madagascar is an IHP+ focus country, there are stronger incentives for the country to prioritize to attract additional donor funding. Increasedtransactioncostsfor Government: The bulk ofthe financing for the JHSSP will beplaced in Moderate Differentsourcesof financingeach with apooled account with nominal amounts inseparate different procedures and reporting mechanisms designated accounts.All JHSSP activities are included in will place a highburdenon and increase a commonactionplan,procurementplan and transactions actions for the Governmentandthe disbursement plan and aharmonizedPIMwill ensure that MoH, which inturn could slow implementation Governmenthas to use one set ofproceduresfor and disbursement. utilization of funds, althoughsince eachdonor is administering its own financing, certainpolicies and proceduresof each donor may be used. 16 Table I cont'6 Risks and Risk Mitigation Measures Risks Riskmitigation measures Risk rating whitigation To component results: Weak implementationcapacity: The Implementation capacity o f key technical departments M o derate implementation arrangements remain the same and o f each o fthe decentralizedlevels is being as for the SHSDP. The function o fthe project strengtheningthrough long-term technical assistance, coordination team has been further integrated coaching andtraining and is slowly improving. The into the M o H with the unit functioning mainly provision o f performance-based allocations will provide as a facilitator in overseeing the day-to-day motivation to improve implementation and results on the management o ftechnical activities, ground. The excellent implementation track recordthus implemented by the respective technical far o fthe CGP along with continued highquality departments. However, implementation technical and strong political support fiom the highest capacity at the regional, district and health level are key elements for mitigating this risk. center levels remains weak. Frequent turnover in already scarce health The development o f career plans for medical and Moderate personnel: Turn-over at all levels o fthe health paramedical staff, with the first wave focused on staff in system and inparticular, inrural remote areas, rural areas, is expected to contribute to reducing this risk. will impact the quality o fhealth services Inaddition, the proposedproject will pilot andscale upa provided. package o f incentives and other innovative mechanisms to retain staff inrural areas. Financial Management: There is a risk o f The Project Accounting Manual o f Procedures i s being L o w misclassification o f expenditures and non- updated to include the new Chart o f accounts and reflect compliance with agreed changes inprocedures. agreed changes inproceduresto be applied. The The computerized system inplace may not computerized accounting system usedby SHSDP is satisfy the requirements o f other donors in being customized and updated to meet user needs and financial and technical information. satisfy donor requirements in financial and technical information. Capacity continues to be built inthe procurement unit o f L o w a new code, there continues to be weaknesses the M o H through a long-term technical assistance and incountry procurement systems and in through transfer o fknowledge and competencies o f the institutional capacities. experienced procurement staff ofthe CGP. The procurement arrangements for the JHSSP are the same as for the SHSDP which have proven successful. The performance o fthe Ministry will continue to be evaluated regularly. To component results: Social and environmentalsafeguards: MOH The National Policy on Medical Waste Management was Moderate has been actively engaged intrying to resolve adopted inSeptember 2005. It was approved and the problems related to management o f medical disclosed on March 23,2007 inthe Infoshop and inthe waste, although capacity remains weak interms country between March 20 and 26,2007. o f implementation o f activities. The Service d'Appui aux GkniesSanitaires (SAGS) has The Government has recently updated the Medical Waste beenan integralplayer inthe development o f Management Plan (MWMP) and reinforced its the policy as well as information, education commitment by the inclusion o fthe necessary budget for and communication activities and training medical waste management for rehabilitated and conducted at various levels. However, much equipped health centers in the 2009 State budget and in more work needs to be done on ensuring that years thereafter. the norms outlined inthe policy are applied to Support to strengthening the medical waste management eachtype o f health center. capacity o f the M o H at all levels is being built into the Institutional Strengthening Component o fthe proposed project. Overall Risk Rating Moderate 17 F. Loadcredit conditions and covenants 36. Conditions and covenants pertaining to the IDA credit include the following: (a) Conditions of Effectiveness: Adoption o f a revisedPIM and a Project Accounting Manual o f Procedures, satisfactory to IDA, to reflect the revised Chart o f accounts, the new models o f Interim unaudited Financial Reports (IFRs) and financial statements, and all policies and procedures to be applied to the project. In addition, there are the standard legal conditions that apply to the effectiveness o f credit agreements. (3) Financial Covenants: Financial covenants are the standard ones as stated in the Financing Agreement Schedule 2, Section I1(B) on Financial Management, Financial Reports and Audits and Section 4.09 o fthe General Conditions. Inparticular, the proceeds o fthe credit shall be used (a) exclusively to finance Eligible Expenditures under the Annual Action Plan; and (b) in the case o f Pooled Activities in accordance with such percentages as shall be determined each year. In addition, the existing computerized accounting system will be upgraded to ensure timely production o f all financial and technical information required by IDA and AFD no later than two months from the effectiveness date. This action i s presently underway and expected to be completed no later than two months after effectiveness. The project financial statements shall be audited on a six monthly basis by independent auditors acceptable to IDA. Independent auditors will be appointed withinthree months after the effectiveness date. (c) Other Covenants:Three additional covenants are includedinthe project: (i) organization o f at least one Joint Health Sector Review annually; (ii) the adoption of the national HumanResource Development Plan by December 31,2010; and (iii) the co-financing deadline for effectiveness of the Co-Financing Agreement o fAFD is September 30,2009. (d) Disbursement Conditions: No disbursementswill be made (i) bonuses under Component for 2.1 untilthe manual establishing the system for such bonuses, satisfactory to the Association, has been adopted; (ii)for performance-based allocations under Component 1.1 until the manual establishing the system o f such allocations, satisfactory to the Association, has beenadopted; and (iii) thecomponentsunderthePooledFundinguntiltheCo-financingAgreementofAFDis from made effective and the Collaboration Agreement i s signed. IV. APPRAISAL SUMMARY A. Economicand financialanalyses 37. The underlying rationale for the JHSSP i s the continued need for the Government o f Madagascar to improve budget sustainability by incrementally increasing public financing for the health sector, mitigating allocative and technical inefficiencies, and improving targeting o f resources for vulnerable groups and high priority health programs. JHSSP i s also expected to generate further benefits by adopting a programmatic approach that will reduce the fragmentation o f donor support and strengthenlinkages with the M A P and PDSSPS. 38. With a per capita GDP estimated at US$375 in 2007 and about 70 percent o f its population living inpoverty, Madagascar i s one o f the poorest countries inthe world. The health 18 sector faces many challenges and at the current level o f expenditures, the country will not be able to achieve the health-related MDGs. Preliminary results o f the MTEF, costed by the M o H with the support o f UNICEF and other partners, show that an additional US$7 per capita will be required for 2009-2010 and US$8.10 per capita for 2011-2012 to achieve a reduction in child mortality by 46 percent, neo-natal mortality by 29 percent and maternal mortality by 44 percent, necessary to sustain progress in achieving these MDGs. Given the Government's macroeconomic constraints, the financing gap inthe health sector cannot be bridged with internal resources. Therefore, donor assistance, financing a large share o f the sector's investmentbudget, will continue to be relied upon. 39. The Bank-financed CRESAN 11, which closed in December 2007, has supported the health sector since 1999 and financed some 65 percent o f the M o H investment expenditures in 2005. The key, however, is not only to find the required resources but also to spend them effectively and efficiently. Despite M o H efforts, budget execution remains low (according to preliminaryestimates at 73.4 percent in 2007), and constitutes a challenge that is both internal (removing cumbersome procedures and addressing technical capacity shortcomings) and external (ensuring a higher degree o f predictability and coordination inthe delivery o f foreign assistance). JHSSP aims to fill a part o f the financing gap, while at the same time addressing some o f the budget management bottlenecks confronting the Government, including internal management weaknesses at all administrative levels, volatility o f donor funds, and high transaction costs created by the proliferation o f parallel projects with different management and reporting mechanisms. JHSSP will support a coordinated approach o f development partners insupport o f a Government-owned health strategy, with a corresponding MTEF leading to greater harmonization indonor processes andprocedures. 40. The economic value o f the proposed intervention, and the justification for supporting public intervention in the health sector, are attributable in part to the presence o f important market failures reflecting the presence o f externalities as well as the public goods dimension o f health services. Preventable diseases such as diarrhea and malaria are the major causes o f mortality and morbidity in Madagascar, especially among children under five. JHSSP will finance activities aimed at prevention and treatment o f these diseases, and will support information and community-based campaigns. In addition, JHSSP has a pro-poor bias, and will finance activities aimed at reducing the inequalities in access and utilization o f health services. There are large income inequalities inthe utilization o f health services inMadagascar, partly due to poor physical access to health services in rural isolated areas, and partly to financial and cultural barriers to utilizing services. The recurrent budget o f the M o H i s unequally distributed across regions, and in general, richer regions receive higher amounts o f budget per capita than poorer regions. This also reflects an unequal distribution o f qualified medical personnel, which benefits richer urban areas, and somewhat the higher concentration o f health centers inbetter-off regions. The project will seek to address this unequal distribution o f resources by financing interventions in underserved, rural areas where poverty rates are highest. Moreover, the project will focus on cost-effective interventions to prevent and treat the illnesses that can be delivered at household, community and health center level. By improving coordination and harmonization among donors, the project will also improve allocative efficiency by diminishing transaction costs and thus diminishing administrative costs o f MoH when handling different donor- supported projects. 19 41. Finally systems and process-related benefits are expected to be generated by the proposed intervention. Better planning, financing, organization and management o f the health sector will be supported (notably through technical assistance and knowledge-building through pilot initiatives) and household-oriented benefits (better access, increased utilization o f health services and improved health status, especially o f vulnerable groups living in rural areas, women and children) will be sought. The adoption o f a programmatic approach i s aligned with the objective o f promoting a strategic partnership between the M o H and the principal development partners, and of achieving greater aid effectiveness through harmonization o f donor assistance and better alignment to client processes and priorities. B. Technical 42. The overall technical design o f the project i s aligned with the country's priorities and consistent with international good practice. The project has been designed in response to health sector priorities and needs, thus is in line with the revised PDSSPS. The last Demographic and Health Survey (DHS) 2003/2004 provides solid baselines for the key health indicators for the country and the 2007 Health InfrastructureDevelopment Plan is a reliable source o f information on availability at health centers and distribution o f resources. 43. Consultations and joint reviews with some o f the development partners helped identify specific support required by the government. Lessons learned and good practices from recent IDA or other development partner-financed healthprojects inMadagascar and inthe region will be capitalized upon to ensure better scaling-up o f proved high-impact interventions: quality management at the primary health care level, community-based activities related to health, and integration o f services on reproductive health. The project will also benefit from analytical studies provided by AFD (improvement o f the budget allocation criteria for the district level, assessment o f insurance schemes), by UNICEF (costing o f a `minimum package' o f high-impact, low cost health interventions) and from evaluation o f the current pilots under SHSDP: incentive measures for providers, universal access to obstetrical and neonatal emergencies. Lastly, innovative approaches calling upon mutual accountability and performance culture will be explored through results-based financing mechanisms. 44. Project elements will be implementedon the basis o f national strategies and international norms and standards (performance indicators, good practices inimmunization, community-based malaria treatment and at the primary health level, performance-based contracting). The project aims to implement cost-effective interventions o f proven values to address priority health issues, and to avoid overburdening the Government counterpart with procedure issues. 45. The designrecognizes the necessity to strengthen the health systemas a whole inorder to achieve the expected results. An emphasis on capacity strengthening i s relevant and the project will support the decentralized levels to use available data indecision-making, and will strengthen management, planning and budget process capacities to ensure timely and efficient budget execution. 20 C. Fiduciary 46. Procurement. A new Procurement Code was passed by the Parliament and the Senate and became effective in July 2004 and included simplification of procedures and compliance with international standards. The Procurement Code has also been supplemented by regulations, procedure manuals, and standard biddingand other procurement documents. The Bank approved the Use o f Country Systems (USC) on April 24, 2008, which includes International Competitive Bidding (ICB) and Quality and Cost-Based Selection (QCBS). However, this approval does not extend to Madagascar given that there are a certain number o f pre-requisites that have not been fulfilled, including the fact that Madagascar has not yet expressed its interest to be part o f the pilot. As a result, despite the support from other development partners for USC, there continues to be no formal approval from any partners on USC in Madagascar. Therefore, during the preparation o f the proposed project, it was agreed with,the Borrower that IDA Guidelines and Standard Bidding Documents (SBDs) would be used. The existing PIM will be updated before credit effectiveness to reflect the arrangements for the proposed JHSSP. 47. Procurement activities o f the project will be carried out by the Unite' de Gestion de la Passation de Marche's (UGPM) o f the M o H in coordination with the procurement team o f the CGP which is responsible for oversight o f implementation o f the on-going Madagascar SHSDP. This unit will function as a MoH procurement unit in accordance with the provisions of the Procurement Code. The CGP procurement team i s currently duly staffed with two proficient procurement officers and an assistant. The UGPM has had some experience in managing procurement operations within the M o H and i s properly staffed with health procurement specialists. A Procurement Capacity Assessment o f MoH, including training needs and arrangements, was conducted as part o f project preparation. The assessment reviewed the organizational structure for implementing the pooled financing activities and the interaction between the UGPM, the CGP'S staff responsible for procurement, and the DF. Corrective measures were agreed upon in May 2007 during preparation o f the on-going project and are being implemented in a timely manner along with the agreed procurement action plan. As such, the procurement action planis being, and will continueto be, fine-tunedquarterlyandthe project procurement plan will be updated accordingly. As part o f supervision missions and inaddition to regular post procurement reviews, independent procurement and technical audits will be carried out as needed. The overall project andproject risk for procurement i s therefore moderate. 48. Financial management. In accordance with Bank policy and procedures, the financial management arrangements o f the CGP and the regional operating units responsible for implementation o f the project have been reviewed in order to determine whether they are acceptable to the Bank. This review i s actually an update since the financial management systems o f these entities have already been assessed in the context o f the ongoing SHSDP. The conclusion o f the financial management assessment i s that the CGP and the related operating units of the MoH satisfy the Bank's minimum financial management requirements specified in OPBP 10.02. However, some improvements will be needed to further strengthen the financial management system. 49. To efficiently address the challenges o f the proposed project, a financial management plan has been developed and agreed upon with M o H to ensure an environment which mitigates fiduciary risk.Measures to be taken are the following: 21 Maintenance o f a qualified technical assistant recruitedunder SHSDP who i s acquainted with both the national financial management system and IDA financial management procedures. The mandate o f this technical assistant is to strengthen the financial management capacity o f the MoH, and specifically the DF, and supervise the financial management aspects o f all programs to be implementedby MoH. This action has been completed; Extension o f the on-going contracts o f the seventeen financial management officers recruited under the SHSDP to: (i) provide the regional operating units with the required capacity to quickly disburse and account for project funds; (ii) ensure, at the regional and district levels, the use o f funds for the purposes intended; and (iii) assure timely preparation o f periodic financial reports required for proper monitoring o f activities implemented by regional operating units, with respect to financial and physical aspects. This action has been completed; Review o f the Chart o f accounts to reflect all components and activities to be financed under this project and satisfy the requirements o f other development partners in financial, accounting and technical information related to the project. This action will be completed as partofthe revisiono fthe Project Accounting Manual ofProcedures; Update o f the Project Accounting Manual of Procedures to include the new Chart o f accounts, agreed changes in flow o f funds, models o f IFRs and financial statements and all policies and procedures to be applied underthis project. The content and formats of IFRs and financial statements were agreed at negotiations. The update o f the manual will be completed prior to credit effectiveness; and Customizing and upgrading o f the computerized accounting system currently used by the CGP inorder to satisfy donor requirements infinancial and technical information, and ensure timely production o f annual financial statements and quarterly IFRs for monitoring project activities. The new software will be functional no later than two months after credit effectiveness. 50. The review of the Chart of accounts and the extension o f the contract o f the seventeen financial management officers has been undertaken. To ensure proper application o f procedures described inthe revised manual, a specific training will be provided prior to credit effectiveness. To mitigate risks raised by the limitedcapacity o f the Auditor General (Chambre des Comptes), the partners and Government agreed that, as an interimmeasure, an international private auditing firm acceptable to the donors will carry out the audit of the project accounts jointly with the Auditor General. This audit will be performed on a six-monthly basis and conducted in accordance with International Standards o f Auditing. The auditors will be recruited within three months after the effectiveness date. The audit report will be submittedto IDA and AFD not later than six months after the end of each period. No significant problems have been encountered so far interms o f audit covenants: all audit reports related to IDA-financed projects in Madagascar have been received indue time. 51. To build and strengthen the financial management capacity o f M o H staff at all levels, capacity building activities are being developed in the medium-termthrough the ongoing public financial management reforms supported by PGDI and other development partners. Institutional strengtheningactivities are also being undertaken under Component 4 of this project to enable the MoH to move towards sector-wide financial management arrangements by the end o f the project period. 22 D. Social 52. A Poverty and Social Impact Analysis carried out in 2005 highlighted the absence o f citizen involvement inmonitoring service quality inhealth as well as a lack o f empowerment o f local health committees, which represent a key focus o f community level involvement in the health system. The limited use o f public health centers is mainly related to financial barriers to access and poor quality o f health services provided. Moreover, lack o f education incommunities prevents understanding o f the importance o f reproductive health services: family-planningis not widely accepted by men; antenatal care is delayed; and women are reluctant to deliver inhealth facilities. Although public primary health services are free and drugs are subsidized through equity fund mechanisms, other related costs (transportation, accommodation, meals) represent important financial constraints to accessing health services. Health care providers are reproached for absenteeism, lack o f professionalism and/or skills and poor quality o f the services provided which lead to loss o f trust between provider and patient. Community-based care has been addressed through the community-based health workers initiative but communities need to be empowered. Moreover, Madagascar's physical characteristics o f having numerous remote and difficult to access areas makes it difficult to rely only on top-down supervisionto monitor quality andperformance o faround 3,000 healthcenters. 53. In this context, health service quality could be improved if there were support for engaging local communities in the monitoring o f health quality, and if the accountability and transparency o f the relationship between the service providers and users is strengthened at the local level. Social accountability mechanisms need to be established in order to provide community members with simple but effective reporting mechanisms as well as sensitize them to service norms and rights and responsibilities o f various actors in provision o f health care. Experience with the application o f social accountability mechanisms in other countries has highlighted their effectiveness in reducing absenteeism, improving treatment o f clients, and increasing utilization o f health services. Such mechanisms may also provide greater transparency and demand for timely allocations from the communes to pay for medicine dispensers and guards. Empowering the health committees to apply pressure on the mayors' office to allocate these funds for training them and providing them with transport allowances to participate in health management committees also helps. These represent relatively small investments, since the potential payoff can be large, especially given the critical role played by the dispenser in providing drugs, an essential element inaccess and quality o f health care. 54. An ongoing pilot is testingand adapting a Community Scorecard to the health sector, and is expected to provide valuable lessons on how such mechanisms could be adapted and more systematically integrated into the health sector monitoring. A draft implementation manual has been developed, and could be used for scaling up these mechanisms in the future. These pilots are being tested both in areas in which top-down performance and quality enhancement projects are in place as well as in areas without these projects. During the pilot stage, the Community Scorecard mechanism was selected because it was a more accessible mechanism for a wider variety o f actors, and did not require sophisticated statistical or analytical skills. The proposed social accountability mechanisms would directly tie into the multiple activities o f the project, including development and management o f human resources in the health sector, improving demand and utilization o f health services, and M&E. 23 E. Environment 55. The handling, collection, disposal and management o f health care waste and other infected materials i s the most significant environmental issue associated with the proposed project. As such, it has been classified as Category B for environmental screening purposes. F. Safeguard policies 56. The only safeguard triggered is OP 4.01 Environmental Assessment, due to potential risks in the ineffective medical waste management in health centers. As such, a Medical Waste Management Plan (MWMP) is required. The project does not trigger any o f the World Bank's social safeguard's policies, since land will not be acquired and civil works will be limited to rehabilitation o f existing infrastructure. To address potential impacts on the environment and public health effectively, the M o H adopted the National Policy for Medical Waste Management inSeptember 2005. This Policy was approved and disclosed on March23, 2007 inthe Infoshop andbetween March20 and 26,2007 in-country. Table2 Safeguard Policies Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OPBP 4.01) [XI 11 Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [ I [XI Physical Cultural Resources (OP/BP 4.11) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI IndigenousPeoples (OP/BP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety o fDams (OP/BP 4.37) [I [XI Projects inDisputedAreas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI 57. The analysis o f the implementation and supervision o f the National Policy has shown that: (i)the National Office for the Environment o f the Ministry o f the Environment has been responsible for supervisingthe implementation o f the policy at the provincial and district level in a satisfactory manner; and (ii)the M o H has demonstrated clear ownership o f the problems related to management o f medical waste and has been an integral player in the development o f this policy as well as Information, Education and Communication campaigns and training activities conducted at various levels. In addition, a M W M P was developed for MSPP 11, and i s under implementation. Prior to appraisal o f the MSPP 11, the MWMP was disclosed in-country and in the Infoshop. Thus the Borrower has demonstrated the capacity to properly develop and implement a MWMP, which is the only safeguard-related study required for this project and project. The relevant detailed M W M P was provided to the Bank in September 2008 and judged satisfactory. * By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties` claims on the disputed areas 24 58. To improve the implementation o f National Policy on Medical Waste Management, the Government o f Madagascar through the M o H sent a commitment letter to the World Bank in September 2008 that the future M o H budget as from 2009 onwards will include the necessary budget for medical waste management for rehabilitated and.equipped health centers. The relevant detailed MWMP presents the strategic objectives o f the M o H and seeks to ensure the conformity o f health centers with the National Policy o f Medical Waste Management. As such, within this framework, the project will finance: (i)containers for syringes, trash bins, boots, gloves, masks fot the maintenance personnel; on-site sanitary pits; (ii) incinerator construction; (iii) forhealthcarepersonnelperhealthcenterfinanced; (iv)developmentofmonitoring training mechanisms and management tools and instruments for the medical waste management in the health sector; and (v) public awarenesscampaigns regarding the dangers o f unsafe medical waste management. The National Policy on the Medical Waste Management with the updated MWMP was disclosed in Madagascar and at the Bank's Infoshop prior to appraisal. In addition, in September 2008, the M o H sent official instructions to all health facilities to include a budget-line to ensure regularfunctioning o ftheir medical waste management system. G. Policy Exceptions and Readiness 59. Policy Exception. The proposed project does not require any exceptions from Bank policies. 60. Readiness. The main design parameters and operating systems for the project were established under the SHSDP. The project is deemed ready for implementation, subject to fulfillmento fthe conditiono feffectiveness. 25 Annex 1: Country and SectorBackground MadagascarJoint Health Sector Support Project A. Health Status and Outcomes 61. The last decade witnessed marked health improvementsinMadagascar, especially among children. According to the Demographic and Health Survey (DHS), infant and child mortality fell by 43 percent and 41 percent, respectively, between 1997 and 2004. Although some issues have beenraised regarding the reliability o f these marked drops in mortality, other determinants o f child survival - such as morbidity and coverage o f important health interventions - have also improved. For instance, the prevalence o f diarrhea inchildren decreasedby about 63 percent and the proportion o f anemic children fell by about 31percent between 1997 and 2004. At the same time, vaccination, vitaminA supplementation, and exclusive breastfeeding increased. 62. Despite these advances, the maternal mortality ratio has unfortunately remained stagnant at about 469 per 100,000 live births since 1997, jeopardizing the likelihood that Madagascar will reach this MDG by 2015. While antenatal care has increased to 80 percent and the presence o f skilled staff at birth has increased from 47 percent to 51 percent, the full benefit o f skilled attendance at birth can only be realized if the referral system, comprising all o f the essential elements o f access to the whole spectrum o f obstetric care including emergency services, i s fully functional. Some progress has beenachieved inrecent years inaddressing this challenge through better communication networks between primary and first level referral facilities using solar based radios, strengthening o f blood banks at district level, provision o f ambulances and obstetric care equipment and the rehabilitation and re-equipping o f some district and referral facilities. Moreover, deaths due to abortion contribute significantly to the maternal mortality rate (40 percent inrural areas, and approximately 52 percent in Antananarivo alone), suggesting that improved access to family planning advice and services would considerably improve maternal health in the medium-term. Overall, more intensified efforts are needed for more systematic improvements inreferral services and emergency obstetric care, particularly inrural areas. 63. Communicable diseases, especially malaria, diarrhea, and acute respiratory infections, often in association with malnutrition, are the main causes o f mortality and morbidity, mainly among children under-five. The M o H statistical yearbook 2004 shows that 24 percent o f outpatient consultations are for respiratory track infections, followed by 18 percent due to fever (suspectedmalaria), and 8 percent for diarrheal illnesses. Among children under-five, respiratory track infections, suspected malaria, and diarrheas represented 33 percent, 22 percent, and 14 percent o f primary health care consultations in2004. Most vaccine preventable diseases seem to be under control inMadagascar -indicative o fhighvaccination coverage -and in2004 less than 1percent o f all children's consultations at the primary health care level were due to measles. 64. Bilharziosis, lymphatic filariasis, tuberculosis, leprosy and malaria also represent a large health burden to the population. Bilharziosis affects about two and a half million people in Madagascar, mostly in the western and central parts o f the country. Lymphatic filariasis affects all areas o f the country but especially the poor rural coastal areas, and in some o f these areas, the prevalence i s thought to be higher than 50 percent. Tuberculosis also represents an important health burden inthe country with an estimated 20,000 cases per year and a detection rate o f only 26 62 percent. Finally, despite marked reductions in the incidence o f leprosy, Madagascar remains one o f the few countries inthe world that has not eradicated this disease. By end 2005, it had the highest registered prevalence in the world (2.5 per 10,000). While Madagascar has made some headway on the control of malaria, tuberculosis and leprosy, these efforts have lost some ground mainly due to delays inaccess to resources, and deterioration o fthe existing surveillance system. Madagascar has secured sizable resources for the control o f malaria, tuberculosis and HIV/AIDS treatment mainly through the Global Fund grant facility. Recently however, delays in implementation have occurred due to lengthy processes in defining appropriate strategies (e.g., for malaria) or delays in access to available funds. Nevertheless, social marketing o f highly subsidized permanently impregnated bed-nets have increased mother and child prevention inthe coastal regions. Diagnosis and treatment o f tuberculosis improved with the expansion o f the directly observed therapy system and increased drug availability nationwide. Table3 Coverageof effective child health interventions,Madagascar, 1992 2004 - DPT 1 DPT 2 DPT 3 Measles All ORSIRHS VitaA Exclusive breastfeeding 1992 76.5 66.3 53.8 54 43.4 25.6 37.1 1997 67.7 60.1 48.4 46 36.2 23.4 4 47.6 200312004 71.3 66.7 61.4 59 52.9 42.4 76 67.2 Source: DHS 1992, 1997,2003/2004; a: ever before survey in 1997and during 6precedingyears in 2003/2004 65. Many effective interventions to improve child and maternal survival and prevent or treat many of these communicable diseasesexist and can be deliveredat very low costs. For instance, for the prevention and treatment o f diarrhea, pneumonia, and malaria, the main causes o f morbidity and mortality among children under-five, the following low cost interventions have proven effective: exclusive breastfeeding, oral rehydration treatment, antibiotics for pneumonia, vitaminA supplementation, and others. Similarly, to improve maternal survival many preventive and curative interventions exist that can be delivered at low cost: family planning, folic acid supplementation, skilled birth attendance, emergency obstetric care, and others. The coverage o f many o f these effective interventions to improve child survival has increased markedly over the years. Exclusive breastfeeding, the use o f oral rehydration solutions for home-based management o f diarrhea, and vaccination rates have noticeably increased over the last decade which, together with the distribution ofwater purification products through social marketing, have contributed to improvements inchild survival. 66. There are large socio-economic differences in the coverage of many o f the high impact health interventions, especially those needed to improve child survival. For instance, the percent o f children fully immunized i s 2.5 times higher among the richest 20 percent o f the population than among the poorest 20 percent. In the case o f vitamin A supplementation, the socio- economic differences are much lower but still persist. These differences also reflect the failure o f the health system to reach the poorest segments o f the population. There are also large regional disparities in health outcomes, partly reflecting large income differences. The provinces o f Antananarivo and Antsiranana have the lowest percentages o f people living inpoverty, and these are also the provinces with the lowest levels o f infant and child mortality. There are also large socioeconomic differences inchild survival, which i s not surprisingas income is one o f the main determinants o f child health. The mortality rate among children and infants among the poorest 20 percent o f the population i s more than three times higher than among children among the richest 20 percent. 27 Figirre I:Neonatal, and child mortality acrossprovinces and wealth quintiles, 2003/2004 160 ~ Poor** if 111 ," Rlshn* L3 naonatal .Iinfant L3 underfive ource DHS2003/2004 and EPM2005for poverty rates acrossprovinces 67. Inthe case o fmaternal health, the lowpercent o fbirths attended by skilled personnel and deficiencies in the referral system in case o f complications have thwarted improvements in maternal survival. Data from the last DHS shows that while more than 70 percent of women receive at least two antenatal care consultations, only about 51 percent o f births deliver in the presence o f skilled healthpersonnel, which significantly limits the possibility o f receiving proper attention in case o f complications. There are also large socio-economic and geographical differences inthe percent o f women receiving antenatal care and inthe percent of birthattended by qualified healthpersonnel. Figure 2: Coverageof maternal health interventions,by income and rural-urban areas, 20 12004 I2O 1 100 1 20 - 0 - , antenatalcare skilledddilery inhealthfacility ource: DHS 2003/2004 68. Finally, community multi-sectoral approaches are also needed to ensure that households have access to clean water and sanitation, which will increase protection against the spread of water-borne diseases. Improving this situation does not depend only on MOW,but efforts to improve these indicators will have a high impact on health. B. Organization of the Health System 69. The health delivery system in the country follows a four-level pyramidal system. The basic health centers (centre de santt?de base - CSB Iand CSB 11) are the first point of contact in the system. In 2004, there were 1,106 CSB Iand 1,842 CSB I1spread across the entire country 28 and catering to approximately 10,000 people for each facility. Inaddition, there are 85 district- level hospitals in district headquarters (centre hospitulier de district - CHD I)based in district headquarters but offering similar services to those offered in a CSB 11. The second step are the 55 CHD I1hospitals (2004), also based at district headquarters but offering emergency surgery and comprehensive obstetrical care. At the third level, there are four regional hospitals (centre hospitulier regional - CHR) inthe whole country, offering second referral services. At the fourth level, there are six university hospitals (centre hospitulier universituire - CHU) offering comprehensive national referral services. Table4 Consultationatpublic andprivatefacilities, by income quintiles (EPM2005) CH* CSB 1 CSB 2 Private Clinic Private doctor Other Total Urban Most poor 20.1 18.6 38.8 3.1 3.2 16.2 100 2emeQuintile 14.9 11.3 31.6 5.9 24.3 11.3 100 3emeQuintile 20.4 14.7 25.4 16.3 13.2 8.8 100 4emeQuintile 11.2 10.5 29.4 8.1 31.9 7 100 Most rich 23.3 4.9 20.6 7.5 32.7 7 100 Total 19.0 9.5 26.2 8.3 26.0 8.6 100 Rural Most poor 5.1 25.5 58.0 0.9 6.2 4.1 100 2emeQuintile 4.9 19.0 53.9 2.1 7.0 13 100 3emeQuintile 3.5 12.9 56.9 3.0 12.6 11.3 100 4emeQuintile 1.2 11.6 66.9 2.1 11.4 6.9 100 Most rich 5.7 10.0 50.8 3.6 20.4 7.4 100 Total 4.0 15.1 57.3 2.5 12.2 8.6 100 70. The public sector offers the bulk o f health care services inthe country, especially inrural areas. In urban areas, more than 30 percent o f first contacts with the health system occur in a public primary health care facility, while in rural areas more than 70 percent o f all first contacts occur at a public facility. On the other hand, the private sector accounts for about 30 percent o f all first contacts inurbanareas and about 14 percent inrural areas. Overall, more than 40 percent o f consultations take place at private providers among the richest 20 percent o f the population. The private sector, mainly concentrated in urban areas, also represents an important share o f service delivery. About one out o f every five primary health care facilities and two out o f every five referral hospitals are privately owned. The majority o f these facilities are concentrated in Antananarivo and other major cities. The private sector has an even larger presence in the retail sale o f pharmaceuticals. There are 203 pharmacies, located mainly in Antananarivo, and 1,625 drugretailers distributedthroughout the country. C. HealthSector ChallengesandIssues 71. The health sector in Madagascar faces many challenges relating to the level o f overall financing, utilization o f health services, distribution o f health personnel, availability o f drugs and medical supplies in health facilities, and internal administration o f the health system, including budget execution. 29 Theoverall level ofjinancing for health is very low 72. Total.health expenditures in Madagascar were estimated to be approximately US$6 per capita in 2005, which is around 1.4 percent o f the GDP. External assistance is a key source o f health financing, though out-of-pocket payments are also large. Interms o f distribution, there are large inequalities across regions, with richer regions receiving relatively more resources. This regressive distribution o f resources represents an obstacle to access and utilization o f quality health care. Insignificant resources flow to the CSBs, which partially explains the low quality o f the services rendered at this level. There are no clear criteria for equitable distribution o f health resources across regions. Resource mobilization and allocation remain the cornerstones o f the health sector strategy inMadagascar, as the country strives to increase the resources allocated to the health sector. The demand and utilization of health services are very low 73. A large proportion of the population does not receive care when in need. Data from the EPM 2005 shows that only two out o f every five people receive care in case o f illness or injury. In addition, there are large regional differences in the percent of people receiving care, with about 65 percent o f people reporting an illness or injury in DIANA region receiving care compared to only 23 percent in Vatovavy Fitovinany and Melaky, two o f the poorest regions in the country. Geographic access to health care facilities is limited in rural areas, and about 10 percent o f those needing care live far from health facilities and are therefore unable to utilize health services when ill.A health mapping exercise done in 2007 showed that only about 58 percent o f the population has access to - lives within 5 kilometers o f - a primary health care center, though the situation has improved recently with the establishment o f 216new facilities. 74. Financial barriers to access represent the main cause o f low utilization o f health services. The EPM 2005 shows that the cost o f receiving care is the main reason reported for non- utilization o f services in case o f illness. These financial barriers are often related not only to the direct cost o f the services but also to other expenditures, such as transportation costs and the opportunity cost o f seeking care. The Government has tried to alleviate these financial barriers, first by eliminating user fees during the political crisis and then by creating FANOME and the equity funds. After the 2001 economic crisis, health service fees were abolished, including copayment on drugs, following which utilization o f health services increased significantly. However, giventhat the increase inhealthresources was not sufficient to compensate for the loss o f user fees, drug stock-outs became more common and the quality o f services deteriorated further as the workload ofthe already insufficient healthpersonnel increased. At the endo f2003, the Government reinstated user fees, and by 2004, a new cost recovery system - FANOME- was put in place. This system was accompanied by an exemption mechanism to ensure that the poor had access to health care. Further, a small percent o f the sale of drugs (2.2 percent) i s now set aside for an equity fund in each primary health care center to allow free access to drugs for the poor. 75. Early evaluation o f these reforms suggests that: (i)utilization o f health facilities decreasedfollowing the reintroduction o f user fees, although the exact role o f the re-introduction o f the fees i s not clear since the purchasing power o f the population has also decreased; (ii) stocks o f drugs and supplies have improved following the reintroduction o f user fees; (iii)the 30 new equity fund successfully targets the poor as almost all people in the exemption list can be classified as being poor; (iv) coverage by the equity fund i s very limited, and despite widespread poverty, only one percent o f the population i s on the exemption list; and (vi) funds collected (2.2 percent o fthe sale o f drugs) are not enough to guaranteed the sustainability o fthe equity funds. 76. Despitethe documented highprevalence o fpoverty amongthe general population and the introduction o f payment mechanisms to assist those who have been identified as poor to have access to basic health services, the small number o f persons who claim to be indigent implies that there may be significant cultural barriers to identifying oneself publicly as poor or indigent. Similar measureshave been gradually introduced inhospitals, given the impoverishing effects o f hospitalization, where most surgical and other consumables are not available and must be purchased inprivate outlets, resultinginunreasonably expensive bills. The distribution of healthpersonnel across the country is very uneven 77. A findamental issue underlying the uneven production and delivery ofhealth services in Madagascar is the huge variation in the allocation, training and competency levels o f medical personnel. Almost 50 percent o f the personnel o f M o H are concentrated in the area o f Analamanga. A few hospitals in the large cities have a disproportionately huge number o f doctors and specialists, whereas there are huge unsatisfiedneeds for certain vital specialties such as gynecology, surgery and pediatrics at the regional level. Likewise, the distribution o f doctors across rural and urban areas also shows huge imbalances. In addition, the relatively low productivity o f medical personnel in the public sector also poses a major problem. Besides shirkingand absenteeism, poor productivity is also a result o fpoor basic training o fthe medical personnel (for example, many general practitioners do not know much about childbirth), unavailability o f essential goods and equipments to facilitate diagnosis and treatment and low levels of remuneration. As a result, quality o f care suffers, especially at the CSB and in rural areas, and the system i s marked by little or no integration o f preventive and curative care, absence o f continuity o f the care and irrational use o f drugs. Even non-clinical activities are of poor quality, with badpatient reception, long waiting hours, and absence o f communication with the patient. All employees Qualified employees Ofwhich, number of doctors Observations I I I Urban CSB I1 11.5 6.5 2.3 54 Total 110.9 1 6.2 II2.2 I 5 7 CSB I 2.5 0.8 0.0 24 Rural CSB I1 4.1 1.9 0.9 72 Total 3.7 1.6 0.7 96 All CSB 6.4 3.3 1.2 153 CSBI 5.0 2.0 0.0 CSBII 9.0 4.0 1.o 78. Table 5 compares the average number o f personnel in CSB in 2005 with standards established by national norms. While the health facilities in urban areas on average have more 31 qualified health personnel than required by the national standard, health facilities in rural areas have much less staff, especially nurses, midwives, and health aides. The majority o f the qualified health care personnel are concentrated in the province o f Antananarivo. This is especially the case for physicians, as this province has 46 percent o f all doctors working in the public sector with only 28 percent o f the country's population. Nurses and midwives (not shown in the graphs) are much better distributed as the share of each province is similar to their population share. Figure 3: Percent of qclalijied health personnel andpopulation percent acrossprovinces 50T Antanananw Antsiranana Fianamtsoa Mahalanga Toamasina Toliara Doctors EXnurses +population percentage Source: Dubois et al. 2005. Healthfacilities arepoorly equipped 79. The continued supply and distribution of drugs and medical supplies to the health facilities i s still not assured. After the crisis in 2001, the Government eliminated user fees at health facility level and started to distribute pharmaceuticals free o f charge. Duringthis time, a health facility survey recorded widespread drug stock-outs in the CSBs. Only 15 percent o f the public primary health care centers did not suffer shortage in the supply o f a group o f essential drugs. About 30 percent o f facilities had shortages o f chloroquine, cotrimoxazole, mebendazole, and alcohol; about 46 percent had shortages o f paracetamol; and more than half were out of acetylsalicylic acid. The mean duration o f the stock-out varied from 70 days for acetylsalicylic acid to 32 days for mebendazole. After the re-introduction o f fees and the FANOME/equity fund, the situation has improved although drug shortages are still a problem. Over 20 percent o f health facilities, especially inrural areas, have shortages o f oral rehydration salts, serum glucose, folic acid, and lidocaine. For some o fthese drugs the median duration o f stock-out was three months. 80. Adequate supply o f drugs was restored with the reintroduction o f cost recovery in January 2004 (after a period o f free distribution during the 2002 crisis), and the 35 percent markup on generic drugs i s among the lowest inAfrica. However, this low level o fmark-up does not leave much room for additional resources to improve quality. While the Government has succeeded in maintaining low drug prices through subsidies to compensate for the high devaluation during 2004, it will have to carefully manage the restoration o f prices reflecting drugs' real cost inthe near future. 32 81. There are other indications of low quality o f services at public facilities. In2003, only 59 percent o f public basic health centers had access to clean water, 53 percent had electricity, and only 16 percent had transportation. Further, only 21percent o f public facilities collected all the information required by the Integrated Management o f Childhood Illnesses protocol (age, weight, health card, temperature, and breathing frequency). Furthermore, in only 8 public facilities out o f 58, children were examined for the standard four signs o f health risk (vomiting, convulsions, anemia, and the capacity to drink). Additionally, only 61 percent cases o f anemia or severe malnutrition were correctly identified in public facilities. The situation has changed only marginally in2005, and 61 percent o f CSBsnow have access to a water source and 54 percent to electricity. However, in 2005 more than 90 percent o f facilities collected information on age, weight, health care andtemperature o fchildren. Area IRural 47.2 46.5 53.5 62.2 127 IUrban 89.2 94.6 43.2 41.9 148 Source: EEEFSII,2005. 82. The health system performs poorly at the hospital level also, limiting referral to urban areas and only when it is not further compounded by financial barriers. The quality o f service delivery in hospitals is affected by the lack o f proper medical specialists, equipment, maintenance, proper drugs and consumables. With support from development partners, hospital level services are being reviewed to lead to a reorganization o f the referral system, and a transformation o f the role and mandates o f district and regional hospitals for more effective and efficient service delivery. 33 Annex 2: Major RelatedProjectsFinancedby the Bankand/or otherAgencies MadagascarJoint HealthSector Support Project 83. Madagascar Sustainable Health System Development Project (US$10 million credit). The project was approved inMay 2007 and became effective on September 3,2007. The closing date is December 31, 2009. The development objectives o f the project are to contribute to the strengthening o f the health system and enhance the institutional capacity o f the M o H to improve access and utilization o f health services, especially in rural and.remote areas. The project has five components: (i) strengthening delivery o f health services; (ii) development and management o f human resources in the health sector; (iii)innovation in health financing management; (iv) improving demand and utilization o f health services; (v) institutional strengthening. The project is satisfactory both in terms o f achievements o f development objectives and implementation. 84. SecondMulti-sectoralSTI/HIV/AIDS Project-MSPPI1(US$30 millioncredit). The project was approved in July 2005, and made effective on May 1, 2006. The closing date i s December 31, 2009. The development objective o f MSPP I1is to support the Government o f Madagascar's efforts to promote a multi-sectoral response to the HIV/AIDS crisis and contain the spread o fHIV/AIDS on its territory. Inaddition, MSPP I1seeks to improve the quality of life o f persons living with HIV/AIDS through increased access to quality medical care and non- medical support services. Giventhe current epidemiological situation, the project focuses on at- risk groups in high prevalence areas, while moderately expanding services to other affected groups (e.g., orphans and other vulnerable children). The project consists o f the following components: (i) harmonization, donor coordination, and strategies; (ii) support for health sector response; (iii)STI/HIV/AIDS prevention and care; (iv) monitoring and evaluation; and (v) project management and capacity building. The project i s rated satisfactory for development objectives while implementationi s ratedmoderately satisfactory. 85. Community Development Fund Additional Credit (US$19.1 million). The project - was approved in August 2006 and made effective on December 04, 2006. The project has benefited from two supplemental credits. The objectives o f the project are to improve the use o f and satisfaction with project-supported social and economic services amongst participating rural and urban communities. The project is implemented by the Fonds d'intervention pour le De'veloppement, an executing agency created in 1993 which has successfully executed earlier social funds in Madagascar. The additional financing i s mainly financing the costs associated with the scaling-up o f the activities implementedby the executing agency and supported by the project, while the future role o f the Fund in the new deconcentration and decentralization framework i s defined. The components o f the project are now as follow: (i) transfers o f funds to community associations; (ii) transfers o f funds to communes; (iii)social safety net activities (shocks); (iv) rehabilitation and reconstruction in response to natural disasters; and (v) capacity building activities. The project is rated satisfactory for implementation and achievement o f development objectives. 86. Second Community Nutrition Project. The initial project was first approved in April 1998 and became effective on November 2, 1998 for an amount o f US$42 million. The project also benefited from two additional financings, the first one in an amount o f US$10 million, 34 effective in August 2004, and the latest, for an amount o f US$lO million, became effective in August 2007. The closing date is currently December 31, 2009. The development objective of the project is to improve the nutritional status o f children under the age o f three, pregnant and lactating women, and school-aged children. The project aims to ensure long-term sustainability o f nutrition outcomes by improving the quality and quantity o f food intake by children at home. The second additional funding supports the institutionalization o f the National Nutrition Office to contribute to ensuring sustainability. The project finances four components: (i)community nutrition activities, including growth monitoring and promotion for children under three, vitamin A supplementation for children under three and lactating women, referral o f severely malnourished children to health services, community mobilization, training o f community- workers and social-workers; (ii)school nutrition activities consisting of irodfolate supplementation for primary school children, deworming o f enrolled and non-enrolled children 3-14 years, iodization o f salt, and training o f primary school teachers; (iii)support to multi- sectoral activities, including support to the MoH for the Integrated Management o f Childhood Illness, and support to few pilot projects inthe agriculture sector on diversification and storage o f agricultural and food products; and (iv) information, education and communication, training and project management. The project is rated moderately satisfactory for both implementation and development objectives ratings. 87. Governance and InstitutionalDevelopment Project I1 - PGDI I1 (US40 million). The Second Governance and Institutional Development (PGDI 11) project was approved inJune 2008 and i s not yet effective. The project will enhance and further deepen previous reforms initiated under the first PGDI which is scheduled to close in June 2009. It builds on significant analytical work, in particular, the Public Expenditure Financial Assessment reports of 2005, 2006 and 2008 as well as the Public Expenditure Reviews in 2005 and 2007 which provide general recommendations on the public expenditure reform agenda and specific recommendations for the transportation, education, environment, health, nutrition and water and sanitation sectors. The development objective o f the project is to improve the efficiency and transparency o f Government and selected public services in Madagascar in line with the MAP. The two main components address the following: (i)improving transparency and economic governance will require a comprehensive reform o f the public finance system; and (ii) institutional development and capacity building activities inselected government institutions. 88. Madagascar Fifth Poverty Reduction Strategy Credit - PRSC V (US$50 million) is the overall umbrella support whose main objective is to support the implementationo fthe MAP and consolidate reforms under way in the areas of public finance, governance and basic service delivery. It sustains efforts to improve the overall institutional setting for improved delivery in education, health, nutrition, water and sanitation. These reforms are expected to be conducive to higher growth rates and faster cycle. In particular, the PRSC i s supporting improvements in financial management, including budget preparation and execution, implementation o f the new procurement code, improvements in human resource policy and decentralization o f service delivery. The project was approved in June 2008 and became effective on July 31, 2008. The closing date i s July 31,2009. 89. MadagascarIntegratedGrowth Poles Project Credit-Additional financing (US30 million). The overall objective of the Integrated Growth Poles Project is to improve the business environment inthree selected regional poles (Antananarivo-Antsirabe, Nosy Be, and Taolagnaro) 35 to ensure equitable and sustainable economic growth through construction and rehabilitation o f critical infrastructure, regulatory reform and strengthening capacity of national and local institutions. The project was approved in July 2005, became effective on September 28, 2005 and was formally restructured in December 2007. The original Credit amount is US$129.8 million and the closing date i s December 31, 2010. An additional financing o f US$40 million was approved in April 2008 and became effective on August 8, 2008. The additional financing will be used for completion o f originally planned activities that have remainedunfundedto date. These include the rehabilitation o f part o f the Taolagnaro hospital and surgery block, as well as the provision of goods and technical advisory services. The project is rated satisfactory on implementation and achievement o fdevelopment objectives. Contributionsof OtherDonors 90. Implementation o f the PDSSPS is being supported through parallel financing by other development partners, including AfDB, JICA, UNICEF, UNFPA, USAID, and WHO. The EU will continue to provide direct budget support to the Government o f Madagascar, which indirectly supports the health sector. The GFATM has also awarded to Madagascar US$70 million over five years in Round 7 to procure commodities such as insecticide treated nets, Artemisinin-based Combination Therapy and rapid diagnostic tests for malaria, and finance for indoor-residual spraying in the Central Highlands and Intermittent Preventive Therapy for pregnant women. GFTAM is also funding HIV/AIDS related activities under Round 3 (US$382,000) to ensure the provision of anti-retrovirals for 152 patients and related medicines for opportunistic infections for the next two years; it will finance tuberculosis related activities under Round4 (US$8.3 million) including prevention, case detection and treatment until 2010. Finally, JHSSP is expected to leverage additional sources o f financing under IHP+, including Norwegian grant funds for innovative results-based financing approaches. 36 Annex 3: Results Framework and Monitoring Madagascar Joint Health Sector Support Project Higher LevelIndicators 1. Maternal mortality ratio 2. Mortality rate, under-five (per 1,000) 3. Total fertilitv rate Project Outcome Indicators Use of Outcome Information Contribute to strengthening 1. Births attended by skilled health Lack o fprogress will the health system to increase staff (% o ftotal) result inrecommended the utilization ofhealth modifications to sector services, particularly among 2. Modern contraceptive prevalence strategy andor analysis to mothers andchildren rate o fwomen ages 15-49 (YO) understandrelationship between the strategy and 3. Immunization DPT3Penta under- the outcomes. one Intermediate Results Use of Results One per Component , Monitoring Outcome 1 1. Percentage o fhealth centers with Progress will be assessed The health system delivers a functional refrigerator inthe by Government and improved basic health districts o f intervention partners at the Annual 2. Percentage o f districts holding Reviews (based on most quarterly reviewswith health recently available data). Dersonnel 3. Percentage of districts receiving Lack of anticipated performance-based allocations progress will result in having achieved at least 75% o ftheir analysis o f obstacles to exDectedresults implementationand 4. a) Numbero f health centers reconsideration o f rehabilitated assumed linkages between b) Number ofhealthcenters with an inputs/processes and adequate water supply inregions o f outcomes. intervention 5. a) Number of private doctors installed inproject interventionareas b) Percentage o fprivate doctors installed inproject intervention areas who stay intheir posts for more than two years 37 IntermediateResults ResultsIndicatorsfor Each Use of Results Oneper Component Component (Output Indicators) Monitoring Outcome2 1.Numberof anti-malarial treatment See above. The M o Hmakes policy distributed to children under-five by decisions to increase the use community healthworkers inproject o f basic health services interventionareas based on evaluations o f 2. Contraceptive prevalence rate at pilots. health centre level 3. Percentage o fbirths takingplace at public andprivate healthcenters andhospitals (% o ftotal) Outcome3 1.HumanResources Development See above. MOHmanages and Planvalidated monitors the availability and 2. Numbero fhealth agents3trained equitable distribution of, in-service for obstetrical and humanresources for the neonatal emergency care health sector. 3. Percentage o fhealth centers comply with minimumstaffing norms (% o ftotal) Outcome4 1.Budgetexecutionrate o fM o H See above. Planning, budgeting, management, 2. Percentage o fdistricts andregions implementation, and providing annual technical and monitoring and evaluation financial reports at most 8 weeks capacity i s improved at the after the end o fthe fiscal year (% o f central, regional, district and total) health facility levels. 3. Percentage o fhealthcenter monthly reports submitted within 15 days o f the end o f the month4(% o f total) 4. Percentage o f hospitals in compliance with the policy on waste management (% o ftotal) 5. Percentage o f epidemics confirmed and controlled inless than 15 daw (%o ftotal) These includenurses andmidwives. Timeliness indicator. 38 m CQ 3 m z6 z6 n E; m m 53 53 d d 3 m 2E;m $ 4 3 3 0 cd $ x Y .3 F4 I 0 m rl s s M 0 N rl M 03 b r- rl ai m i-' m cd s s 0 M M l- sF 0 b rl 2 I 0 0 i s 30 0 k- M 2 2 0 M b N m c 0 hl C .e b m F4 u c B z s s M I m 0 II 0 2 0 0 s I 0 \o m II 2 crl 0 d 0 0 2 s s s 0 0 00 crl 0 II 0 iD crl (r, m 0 b 0 s 0 3 0 I d 3 M crl s2 ?Q crl v1 Y 0 L Y Q E 3 88 Y 1 9 d n a k! v) v) v) 53 d i z i 4 3 3 3 3 (d 6 6 6 s s s s M e e4 0 Q\ 0 m 0 3 s s s \o M 00 0 Q s s s m sm 00 00 00 rr, 0Q\ s s s 0 \o m 00 00 e4 m f: lr, e, G5 3 Y c 3 .3 3 VI VI e, 3 3 Annex 4: Detailed Project Description Madagascar Joint Health Sector Support Project 91. The following detailed JHSSP description outlines the activities to be financed under a common action plan, although some o f these activities will be financed by the pooled account, and others by special accounts replenished separately by AFD and by IDA. The IDA credit would finance 100 percent o f expenditures under Components 1.2, 2.1 and 4.2 while the AFD grant would finance 100 percent o f expenditures under Components 2.2 and 4.3 as described in Annex 4. IDA and AFD would jointly finance, at the respective percentages to be determined each year, 100percent o f eligible expendituresunder all other project Components. Component 1: Strengthening Delivery of Health Services (IDA financing: US$31.1 million equivalent, AFD financing: US$10.2 million equivalent) 92. The objective o f this component is to strengthen the delivery and availability o f basic health services at regional, district and health facility levels. To this end, this component will support the following principal activities: (i)Allocations to Regions, Districts and Health Facilities; (ii)Performance-Based Contracting o f Basic Health Service Delivery; and (iii) Support to the Functionality o f Health Facilities. 93. Sub-component 1.1: Allocations to Regions, Districts and Health Facilities. The objective o f providing allocations to health facilities i s to assist them to improve the delivery o f the basic services, especially for neo-natal, child and maternal health. A certain proportion o f the allocation would continue to be provided, as under the on-going SHSDP I,to cover fixed recurrent costs o f the health facilities. This portion o f the allocation would be calculated on a per capita basis and according to the number o f health centers in the district to ensure equity. Additional resources would then be allocated based on documented performance and delivery o f an agreed upon set o f results inregions, districts and health facilities with the required capacity to manage such allocations. At the regional and district levels, these allocations would also be expected to lead to an improvement in the quality o f regular monitoring and supervision. At the facility level, these additional resources would be utilized for improving management and increasing the coverage o f basic health services at the community level. Technical assistance and training would be provided to the M o H to establish a simple operational performance-based incentive system for regions, districts and health facilities, and prepare a manual o f procedures defining eligibility criteria, and fiduciary and operational arrangements for the allocations, to be adopted prior to implementation o f the results-based portion o f the allocation. The expected result o f this sub-component would be (i)an increase in basic services provided by health facilities; and (ii) increase in supervision o f health facilities by districts and overall improvement o f management o fthe health district. 94. Sub-component 1.2: Performance-Based Contracting of Basic Health Service Delivery. Giventhat access continues to be very low in Madagascar, with unevendistribution o f medical personnel, large distances impacting the supply o f key medicines, and no availability o f electricity or water supply, contracting out basic health service delivery on the basis o f results would be one o f the most efficient mechanisms to expand coverage to reach the rural population. This sub-component would thus support the extension and enhancement o f sustainability of 42 contracting out to private doctors in rural areas to include (i)installation o f at least 56 new doctors; (ii) capacity buildingo fthe regional medical associations through training and exchange o f experiences, and provision o f basic equipment; (iii)a series o f feasibility studies on self- financing and community pre-payments; (iv) a financial audit; and (v) operating costs not exceeding 10 percent. In addition, this sub-component would seek to capitalize on other experience within Madagascar o f contracting out to private sector and civil society, such as faith- based NGOs, first evaluating the cost/efficiency o f the approach with a view to scaling-up if possible. 95. Sub-component 1.3: Support to the Functionality of Health Facilities. The objective o f this sub-component is to improve the functionality o f health facilities to deliver basic services, including support to strengthening the cold chain and logistical supply chain. Despite the recent improvements inthe immunization coverage, the performance o f routine immunization activities remains low, with one o f the reasons being the lack o f cold-chain storage space and out-dated equipment at all levels. Madagascar does not currently have the capacity to order and store the vaccines it needs all at once, and i s forced to place frequent international orders for vaccine shipments, which not only increases the price o f vaccines but creates logistical challenges at all levels. To addressthis problem, this component includes the rehabilitation o f a central-level cold store, regional storage facilities, the provision o f refrigerators and cold-boxes at district facilities, as well as the rehabilitation of and equipment for the existing infrastructure to comply with national norms, including water, sanitation and medical waste management norms. In addition, the JHSSP will provide the necessary drugs and medical supplies, where there are gaps in the national program, to (i) contribute to the fight against priority infectious diseases, including malaria, plague prevention and surveillance, filariosis elimination and immunization against rabies; and (ii)improve reproductive health and child services through provision o f safe delivery kits for normal and complicated births and purchase o f contraceptives. Finally, this sub- component will provide technical assistance and training to the MoHto undertake, among other things, needs and institutional capacity assessments o f pharmacies, and develop a manual o f procedures for management o f drugs and medical supplies at each level, including clear roles and responsibilities for each level, outline o f a training curricula, and practical management tools. This sub-component is beingfinanced solely by IDA. Component 2: Innovative Demand-Side Interventions for Basic Health Services (IDA financing: US$15.5 millionequivalent,AFD financing:US$1.4 millionequivalent) 96. The objective o f this component is to increase support to innovative interventions to stimulate demand for basic health services. Currently demand for health services is low: only 40 percent o f the population reporting an illness seeks care from qualified medical personnel. Geographical access to basic health services i s limited in rural areas, and financial barriers represent a main cause o f low utilization o f hospital services by the poor. While some forms o f health insurance exist, these again only cover a very small fraction o f the population that typically does not include the poorest and/or the sickest. The use o f specific services related to family planning and preventive care, in particular, remain low. To address these issues, this component includes the following principal activities: (i)Improving Access and Utilization o f Basic Health Services; and (ii) Expanding Enrollment in a Social Health Insurance Scheme for the Formal Sector. 43 97. Sub-component 2.I: Improving Access and Utilization of Basic Health Services. To increase utilization o f basic health services, this component will support the implementation o f selective innovative approaches designed to tackle financial and geographical barriers to access and to maximize utilization of cost effective interventions as well as the rigorous evaluation o f these approaches, so that lessons can be learned and the M o H can make evidence-based decisions on improving service delivery, especially for mothers and children. The initiatives will draw on successful existing experiences in-country and similar experiences in other countries. This sub-component will therefore finance: (a) initiatives designed to improve geographical and financial access; (b) selective scaling up o f free access to maternal and neonatal emergency care; (c) behavior change activities; and (d) introduction o f a free minimumpackage o f basic services. 98. In terms of activities designed to address access, this sub component will finance a feasibility study to determine the extent to which transportation interventions would increase accessibility to routine health services, and develop and implement (i) a pilot initiative for transportation subsidies to improve maternal and child health care access for the poor inremote districts that are only accessible six months out o f the year and those that require river transportation, and (ii) pilot initiatives for community-based case management o f key childhood illnesses, including pneumonia, malaria and diarrhea. The sub-component will provide technical assistance to the M o H to evaluate the design (contracting out o f the management to a third party), cost-effectiveness, risks (such as over prescription o f cesarean or decreased competition with the private sector) and financial sustainability of the pilot providing free access to maternal and neonatal emergency care, and plan and implement a scale-up o f the scheme in priority regions if the experience i s conclusive. In terms o f behavior change activities, the sub- component will support the implementation o f (i)annual national mass media campaigns focusing on priority healthtopics, with the objective of improving the population's knowledge o f the diseases, preventive solutions and services available at each level o f service; (ii) specific communication campaigns targeting adolescents, focusing on improving adolescent reproductive health inpublic andprivate health centers; and (iii) the integrated adolescent reproductive health strategy, including vouchers for family planning, HIV testing and STItreatment services 99. Finally, this sub-component will finance the introduction o f minimum package o f high- impact, low cost basic health interventions to expand coverage o f basic health services focusing on maternal and child health, seeking institutional change on the supply side by providing performance-based bonuses to health service providers for the number o f children and mothers reached with this package. The M o H in cooperation with partners has identified and costed this minimum package proven to have a significant impact on under-five mortality rates, and the Government intends to deliver these services free-of-charge at national scale, which should increase demand and thereby utilization, bringingthe country closer to achieving the MAP goals and the health-related MDGs. The package includes: (i)preventive services, such as immunization, micronutrient supplementation, and promotion o f insecticide-treated bed-nets; (ii) promotion o f health services, such as increasing prevalence o f exclusive breast-feeding and use o f family planning; (iii)basic curative services, such as treatment o f acute respiratory tract infections, diarrhea, other childhood illnesses, and tuberculosis; and (iv) reproductive health services, such as prenatal care, emergency obstetrical care, and post-partum care. This sub- component i s beingfinanced solely by IDA. 44 Box I:Minimumpackage of high-impact low-cost health interventions Pregnant Women Children 0-28 days = Insecticide-treatedmosquitonet 9 Exclusivebreast-feeding = ... At least 3 Ante-natalconsultations Vaccination Vaccination(tetanustoxoid) Managementofneo-natalinfections Treatmentof syphilis inpregnancy . 8 Integratedmanagement ofchildhoodillnesses De-worminginpregnancy Comprehensiveemergencyobstetricalcare for Folic acid newborns(includingintensive care for 8 PreventionofMother-to-ChildTransmission newborns) ofHIV/AIDS 8 IEC for Hand-washing Children1-5 months Exclusivebreast-feeding At birth ... 8 Vaccination Assisted delivery:Basic Emergency 8 OralRehydrationSolution Obstetric Care Zinc for diarrhoeamanagement Cleandelivery and cord care ManagementofAcute Respiratory Infections IEC for Hand-Washing Integratedmanagement of childhoodillnesses Lactating Women . .. Children 6-12 months FamilyPlanning ....Vaccination Vitamin A supplementation Vitamin A supplementation IEC Hand-washing ....Complementaryfeeding OralRehydration Solution Zinc for diarrhoeamanagement Managementof Acute Respiratory Infections Managementof malaria Integratedmanagement of childhoodillnesses Insecticide-treatedmosquito net Children 12-59 months . Vitamin A supplementation . 8 Managementof Acute Respiratory Infections 8 Managementof malaria Integratedmanagement of childhoodillnesses 100. Sub-component 2.2: Expanding Enrollment in a Social Health Insurance Schemefor the Formal Sector. This sub-component will support the extension o f an existing compulsory social health insurance scheme "Organisations Sanitaires Inter-enterprises" (OSIE) to other professions. Currently the scheme is financed by employers and employees of a limited number of participating firms. OSIE provides a defined basket o f services (preventive care, medical visits, ambulatory care and drugs). Some firms extend the benefits for the person enrolled and its dependents to other services (specialized care, laboratories tests and deliveries). As such, this sub-component will support technical assistance, feasibility studies, monitoring and evaluation of the pilot, training, and annual audits. This component is being financed solely by AFD. 45 Component 3: Development and Management of Human Resources (IDA financing: US$3.7millionequivalent,AFD financing:US$3.7 millionequivalent) 101. The objective of this component is to improve humanresource management inthe health sector, with particular emphasis on rural areas, and strengthen capacity o f the Human Resource Department of the MoH. The expected results of this component would be a more equitable distribution o f qualified medical and paramedical personnel in specified rural regions. This component will thus support the following principal activities: (i) Finalization o f the National HumanResourceDevelopmentPlan(HRDP); and(ii) Implementationo fthis HRDP. 102. Sub-component 3.1: Finalization of the National Human Resources Development Plan. This sub-component will finance the development o fthe HRDP, including definingprofessional profiles critical to the health sector, revising standards and redeploying personnel based on criteria and standards aimed at improving the rural-urban balance, ensuring the stability and continuity o f doctors in rural parts o f the country, and changing the structure o f incentives for doctors and other medical, paramedical and administrative personnel at all levels o f health care provision. The strategy would be complemented by the production o f an operational plan for human resources in the health sector and would support the development and management of career plansand effective humanresources management tools for medical personnel. 103. Sub component 3.2: Implementation of HRDP. This sub-component would support the implementation o f the HRDP, including, through the development and selective implementation o f innovative performance-based mechanisms, incentives to rural-based personnel to improve their performance. A pilot package of incentives is currently beingimplemented inthree regions and an evaluation will be undertaken after nine months o f implementation with lessons from the pilot incorporated into the scaling-up to rural regions with poor health indicators. To this end, this sub-component will support the development of selection criteria for regionsto benefit from this intervention. This sub-component would also support (i)selective training of health personnel on priority areas o f health service delivery, (ii)training and coaching to health personnel to strengthen capacity and competencies at regional and district levels, and (iii) development o f new training strategies, both for basic and continuing education. Finally, this sub-component would provide technical assistance and support for the improvement o f the information system for the management o f human resources. Component 4: InstitutionalStrengtheningandMonitoringand Evaluation(IDA financing: US$12.7millionequivalent,AFD financing:US$4.2 millionequivalent) 104. A critical objective o f this component is to provide support to build the capacity o f the MoH at all levels of service delivery including public expenditure management, procurement capacity, financial management systems, budget execution, project oversight and planning and use o f data for decision making (evidence-based planning). To this end, this component will continue to support a number o f system development and institutional strengthening activities at the central and decentralized levels, including the following key activities: (i)Improving Technical and Management Capacity; (ii)Strengthening the National Health Management Information System (HMIS); (iii) Increasing Epidemiological Surveillance; and (iv) Support to Project Execution and Evaluation. 46 105. Sub-component 4.I:Improving Technical and Management Capacity. The objective is to strengthen technical and management capacities o f particular departments within the MoH, including the partnership department, the planning department, the malaria control team, the social protection team, as well as to responsible for medical waste management and environmental surveillance. This component would also support thematic technical assistance; provision o f small equipment, materials and motorcycles; training and coaching activities at the central, regional and district levels on increasing capacity in planning, programming, public expenditure management, procurement, financial management, internal audits; and supervision at all levelsto ensure the optimal utilization o f resources to guarantee results inthe health sector. 106. Sub-component 4.2: Strengthening the National Health Management Information System (HMIS). M&E systems provide information on inputs, structures, outputs and outcomes, and are central to managing results and strengthening performance. Very importantly the performance o f the HMIS has improved especially interms o f timeliness and accuracy o f data. However, due to weak capacity, the system is not fully able to capitalize existing information and data. The goal o f this sub-component is thus to integrate the M&E system for the whole sector (public and private providers and all sources o f funds) as well as to improve capacity in data collection, management, dissemination and its utilization for decision-making at all levels o f the system. This will include direct support to the national Health Management Information System (HMIS) and statistical capacity building.This sub-component is being financed solely by IDA. 107. Sub-component 4.3: Strengthening Epidemiological Surveillance. The objective o f this sub-component is to improve the epidemiologic surveillance, alert and response capacity o f the M o H at all levels which will complement the on-going Epidemiologic Surveillance Monitoring Project for the Member States o f the Indian Ocean Commission. This sub-component i s being financed solely by AFD. 108. Sub-component 4.4: Support to Project Execution and Evaluation. This sub-component will finance annual financial audits, a technical audit, mid-term review and final evaluations, and operating costs o fthe CGP. 47 Annex 5: Project Financing Madagascar Joint Health Sector Support Project Total , Project Cost By Component and types of Local Foreign expenditure US$ million US$ million million US$ Component 1:Strengthening Delivery of Basic 28.5 12.8 41.3 Health Services Component 2: InnovativeDemand-Side 0.7 6.2 6.9 Interventions for Basic Health Services Component 3: Development andManagement of 4.7 2.7 7.4 HumanResources Component 4: Institutional Strengtheningand 2.7 4.2 6.9 Monitoring and Evaluation . Total Project Costs 56.6 25.9 82.5 Source of financing/activity AFD IDA Total (US$million) (US$million) (US$million) I.Pooledfinancing Component 1 sub-component 1.1 8.8 11.2 20.0 sub-comnonent 1.2 1.4 1.4 2.8 Component 3 sub-component 3.1 0.7 0.7 1.4 sub-comnonent 3.2 3.O 3.0 6.0 Component 4 sub-component 4.1 1.4 1.2 2.6 sub-comnonent 4.4 1.o 10.5 11.5 11.Parallelfinancing Component 1 sub-component 1.3 _- 18.5 18.5 Component 2 sub-component 2.1 -- 15.5 15.5 sub-component 2.2 1.4 -- 1.4 Component 4 sub-component 4.2 __ 1.o 1.o sub-comnonent 4.3 1.8 -- 1.8 TOTAL 19.5 63.0 82.5 48 Annex 6: ImplementationArrangements MadagascarJointHealthSector SupportProject A. Institutionalarrangements 109. The implementation o f the PDSSPS and therefore the project activities financed under the JHSSP will be overseen by the MoH, through its relevant directorates and services. Decisions will be made by a Steering Committee, comprised o f staff inadequate number and with proper experience and which i s essentially the MoH's management team made up o f the relevant technical division chiefs and representatives of health districts. This committee is responsible for: (i)general oversight o f Project activities, (ii) ensuring consistency o f Project activities with the Recipient's policy and strategy; (iii) approving Annual Action Plans; and (iv) follow-up on Project performance and implemefitation progress. 110. A project coordination team (Cellule de Gestion de Programme - CGP), reporting directly to the Secretary General, will be responsible for the day-to-day coordination o f project activities. This CGP i s made up o f experienced professionals who have been responsible for oversight o f Bank-financed health projects over the last ten years and for managing grants from the Global Fund and AfDB. The CGP has performed its duties satisfactorily and has acquired experience in managing IDA funded activities, coordinating donors, NGOs, various M o H services and district health authorities. This team has demonstrated its capacity both to manage IDA'Sand other donor's financial management and procurement procedures and to identify innovative solutions effectively at all levels o f the health care system to improve the accessibility and quality o f health services. Other donors have expressed interest in using this team for the execution o ftheir activities. 111. Given the project's wide array o f activities in different areas, the CGP will collaborate with the following M o H Directorates: (a) Health district development (Direction de dkveloppement des districts sanitaires); (b) Infectious diseases (Direction de la lutte contre les maladies transmissibles); (c) Preventive medicine (which includes Nutrition and Family planning services); (d) Planning and research (direction des etudes et de la plunification), (e) Health care establishments (Direction des ktablissements de soins), and (f) Pharmacy and laboratory. 112. In close collaboration with the Directorate o f Finance and the Directorate o f Planning within MoH, the CGP will be responsible for annual project planningand budgeting. The CGP will also be responsible for project management including: (i) coordination and communication with all agencies involved in the implementation of the Project, including all M o H technical departments at the central and decentralized levels, on the basis o f the Annual Action Plans; (ii) preparation and consolidation o f district-level work programs and budgets, and finalization and submission to IDA and AFD, o f the Annual Action Plan by November 30 o f each year; (iii) maintenance o f records and separate accounts for all transactions related to the CGP; (iv) preparation, consolidation and production o f the project financial statements, quarterly financial reports and other financial information requiredby the Government; (v) management o f the three 49 designated accounts; (vi) overseeing procurement; and (vii) monitoring and evaluation o f the various activities supported under the project. 113. The CGP i s currently headed by a National Coordinator nominated by M o H who reports to the Secretary General and the Minister o f Health, and participates in the M o H management team together with the other technical directors, and the senior staff o f the health districts. The CGP will continue to have an internal controller to oversee all administrative and financial transactions; a highly qualified accountant with at least one assistant; two procurement specialists; a procurement assistant; a monitoring and evaluation specialist; and at least one assistant. Implementation o f project activities will be the responsibility o f the above listed M o H Directorates who will collaborate closely with the decentralized health districts. The PIM is being revised to further define the roles and responsibilities o f all concerned partners. An in- depth capacity assessment o f the CGP and M o H undertaken during pre-appraisal confirms that the CGP is adequately staffed and that appropriate resources have been earmarked to meet project implementation needs. B. ImplementationArrangements 114. Implementation o f the project will be governed by four procedures manuals, including the Project Implementation Manual (PIM) which covers general implementation modalities for project activities and the monitoring and evaluation system, and the Project Accounting Manual o f Procedures, covering the planning, budgeting, financial management, accounting and procurement systems as well as including terms o f reference o f staff. These manuals, the adoption o f which are conditions o f effectiveness, are both inthe process o f beingupdated. Two additional manuals will be prepared during the first year o f project implementation. The first relates to the Manual governing Performance Based Allocations under Component 1.1 o f the project. The Manual, satisfactory to IDA, will set forth, inter alia, eligibility criteria, and fiduciary and operational arrangements for the implementation o f activities financed through these allocations. The second Manual, also to be satisfactory to IDA, pertains to the provision o f Bonuses under Component 2.1 o f the project and will govern the implementation o f the minimumpackage of services. C. PartnershipArrangements 115. A numbero fdonors are active inthe health sector inMadagascar. Donor collaboration on the design and implementation o f the health strategy in Madagascar has been excellent, and the scope o f partnerships is expected to increase even more under the sector-wide approach and within the framework o f IHP+. Three formal mechanisms o f coordination will be used: (1) Bi-annual Joint Health Sector Reviews 116. M o H will continue to organize bi-annual Joint Health Sector Reviews and ensure the participation o f concerned Ministries (Finance, Water and Sanitation and Education), development partners, civil society organizations active in the health sector, and other key stakeholders. The purpose o f the first Joint Health Sector Review o f the year i s to analyze previous year's performance and produce a set o f conclusions and recommendations for M o H endorsed by the participants. These then form the basis o f any necessary adjustments to the 50 Ministry's Annual Work Plan. The purpose o f the second Joint Health Sector Review is to review progress made during the previous six months and provides the basis for adjustments and course correction for the following year. The Joint Health Sector Reviews have three components: (i) preparation o f critical questions under a number o f thematic areas; (ii) joint a joint field visit to different regions to enhance the understanding o f problems in the field and undertake discussions with stakeholders at the regional, district and community levels on critical questions; and (iii)a two-day plenary session to consolidate the field work and prepare a prioritized action planfor the following six month period. 117. The outcome o f each Review is a prioritized set o f actions for the coming year, agreed with participating development partners, and which incorporates their respective contributions, reflects their collective recommendations on priority areas for action, and facilitates performance monitoring. This collective approach to sector monitoring and coordination i s expected to improve efficiency, accountability and prioritization o f donor support in the sector. Inthe past, these Reviews have been successful in giving voice to all levels o f health service providers and facilitating a constructive dialogue around bottlenecks and capacity constraints to service delivery. The Reviews will continue to provide a mechanism for monitoring progress on PDSSPS implementation, and will serve as one o f the country's health sector coordination mechanisms. (2) Donor and GovernmentAgreements 118. A document outlining the GuidingPrinciples for a SWAP has beendeveloped laying out the coordination, financing and monitoring principles governing the implementation o f the National Health Sector Development Plan. This was signed by Government and the development partners and serves as the foundation for the development o f a country compact, a critical milestone o f IHP+, which is expected to be prepared in 2009. With respect to the pooled financing under the proposed project, a separate Collaboration Agreement has been drafted to outline the organizational, institutional and coordination arrangements for implementation, the roles and responsibilities o f each partner pooling their resources as well as and arrangements for adding newpartners during implementation. This Collaboration Agreement will be signed by the Government, IDA and AFD. (3) Joint SupervisionArrangements 119. Development partners contributing to the pooled account will arrange regular joint supervision missions and work closely together on team composition, planning and implementation with counterparts to minimize administrative efforts for the government. This will include coordination o f the policy dialogue in line with specific areas o f expertise o f individual agencies to allow for efficient allocation o f resources and use o f government capacities as far as possible. Regular supervision missions are envisaged twice every year, and in addition to the fiduciary requirements o f participating development agencies in the pooled financing, will support the Bi-annual Joint Health Sector Reviews to monitor implementation o f the PDSSPS as well as the JHSSP. To the extent possible, development partners will also coordinate the use o f parallel funds available for implementation support measures (e.g. for technical assistance) and share evaluation results and background reports as applicable. 51 Annex 7: FinancialManagementand DisbursementArrangements MadagascarJointHealthSector SupportProject Summary 120. The proposed lending instrument for this project would be an investment credit o f an amount equivalent to US$63 million to support the Government o f Madagascar's efforts to increase the utilization o f maternal and child health services. This project consists o f four components: (i)Strengthening Delivery o f Health Services; (ii)Innovative Demand-Side Interventions for Basic Health Services; (iii)Development and Management o f Human Resources; and (iv) Institutional Strengthening and Monitoring and Evaluation. 121. Despite recent reforms undertaken by the Government, the country's financial management system at the central, regional and district levels remain weak with poor implementation and management capacity. To address this high fiduciary risk, transitional institutional arrangements were agreed with M o H to entrust the financial management aspects o f this project to the financial management unit of the CGP, which has extensive experience in managing IDA funds. The CGP will retain the existing experienced and qualified fiduciary staff, including three accountants, and will be in charge o f overall coordination o f the project as well as the fiduciary aspects, including budgeting, accounting, financial reporting, disbursement operations and procurement. The financial management staff will be supervised by the MoH's DF, who inturn will be supported by a technical assistant for the duration o f the project. With regard to operating units responsible for the implementation o f project activities at the regional and district levels, these continue to be supported by financial officers recruitedunder SHSDP to strengthen their capacity in financial management. The financial management arrangements o f the CGP and operating units have been assessedto determine whether they are acceptable to the Bank and the main conclusion is that these entities meet the minimum IDA requirements as described in OPiBP 10.02. (This review is in fact an update since the financial management systemo fthese entities has already been assessedfor the ongoing SHSDP). Some improvements will be needed, however, to further improve the system. CountryIssues 122. The World Bank's Country Financial Accountability Assessment and Country Procurement Assessment Report, completed in2003, and some diagnostic works carried out over the last three years by the World Bank and other donors, identified a range o f weaknesses and issues hampering the performance o f Madagascar's budget and expenditure management system. To address these issues, the Government developed, from 2004 to 2007, in collaboration with all key development partners, priority action plans for public finance reforms. While overall implementationprogress ofthe reform program i s encouraging, significant efforts still needto be made to strengthen internal and external control systems. Deficiencies in the control system impact the whole expenditure circuit o f budget execution, especially with respect to the control o f salary payments and delivery o f goods and services to the administration. Moreover, control agenciesneglect their quality control function of budget management as they are more concerned with irregularities and mismanagements. With respect to external audit, the main weakness relates to the lack of an adequate number of skilled and experienced auditors at the "Chambre 52 des comptes" who are able to perform the increasing numbers o f complex tasks required. As a result, significant delays have been noted inthe presentation o f the budget execution laws to the Parliament. To mitigate risks in public expenditure management, the World Bank, through the PGDI, in collaboration with a number o f donors, continues to support Government's public finance reforms reflected inits annual priority work plan. 123. Regarding the accounting profession, some positive developments have been noted over the last three years. Yet a number o f local accounting firms continue to operate below international standards. To improve the capacity and the competitiveness o f local auditing firms, the following measures have been implementedwhen auditing IDA-financed projects: (i) local auditors are obliged to partner with international accounting firms; (ii)the international accounting firm must participate effectively in the fieldwork portion o f the audit; and (iii) the audit report must be jointly signed and submittedby the local and international audit firms. An accounting and auditing Report on Observance o f Standards and Codes was carried out and finalized in June 2008 and clearly identified issues and actions to be taken to strengthen the capacity of the accounting profession in Madagascar. The country action plan describing key actions to be implementedhas beenfinalized and submitted to IDA for financing. 124. The use o f country systems still remains risky for Madagascar due to certain fiduciary weaknesses: inefficient and cumbersome expenditure processes, poor and ineffective internal control, weak external control, incapacity o f the management information system to satisfy reporting requirements. As a result, JHSSP will utilize transitional financial management arrangements while at the same time contributing to the strengthening o f the sector fiduciary systems so that by the end o f project implementation, the M o H will have introduced sector-wide financial management arrangements, including audits. Institutionaland FinancialManagementArrangementsandRiskAssessment 125. The CGP, within the MoH, will be responsible for project management including: (i) coordination and communication with all agencies involved inthe implementationo f the Project, including all M o H technical departments at the central and decentralized levels, on the basis o f the Annual Action Plans; (ii) consolidation o f district work plans and budgets; (iii)maintenance o f records and separate accounts for all transactions related to the CGP; (iv) preparation, consolidation and production o f the project financial statements, quarterly Interim unaudited Financial Reports (IFRs) and other financial information required by the Government; (v) management o f the pooled account, the designated account-IDA and the designated account- AFD; (vi) overseeing procurement; and (vii) M&E of the various activities supported under the project. The CGP i s currently headed by a National Coordinator nominated by the M o H and includes specialists in accounting, procurement and M&E. Implementation o f project activities will be entrustedto: (i) technical departments o f MoH; and (ii) operating units at the regional and district levels, which will receive timely payments from the CGP based upon submission o f satisfactory quarterly budgeted actions plans. The regional and district level operating units will manage disbursements from their own bank accounts. Under the supervision o f the financial officer(s), they will maintain records and accounts for all transactions related to them, and prepare financial report and other basic information on project management and monitoring as required by the CGP. The district level health authorities will also handle the accounting and payment o f all transactions o f health centers. 53 E d u s? a, -B' W a u 0 z * . .Y Q 4 4 c3 9 u 2 .k .s Q c3 E E ' E cc 0 E v, E E ru 0 '5 g 0 ' g & v s 126. The above table identifies the risks that the project management may face, and provides the measuresto be taken to mitigate them. Strengths,Weaknesses and Action Plan 127. The main deficiencies noted in the financial management system are summarized inthe following table which also provides relevant measuresto address them: Table 7Financial Management WeaknessesandActions Significantweaknesses Actions Date Responsible due by The Department o f Finance Ensure SHSDP accounting staff retained in Done MoH/DFB (withinMoH), responsiblefor the CGP structure. supervising CGP accounting staff, is not familiar with Maintain the financial management Done M o W D F B IDNdonor procedures in Technical Assistant recruited under SHSDP financial management and throughout the duration o f the project. disbursement. Extension ofthe contracts o fthe seventeen Done M o W D F B Lack o f qualified staff at the (17) financial management officers recruited regional and district levels. under SHSDP to: i)provide the operating units with required capacity to quickly disburse and account for project funds; ii) ensure, at the regional and district levels, the I use o f funds for the purposes intended; and iii)ensuretimelypreparationofperiodic financial reports required for proper monitoring o f activities implemented by operating units, with respect to financial and physical aspects. Chart o f accounts not yet Update the existing Chart o f accounts to Done Consultant updated to reflect components reflect new components and activities and and activities to be financed satisfy reportingrequirements and integrate under the Project. into updated Project Accounting Manual o f Procedures. Project Accounting Manual o f Update the Manual to provide clear Before Consultant Procedures not yet updated to: guidance to project staffworking at the effectiveness (i) agreedchangesin reflect central, regional and districts levels. procedures to be applied; and (ii)includethenewChartof Organization o f user training to ensure Before Consultant accounts and models o f IFRs. proper application o f procedures, proper effectiveness record keeping, and adequate safeguarding of assets. Incapacity o f the computerized Customizing and upgrading the The new Consultant system in place (used by computerized accounting system used by software will SHSDP) to satisfy entirely the SHSDP in order to: (i) user needs; (ii) be functional meet needs o f this Project and the satisfy other donors' requirements in no later than requirements o f other financial/technical information; and (iii) two months development partners in ensure timely production o f annual financial after credit financial, accounting, and statements and quarterly IFRs for effectiveness technical information. monitoring project activities. 58 Significantweaknesses Actions Date Responsible due by Organizationofuser trainingby the No later than Consultant consultantto ensure efficientuse ofall two months modulesofferedby the software. after credit effectiveness Absence ofacceptable Recruitmentof an internationalprivate Three months MoH,IDA, arrangements inauditing. auditingfirm acceptableto IDA andAFD to after AFD carry out the audit ofthe projectaccounts effectiveness jointly with the Auditor General.This audit will beperformedbi-annuallyand conducted inaccordance with InternationalStandards o fAuditing. The terms ofreference ofthe audit will be Done MoH,DFB submittedto IDA andAFD, andreviewed by the financialmanagement specialistof IDA andAFD to ensure the adequacy ofthe audit scoDe. FinancialManagement Arrangements Budgeting 128. The expected project period for Madagascar JHSSP is four years. A project implementation-planand disbursement schedule has been agreed upon up andwill form the basis for discussions on annual budget and action plans. The annual budget will be prepared in line with the Government's policy and strategy. The DF, Direction des Etudes et de la Planzjkation (DEP) and the National Coordinator will be responsible for coordinating the preparation o f an annual budget for the project. Budgetingarrangements for the project will be described indetails in the Project Accounting Manual of Procedures. The annual estimates will reflect financial requirements o f the project and should be finalized three months before the beginning of the fiscal year, and submittedto the MFB for discussion and decision-making inconformity with the defined calendar. The budget format will be based on the project components, activities, categories, and geographic codes. It will show expenditure estimates per quarter and a total expenditure for the whole year; and funds expected from IDA, AFD and other donors (ifany). Accounting 129. Madagascar JHSSP will use an accounting system in compliance with generally accounting standards and the Plan Comptable des Opkrations Publiques and donor requirements. This system will operate on double-entry accrual principles and will use standard book accounts (journals, ledgers and trial balances) to enter and summarize transactions. Revenue will be recorded when cash i s received, while expenses and related liabilities will be recorded when incurred, especially upon receipt o f goods, works and services. 130. The regional operating units will maintain a simple cash book showing clearly cash received, payments made for each component and activity for which they have implementation responsibility, and cash balances. They also will prepare on a quarterly basis, in collaboration 59 with the financial officers, a more simplified form o f reporting on sources and uses o f funds, and send it to the CGP for consolidation with their activity reports. 131. The Project Accounting Manual o f Procedures (for MoH/CGP and related operating units)will be updated to harmonize donor procedures and will describe the accounting system(s) and accounting policies to be followed, the Chart o f accounts, the formats o f books and records, the financial reporting, and relevant information to facilitate record-keeping and maintenance o f proper control over assets. In addition, staff will be trained to ensure better understanding and proper application o f all procedures described inthis manual. The Project Accounting Manual o f Procedures will be finalized and submitted to IDA and AFD prior to credit effectiveness. 132. While all the donors involved in the project appreciate the need to use Government systems, the Integrated Financial Management Information System installed within the MFB does not serve the needs o fthe project without manyurgent corrections inthe short-term. As this i s not feasible, an interim measure has been therefore taken while the government system is beingimproved. To ensure timely production o f financial informationrequired for managing and monitoring project activities, the CGP will use the existing integrated computerized system which in particular facilitates annual programming o f activities and resources, record-keeping (general accounting and cost accounting), financial and budgetary management, fixed assets management, procurement management, and preparation o f financial statements and quarterly IFRs. 133. However, this software needs to be customized and upgraded to: i)meet user needs; ii) satisfy other donors requirements in financial and technical information; and iii)ensure timely production o f project financial statements and all other reports as required by donors for monitoring project activities. This update i s presentlyunderway and expected to be completed no later than two months after credit effectiveness. The consultant undertaking this update will provide user training to ensure efficient use o f all modules offered by the software. Internal Control and InternalAuditing 134. The CGP i s staffed with an adequate number o f qualified and experienced accountants from SHSDP. To ensure effective transfer o f skills and allow the CGP to respond to a possible increase o f the volume o f financial management tasks once other donors provide financing, an accounting assistant will be selected among the M o H staff based on qualification and experience. To further strengthen the financial management capacity o f the DF and help it to adequately supervise the CGP, the financial management technical assistant recruited under SHSDP will be maintainedthroughout the duration o fthe project. 135. The MoWCGP and related operating units will have an administrative and accounting procedures manual describing clearly the lines o f responsibilities and authority that exist with appropriate segregation o f duties. The manual will also provide sufficient information to facilitate record-keeping and the maintenance o f proper control over assets. This manual will be submitted to IDA prior to effectiveness. 136. To ensure efficient use of credit funds for the purposes intended and consistent application o f procedures on procurement, financial management, disbursement, the Internal 60 Audit Department within M o H plays the role o f internal auditors. This Department reports directly to the Minister o f Health and ensures that all issues identified during the internal audit are addressedquickly to improve project performance. Financia1Reporting 137. To monitor the implementation o f the project, the CGP will produce the following reports: Bi-annualfinancial statements comprising: i)Summary o f Sources and Uses o fFunds (by components, project activities, credit category and showing all sources o f funds); ii) Project Balance Sheet; iii)the Accounting Policies Adopted and Explanatory Notes; and iv) a Management Assertion. 0 QuarterlyIFRs: This financial report withthe physical progress report will be neededto facilitate project monitoring. The IFRsshould be submittedto IDA and AFD within 45 days o fthe end o fthe reporting period (quarter). The IFRwould reflect all project activities, financing, and expenditures, including funds from other donors deposited both inthe segregatedDesignatedAccounts andthe DesignatedAccount for PooledFunds. The form and content o f quarterly IFRs and annual financial statements were agreed at negotiations. Models of these reports will be presented inthe Project Accounting Manual o fProcedures. Auditing 138. The financial statements o fthe project will be audited by an internationalprivate auditing firm acceptable to the donors, in collaboration with the Auditor General. This audit will be performed on a six-monthly basis and conducted in accordance with International Standards o f Auditing. The auditors should be recruited within three months after the effectiveness date. The audit report will be submittedto IDA and AFD not later than six months after the end o f each period. The auditors will be required to: i)express opinions on the project financial statements and the IFRs; and ii)carry out a comprehensive review o f the internal control procedures and provide a management report outlining any recommendations for their improvement. The terms o f reference o f the audit were submitted to IDA prior to negotiations and reviewed by the financial management specialist o f IDA to ensure the adequacy o f the audit scope, drawing special attention to particular risk areas identified duringproject preparation. 139. The quality and content o f the audits o f SHSDP as well as the internal audits undertaken by the M o Hhave been satisfactory to-date. These audits will encompass all activities undertaken at a regional level. Under JHSSP, accountability and transparency mechanisms for the management o f the performance-based allocations will be further enhanced at local levels, including the obligation o f allocation beneficiaries to post the status o f use o f funds in a public place. The regional accountant (financed by SHSDP) will also continue to provide support to the region inmanaging and overseeing the utilization o f funds. FundsFlow and DisbursementArrangements 140. Funds flow arrangements for the project are as follows and shown in Figure 4. For the implementation o f the project, the following bank accounts will be opened in local commercial 61 banks under conditions satisfactory to donors: Designated Account for Pooled Funds to be managed by the CGP: Denominated in Euro, disbursements from the IDA Credit and the AFD Grant will be deposited in this account to finance 100percent o f goods, works, consultants' services, training, operating costs and allocations under Parts Al, A2, C1, C2, D 1 and D4 o f the Project as indicated in the Financing Agreement. The disbursement percentages for expenditures to be financed by each donor through the pooled account will be agreed between donors on an annual basis based on the Annual Action Plan; Designated Account - IDA to be managed by the CGP: Denominated in $US, disbursements fiom the IDA credit will be deposited in this account to finance 100 percent of the specific types of expenditures that are eligible, i.e. goods, works, consultants' services, training, operating costs and bonuses under Parts A3, B1and D2 as indicatedinthe FinancingAgreement; and Designated Account - AFD to be managed by the CGP: Denominated in Euro, disbursements from AFD grant will be deposited inthis account to finance 100percent o f the specific types o f expenditures that are eligible, i.e. goods, consultants' services, and training under Parts B2 and D3 as indicatedinthe FinancingAgreement. Figure 4 Flow of Funds IDA AFD DesignatedAccount DesignatedAccount DesignatedAccount IDA (Central level: PooledFunds(Central AFD (Central level: CGP) level: CGP) CGP) District Regional Accounts Accounts Contractors, suppliers of goods and services 141. While disbursingproceeds from the credit account, IDA may: . reimbursethe borrower for expenditures paid from the borrower's resources; 62 . advance credit proceeds into the Designated Account IDA and the Designated Account for Pooled Funds o f the borrower that are held in a commercial bank acceptable to IDA to finance eligible expenditures as they are incurred and for which . supporting documents will be provided at a later date (see below: Disbursement from . the Designated Account for Pooled Fundsand Designated Accounts); make a direct payment to a thirdparty; and enter into special commitments inwritingto pay amounts to a thirdpartyinrespect o f expenditures to be financed out o f the credit proceeds, upon the borrower's request andunderterms and conditions agreedthe Bankandthe borrower. 142. To ensure prompt payment o f contractors and suppliers operating in the regions, the borrower may open regional bank accounts to be managed by each operatifig unit. Denominated in local currency, disbursements from the Designated Account for Pooled Funds will be deposited inthese accounts opened in local commercial banks to finance 100 percent o f eligible expenditures under the pooled account agreed with IDA and AFD ,and indicated clearly inthe Financing Agreement. The amount to be advanced to the regional accounts will be determined on the basis o f quarterly action plans for an amount not exceeding a fixed ceiling indicated inthe Manual. Subsequent payments will be based on monthly Statements o f Expenditures submitted by operating units after appropriate authorization and approval by CGP. The operating units will submit monthly expenditure reports indicating sources anduses offunds andjustifying the use o f funds, and accompanied by reconciled bank statements. The reconciliation of the regional and district bank accounts will be undertaken on a monthly basis. For this purpose, the opening balance o f regional accounts and advances received from the designated account for the month are reconciled with the closing balance and expenditures for the same period. Unused funds in regional and district 'accounts will be refunded to the Designated Account for Pooled Funds by using the exchange rate at the time of project closure. To ensure timely implementation o f its quarterlyactionplan, each healthcenter at the communeAoca1level would submit their budget to the district level health services, which would inturn pay directly the suppliers as well as the per diem for technical staff during a mission. All supporting documents will be retained by the regional and district operating units, and be made available for review by periodic Bank supervision missions, internal and external auditors. Method of Disbursement Disbursementfrom the DesignatedAccountfor Pooled Funds 143. Flows o f funds from the Designated Account for Pooled Funds will be governed by a Collaboration Agreement signed by donor partners and the Government. IDA and AFD will deposit into the Designated Account for Pooled Fund their contribution as per agreed Annual Work Plan, in an agreed proportion and periodicity (on a quarterly basis) as defined in the Collaboration Agreement. Disbursements from the Designated Account for Pooled Fundwill be made on the basis o f quarterly IFRs, inaccordance with procedures reflected inthe Collaboration Agreement. Under this disbursement method, a forecast o f project expenditures will be agreed between the CGP and donors, covering a period o f six months. The borrower may request an advance for an amount not exceeding this cash forecast. Supporting documentation for these disbursements will be submitted with the subsequent IFRs and reviewed by donors to confirm eligible expenditures during the period covered by the IFRs. The cash request at the reporting 63 date will be the amount required for the forecast period as shown in the approved IFRs less the balance in the Designated Account for Pooled Funds at the end o f the quarter and account balances at the end o f the quarter inthe regional and district accounts. Subsequent disbursements from the Designated Account for Pooled Funds will therefore be made in respect o f this cash request. Detailed disbursement procedures will be described inthe Project Accounting Manual o f Procedures. Disbursementfrom theDesignated Accounts 144. Disbursements will be done based on quarterly IFRs whereby a forecast o f project expenditures will be agreed between the CGP and IDA covering a period o f six months. The recipients may request an advance for an amount not exceeding this cash forecast. The amount o f the advance agreed with IDA will be deposited respectively in the Designated Account-IDA. Supporting documentation for these disbursements (Le. the IFRs) will be submitted and reviewed by the IDA to confirm eligible expenditures during the period covered by the IFRs. Detailed disbursement procedures will be described inthe Project Accounting Manual o f Procedures. The cash request at the reporting date will be the amount required for the forecast period as shown in the approved IFRs less the balance inthe Designated Account IDA at the end o fthe quarter. Minimum Application Size 145. There will be a minimum value for applications for direct payment and special commitments, which i s 20 percent o f the amount advanced to the respective Designated Account. The Project Accounting Manual o f Procedures describes indetails the application steps and requirements for requesting a reimbursement, a direct payment for third party, and applying for a special commitment. DonorContributions 146. Within the context of the sector-wide approach, a portion of IDA financing will be pooled with contributions from AFD. To strengthen donor collaboration and ensure harmonization o f borrower and donor fiduciary procedures, a Collaboration Agreement will be signed by the Government and the cooperating partners pooling their funds for this project. The contribution o f each donor to the project i s as follows: Donors Amount IDA $ USS63.0 million AFD $ US$19.5 millionequivalent Total $ US$82.5 million 64 Allocation of CreditProceeds 147. The proceeds o fthe IDA credit will be allocated according to the following Table. Category Amount of the PercentageofExpenditures CreditAllocated to be Financed (expressed in SDR) (inclusiveof Taxes) (1) Goods, works, consultants' 19,000,000 100% services, Training and Operating Costs under Parts A.3, B.1and D.2 o fthe Project (2) Bonuses under Part B.1o f 100% the Project 3,500,000 (3) Goods, works, consultants' services, Training and Operating Such percentage o f Eligible Costs under Parts A.1,A.2, C.1, 10,800,000 Expenditures as the C.2, D.1and D.4 o f the Project Association may determine for each Fiscal Year based on the Annual Action Plan (4) Performance-Based 7,200,000 Allocations under Part A.1o f Such percentage o f Eligible the Project Expenditures as the Association may determine for each Fiscal Year based on the Annual Action Plan TOTALAMOUNT 40,500,000 SupervisionPlan 148. The financial management specialist will pay regular visits to the CGP to ensure timely implementation o f all pending measures indicated inthe agreed action plan. Taking into account the level o f risk associated with the financial management aspects of this project, a supervision mission will be conducted once a year when project expenditures begin. This periodicity can be revised based on the risk rating associated to the project after each supervision mission. The mission's objectives will include ensuring that strong financial management systems are maintained for the project throughout its life. IDA'SImplementation Status Report will include a financial management rating and the IDA financial management specialist will review quarterly IFRs, the audit reports and follow-up on timely implementation o f recommendations from auditors. 65 Annex 8: ProcurementArrangements MadagascarJoint Health Sector SupportProject A. Madagascar's ProcurementEnvironment 149. Madagascar is in the process o f major procurement reforms. A new Procurement Code was passedby the Parliamentand the Senate and became effective inJuly 2004. The mainpillars o f the code are transparency, efficiency and economy; accountability; equal opportunity for all bidders; prevention o f fraud and corruption; and promotion o f local capacity. The Procurement Code was supplemented by regulations, procedures manuals, and standard bidding and other procurement documents. The Procurement Code defines methods o f procurement and review procedures. The Code also created (i) Public Procurement Oversight Authority or Autorite` de the Regulation des Marche`s Publics (ARMP) in 2006, which includes oversight o f the National Tender Board or Commission National des Marche`s (CNM) for procurement reviews, and the Regulatory and Appeals Committee or Commissionde Regulation et de Recours for the handling o f complaints and norms. Finally, the Code provides for the creation o f procurement units or Unit& de Gestion de la Passation de Marche`s (UGPM) under the leadership of a Personne Responsable des Marche`s Publics (PRMP), and a Commission d'Appel d'Offies in each Ministry, and decentralized departments o f national public institutions. 150. The Procurement Code is generally consistent with good public and international practices and includes provisions for: (i)effective and wide advertising o f up-coming procurement opportunities (general procurement notice for each procuring entity and A M P website); (ii)public bid opening; (iii)pre-disclosure o f all relevant information, including transparent and clear bid evaluation and contract award procedures; (iv) clear accountabilities for decision-making; and (v) an enforceable right o f review for bidders when public entities breach the rules. The Country Procurement Assessment Report (CPAR) was adopted inJune 2003. The action plan o f the CPAR was agreed upon with Government during the December 2003 CPAR mission and workshop. The CPAR is expected to be updated in2010. Duringthe preparation o f successive PRSCs 2 to 6, four key ministries (education, health, transport and agriculture) were assessed on the application o f the new procurement code provisions, with these assessments beingusedas triggers from one PRSC to the next. 151. The Bank approved the Use o f Country Systems (UCS) on April 24, 2008, which includes International Competitive Bidding (ICB) and Quality and Cost-Based Selection (QCBS). However, this approval does not extend to Madagascar given that there are a certain number of pre-requisites that have not been fulfilled, including the fact that Madagascar has not yet expressed its interest to be part o f the piloting program. As a result, despite the support from other development partners for UCS, there continues to be no formal approval from any partners on UCS inMadagascar. B. Organizationof Procurementwithin the Ministry of Health 152. Inconformity with the Procurement Code, a UGPM was created within the M o H staffed withthree procurement specialists, and supervised by a Chef de bureau. This unitreports directly 66 to the PRMP, who acts on behalf of (i)the CNM for clearance of contracts below the prior review thresholds; and (ii) Minister of Health for contract signing. The PRMP holds the rank the of a Director in the organization chart and reports directly to the Minister. Figure 5 shows the institutional structure for procurement within the MoH. Figure 5 Institutional Structurefor Procurement within the M o H Cabinet ' BA DP PRMP +UGPM Direction GCnCral Direction GCneral Protection Sociale I O t h e r l i 7 Institutions and Organizations DProtS DULM DGPFE DPLMT 153. Procurement Process within the MoH. After the institution has prepared and validate its annual work program, each directorate which functions as a "Gestionnaire de Cre`dit" or (GAC) must send the list of activities to be procured to the UGPM so that the latter may prepare the general procurement notice and post it publicly innewspapers. The UGPM consults the technical services so as to draft the terms of reference, the technical specifications and the program of activities. The UGPM then drafts the bidding document to be submitted for approval by the PRMP and the CNM in accordance with their respective thresholds. Depending on the contract amount, the bid will be advertised in newspapers, or displayed at the UGPM office. Bids should be opened at the time and place specified in the bidding documents, and the data sheets, in the presence of the bidders or their representatives who wish to be present. The evaluation commission evaluates the bids and submits an evaluation report to the PRMP and depending on the thresholds, to the CNM. The contract is then prepared and signed by the contractor, consultant or supplier, and countersigned by the PRMP. The contract has to be submitted to the Contrde des De`pensesEngage`es who verifies ifthe expenditure is in line with the "Programme d'engagernent" of the MoH. Finally the contract is made effective. The same process applies at 67 regional levels as the regional authorities have their own PRMPs and Commission Regional des marches. C. Assessment of M o H Capacity to ImplementProcurement 154. As agreed with the Government, procurement activities of the project will be carried out by the UGPMofthe MoHincoordinationwiththe procurement unit ofthe Cellule de Gestion de Programme (CGP) which is responsible for oversight o f implementation o f the on-going SHSDP. This unit will function as a M o H procurement unit inaccordance with the provisions o f Madagascar Procurement Code. The CGP procurement unit i s currently duly staffed with two proficient procurement officers and an assistant. The UGPM has had some experience in managing procurement operations within the M o H and is properly staffed with health procurement specialists. Although the M o H through the CGP has extensive experience with World Bank procedures, ingeneral, the M o H does not have a lot o f experience with other donor procedures, mainly due to previous parallel project implementation units and donor-managed procurement. 155. The UGPM faces a number o f challenges. One key institutional problem relates to the fact that the UGPM currently has not been allocated an independent budget because o f institutional structural problems in the organization chart, and as a consequence, the staff continues to be functionally responsible and report to their respective technical units. Moreover, the M o H continues to suffer from frequent staff turnover. The UGPM also faces a problem o f establishing technical specifications, scope o f works and terms o f reference, mainly due to weak capacity in interpreting and formatting documents provided by the technical units o f the Ministry. To address these issues, an action plan has beenprepared with a series o f corrective actions that are currently on-going, including ensuring adequate qualified staff in place, availability o f budget and clarification o f the roles and responsibilities o f each unit within the budget preparation and execution framework. An evaluation o f budget execution has been conducted and implementation o f an action plan i s underway. In addition, a one-year technical assistance, financed by PGDI, i s beingprovided to strengthen the capacity o f the UGPM to apply the action plan at its level, in coordination with other departments, and in partnership with the key decision-makers. 156. A Procurement Capacity Assessment of the UGPMo fthe M o H and the CGP was carried out inOctober 2008. The assessmentreviewed the organizational structure for implementingthe pooled financing activities and the interaction between the UGPM, the SHSDP's staff responsible for procurement, and the MoH's DF. The key issues and risks concerning procurement for implementation o f pooled financing activities have been identified and include the phasing of activities to be undertaken and handling o f potential urgent issues and/or needs. Corrective measures were agreed upon in May 2007 during preparation o f the on-going project and are beingimplementedina timely manner along with the agreed procurementplan.As such, the procurement action plan is being and will continue to be fine-tuned quarterly and the main procurement plan will be updated accordingly. The overall project risk for procurement is therefore average. Table 9 outlines the procurement risk assessment and corresponding risk mitigation measures. 68 rztion Designation Concerns Riskmitigation Due date Staffing Competent but not Integration o f Duringproject conversant with all SHSDP's procurement implementation donor procedures staff within the UGPM Establishment o f Interpretationand Technical assistance Duringfirst three terms o freference and formatting o f withhealth expertise months o f technical documents coming for UGPM implementation specifications from technical units Project management Lack o f clarity on Project By effectiveness roles and implementation responsibilities manual to be updated and training to be held at all levels D. Procurement for the Activities under the Project 157. General: Procurement for project activities, above thresholds specified below, would be carried out in accordance with the World Bank's Guidelines: "Procurement under IBRD Loans and IDA Credits" dated May 2004; and in accordance with the Guidelines: "Selection and Employment o f Consultants by World Bank Borrowers'' dated May 2004, revised October 2006, ' and the provisions stipulated in the Legal Agreement. All procurement below the prior review thresholds shall be conducted in accordance with procedures set forth inthe Procurement Code, with modifications, if needed, to ensure that the procedures are acceptable to the Bank. Other than the Procurement Code, the Bank has not yet approved use o f country systems as a whole. However, the set of procurement regulation texts, procedures and local standard bidding documents were reviewed and found acceptable at appraisal. National CompetitiveBidding 158. National competitive bidding (NCB) procedures will be undertaken in accordance with the Procurement Code of 2004 and including inter-alia: (a) an explicit statement to bidders of evaluation and award criteria; (b) national advertising with public bid opening; (c) award to the lowest evaluated responsive and qualified bidder; and (d) foreign bidders would not be precluded from participation in NCB. Registration and/or classification o f contractors may be used for establishing bidder qualification or for preparing a list for use under price comparison procedure but not as criteria for bidding.Price references or bracket o f bid values shall not bepermitted for bid rejection. The organization and responsibilities for executing the procurement function, general guidance, procurement methods and procedures, procurement monitoring report formats, etc, will be included as part o f Project Implementation Manual (PIM). The description o f various items under different expenditure categories are described in general below. For each contract to be financed by the project, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time-frame are agreed in the Procurement Plan. 69 The Procurement Plan will be updated at least annually or as requiredto reflect the actual project implementation needs and improvements ininstitutional capacity. IInternational CompetitiveBidding 159. Advertisement: A General Procurement Notice will be published in UN Development Business and Development Gateway Market (dgMarket) and will show all ICB for goods and works and major consulting service requirements. As required by the Procurement Code, a general procurement notice will be publishedin the local press every year for all procurement activities covered by the Annual Action Plan. Specific procurement notices will be issued in Development Business and dgMarket, and at least one newspaper with nationwide circulation, for ICB contracts and before preparation o f shortlists with respect to consulting contracts above us$200,000. 160. Procurementof Works: Works procured under this project would include provision o f basic water and sanitation facilities at health centers, and minor rehabilitation o f health facilities. The procurement will be done usingthe Bank's Standard BiddingDocuments (SBD) for all ICB and using national SBD for NCB, agreed with or satisfactory to the Bank. TO the extent practicable, contracts shall be grouped into bid packages estimated to cost the equivalent o f US$3,000,000 or more and would be procured through ICB procedures. For contracts estimated to cost less than US$3,000,000 equivalent per contract, civil work procurement may be carried out through NCB and contracts for small works, estimated to cost less than US$lOO,OOO, may be procured through quotations procedures. The bidding documents shall include a detailed description o f the works, including basic specifications, the required completion date, basic forms o f agreement acceptable to IDA and relevant drawings where applicable. Specific procedures details can be found inthe PIM. 161. Procurement of Goods: Goods procured under this project would include office furniture and equipment, vehicles, computer hardware and software, equipment for mobile health centers, and goods to strengthenhealth center to deliver basic package o f services, including the provision o f necessary drugs, equipment including cold-chain equipment and testing facilities. The procurement will be done using the Bank's SBD for all ICB and national SBD agreed with or satisfactory to the Bank for NCB. To the extent practicable, contracts shall be grouped into bid packages estimated to cost the equivalent o f US$500,000 or more and would be procured through ICB procedures. For contracts estimated to cost less than US$500,000 equivalent per contract, procurement o f goods may be carried out through N C B procedures and purchase o f small furniture estimated to cost less than US$50,000 will be conducted through prudent shopping procedures. 162. Direct Contractingfor works and goods may be used in exceptional cases, such as for the extension o f an existing contract, standardization, proprietary items, spare parts for existing equipment, and urgent repairs and emergency situations, according to paragraphs 3.6 and 3.7 of the Guidelines. The items to be procured through Direct Contracting would be agreed on in the Procurement Plan. 163. Procurementof non-consultingservices: Procurement from UnitedNations specialized agencies, acting as suppliers, pursuant to their own procedures consistent with para 3.9 o f the 70 BankProcurement Guidelines, may includeUnitedNationsDevelopmentProgram, UNICEF and WHO. The form o f contract between the Government andthe UNagency will be prior reviewed by the Bank. The items to be procured from UNagencies would be agreed on inthe procurement plan if and when to be used. In addition, services o f the national drug procurement agency, SALAMA, may be used as a procurement agent to purchase drugs and medical supplies in accordance with Article 3.10 o fthe Guidelines. 164. Selection of Consultants: The project will finance the contracting o f consultancy services for technical assistance, financial and technical audits, and capacity building. Firms will be recruited on the basis o f the QCBS method, usingthe Bank's Standard Request for Proposals and for all consulting assignments to cost more thanUS$200,000. For contract estimated to cost less than US$200,000 equivalent per contract, selection o f consultants may be carried out through QCBS and the following selection methods. Selection based on consultant's qualifications (CQS) can be used for the recruitment o f training institutions and for assignments that meet criteria set out in Para. 3.7 o f the Consultant Guidelines.Least-cost selection may be used for the selection o f consultants for non-complex assignments inaccordance with para 3.6 o f Consultants' Guidelines. Single source selection (SSS) can be used to contract firms or individuals for assignment that meet criteria set out in Para. 3.9 to 3.13 of the Consultant Guidelines and for contract which amount do not exceed US$lOO,OOO. Specialized advisory services would be procured through Individual Consultants Selection (ICs), based on the qualifications of individual consultants for the assignment in accordance with the provisions o f paragraphs 5.1 through 5.3 o f the Consultant Guidelines. Short lists o f consulting services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants, when this i s possible, inaccordance with the provisions o f Paragraph 2.7 o f the Consultants Guidelines. 165. Operating Costs financedthrough the project would be procured usingthe implementing agency's administrative procedures, which were reviewedand found acceptable to the Bank. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presentedinthe PIM. 166. Training programs andworkshops would be packaged inthe project's action plans and budget and items therein procured using appropriate methods. Training programs would be agreed upon inthe Procurement Plan. 167. Contract management and expenditure reports: The M o H will submit quarterly reports to IDA and AFD not more than 45 days after the end of every quarter. The IFR should include the status of (i)implementation of procurement plans (concerned steps inthe procedure and any deviation), and (ii) contracts management and expenditures on contracts. 168. Review by the Bank of Procurement Decisions: All work contracts estimated to cost US$3,000,000 or more, and goods estimated to cost US$500,000 or more will be subject to Bank's review inaccordance with the procedures inAppendix Iof the Procurement Guidelines. Given that no large contracts for works and goods are foreseen, the first two contracts below respectively US$3,000,000 for works and US$500,000 for goods will be subject to Bank's review. Any amendment to existing contracts raisingtheir value to the level equivalent or above prior review thresholds are subject to IDA review. All contracts awarded on basis of direct 71 contracting will require IDA prior review and clearance. The agreed procurement plan will identify all contractsto be submittedfor the Bank's prior review. Table `0Thresholdsfor Prow ?meritMethods ani Prior Review Expenditure ContractValue Procurement ContractsSubjectto Category Threshold(US$) Method Prior Review (US$) Works 3,000,000 or more ICB All 100,000 or more and NCB First two contracts less than 3,000,000 Less than 100,000 Juotation Firsttwo contracts All amounts 3irect contracting All Goods 500,000 or more ICB All 50,000 or more and NCB Firsttwo contracts less than 500,000 Less than 50,000 Shopping ._ All amounts Direct contracting 411 Consultant 200,000 or more QCBS All Services - Firms Less than 200,000 QCBS, CQS First two contracts LCS All amounts sss All Zonsultant 50,000 or more ICs All Services - Individuals Less than 50,000 ICs _- 411amounts sss All 169. All single source selection will be subject to IDA prior review. Consultancy contracts with firms with estimated value o f US$200,000 or more, and consultancy contracts with individuals estimated value o f US$50,000 or more and amendment of existing contracts raising their value to the level equivalent or above prior review thresholds or above will be subject to IDA prior review in accordance with the procedures in Appendix I of the Consultants Guidelines. 72 170. The thresholds for prior review by Bank are specified in the Procurement Plan. Table 10 shows (a) the proposed thresholds for the different procurement methods, and (b) the proposed initially-agreed thresholds for prior review by the Bank. The Bank will review procurement arrangements proposed by the Borrower for the items specified inthe procurement plans for their conformity with the Financing Agreement and the applicable Guidelines. Any procurement item not specified for prior review may be subjected to a post-review of the procurement process. E. ProcurementPlan 171. The M o H has developed a Procurement Plan for project implementation which provides the basis for the procurement methods. This Planwas approved prior to negotiations and will be available at the MoH/UGPM. It will also be available inthe project's database and on the Bank's external website. The Procurement Plan will be updated annually or as required to reflect the actual project implementationneeds and improvements ininstitutional capacity. F. Frequencyof ProcurementSupervision 172. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the implementing agency has recommended bi-annual supervision missions to visit the field to carry out post review o f procurement actions. G. Detailsof the ProcurementArrangementsInvolvingInternationalCompetition 1. Goods, Works,andNon ConsultingServices (a) List o f contract packages to be procured following ICB and direct contracting: 1 2 3 4 5 6 7 Ref. DescriptionofAssignment Estimated Selection Review Expected Comments No. cost Method by Bank Proposals (Prior I Submission Post) Date including20 1.1.1. Equipment for 50 healthcenters 500,000 ICB Prior Jun-09 CSB built by Accord '"" t Equipment for 3 surgery blocks for 500,000 ICB Prior Jul-09 cesareans and laparoscopy 1'3'4` Purchase of caesarianoperationkits Delivery 1 1,765,338 ICB Prior Aug-09 included Purchaseof implantablecontraceptives 1'3'3' (Implanon: 80.000 unit in2009 and 2,622,000 sss Prior Jul-09 SALAMA' 83.375 unit in2010) 1.3.3. Purchaseof equipment: extractionkit 1.1 for Implanon for 250 healthfacilities 50,000 sss Prior Jul-09 SALAMA 'SALAMAi s the national medicineprocuring unit. 73 - 1 3 4 5 6 7 Ref. DescriptionofAssignment Estimated Selection Review Expected Comments No. "st Method by Bank Proposals (Prior I Submission - Post) Date 1.3.9. Fight against plague :purchases of I I Prior 1 Oct-09 I SALAMA - 1 medicalsupplies 122,180 sss 1.3.9. Operationalizationofrabiestreatment 310,187 sss Prior - 2 centers :vaccines and supervision Ju1-09 SALAMA 1.3.9. Elimination of filariose: medicinesand I I I II - 737,201 SSS Prior Jul-09 SALAMA 3 implementationsupport 1.3.1 Rehabilitation, equipmentsand ICB Prior Jul-09 Multiple - 3,500,000 0.1 imdementation ofthe Droiect NCB Prior Jul-09 contracts 2.1.2. Purchaseof individual400.000 safe I I I I 1 1 1 I - $.ss Prior Dec-09 SALAMA 1 delivery kits 3,000,000 Medical inputsfor the integrated 2.1.4. packageof services for mothers and Package 1 children at healthfacility and 1,000,000 SSS Prior Aug-09 service - community level Supportto installation of doctors: goods -3.2.2. and equipment 2,496,038 ICB Prior Aug-09 4.2.3 Supportto M&E system at all levels: I I I I - goods and equipment 1,568,580 ICB Prior Aug-09 (b) ICB contracts estimated to cost above US$3,000,000 for works and US$500,000 for goods per contract and all direct contracting will be subject to prior reviewbythe Bank. 2. ConsultingServices (a) List o f consulting assignments with short-list o f internationalfirms. 1 1 2 3 4 5 6 7 Ref. DescriptionofAssignment Estimated No. Cost Method by Bank Proposals (Prior I Submission IPost) IDaie - Contractswith Sante Sud for the 1.2.1. installation of private doctors inrural 1,000,000 QCBSISSS Prior Jun-09 areas 2.1.1. Supportto urgentneonatalandmaternal 1,700,000 QCBSICQS Prior Aug-09 - 1 care Technicalassistancefor the finalization 3.1.1 ofthe National HumanResource 619.200 QCBSISSS Prior Jul-09 ' DevelopmentPlan 3.2.3. Training for 20 female health aides per Jun-09 - 1 region 250,000 CQS Prior 3':'3' Training of20 surgical assistants 184,000 CQS I Prior 1 Nov-09 1 - 3.2.3. In-servicetraining of mid-wives and 468,750 CQS I Prior I Jun-09 I - 4 nurses on SONUB 74 4.1.4. Technical assistance for management of 7 I medical waste 150,000 Prior Aug-09 (b) Consultancy services estimated to cost above US$200,000 per contract and single source selection o f consultants (firms), the two first contracts below US$200,000 and of individual consultants assignments estimated to cost above US$50,000 will be subject to prior review by the Bank. (c) Short lists composed entirely of national consultants: Short lists o f consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely of national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. 75 Annex 9: Economic and FinancialAnalysis MadagascarJoint Health Sector Support Project 173. The underlying rationale for Madagascar JHSSP - the need for the Government to improve budget sustainability by incrementally increasingpublic financing for the health sector, mitigating allocative andtechnical inefficiencies, improving targeting o f resources for vulnerable groups and highpriority health programs, and for reducing fragmentation in donor support and strengthening linkages with MAP and PDSSPS -is a valid one. A. Introduction: MacroeconomicContext 174. With a real per capita GDP o f US$375 in 2007 and about 70 percent of the population living in poverty, Madagascar is one o f the poorest countries in the world. After becoming independent in 1961,the country witnessed a long period o f economic decline caused inpart by poor governance and protectionist and inward looking policies. Two liberalization episodes in the late 1980s and 1990s improved economic performance. After the second episode, the country experienced a period o f growth powered by the dynamisms o f the industries that benefited from preferential trade access. Between 1997 and 2001, GDP grew at about 4 percent per year, while inflation was kept under control. However, the political crisis in 2002 halted this trend as GDP dropped by about 13 percent. 175. After 2002, the new Government's sound macroeconomic management consolidated the gains o f previous liberalizations and, despite large external shocks (e.g., cyclones, high oil prices, and the elimination o f the multi-fiber agreement), growth resumed and has continued at about 5 percent per year. Recent GDP growth has come largely from improvements in agriculture, increased tourism receipts, and public investments. Through a tight monetary policy, inflation was also brought under control after a 27 percent rate in2004 to 10.3 percent estimated for 2007 (period average). Table 11Key MacroeconomicIndicators 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 GDP growth 3.7 3.9 4.7 4.7 6 -12.7 9.8 5.3 4.6 5.0 Per capita GDP US$ 250.7 256.9 248.3 250.3 284.6 278.1 323.9 251 281.8 288 Inflationrate CPI 4.8 6.4 10.1 9.9 4.8 13.9 -0.8 27.3 11.4 10.8 Total Revenue 10.1 8 10.3 12 10.9 11.2 FiscalRevenue 9.6 7.5 9.8 10.9 10.1 10.7 Grants 3.9 2.2 5.1 8.2 5.7 47.9 Total GovernmentExpenditure 18.4 15.7 19.5 25.1 21.2 21.3 Global balance including grants -3.6 -5.5 -4.1 -4.8 -4.6 37.4 Povertyrate 73 70 81 72.1 68.9 Povertyrate rural 76 77 86 77.3 73.5 Povertyrate urban 63 44 62 53.7 52 Source: Madagascar PER based on datafiom IMF andEMP surveys 176. In an effort to improve public resource management and strengthen the system o f delivery o f public services, the government strengthened the role o f the regions by integrating 76 de-concentrated services o f the public administration under the authority of the regional chiefs. In 2008, for the first time, budgetary resources were allocated to the regions, making them responsible for the implementation of a small part o f the investment budget, but the budget managementcapacity and efficiency o fthe regional administrations is uneven. 177. Despite this progress many challenges remain given the country's low socioeconomic indicators and weak revenue mobilization. Fiscal resources have never been above 11 percent o f GDP while the country depends more and more on highly unpredictable foreign funds. Nevertheless, the country has benefited from the Heavily Indebted Poor Countries initiative; in 2006,alone the country receivedUS$2.3 billionindebt reduction, close to 43 percent o f its GDP. B. EconomicAnalysisI:TrendsinHealthFinancingandImplicationsfor Budget Sustainability' 178. Compared to other sub-Saharan countries, Madagascar spends little on health, a situation that will worsen ifdonor financing winds down inthe future. As seen inTable 12, the per capita spendingon health is below the median inthe region and muchbelow the US$30 to US$40 per person per year recommended by the WHO to finance a package o f essential services.' At the current level o f expenditures, the country will not be able to achieve the health related MDGs. Preliminary results o f the MTEF show that an additional US$7 per capita will be required for 2009-2010 and US$8.10 per capita for 2011-2012 to achieve a reduction inchild mortality by 46 percent, neo-natal mortality by 29 percent and maternal mortality by 44 percent, necessary to sustain progress inachieving these MDGs.'' Table12 Countries - IMadagascar (2003) I 3.5 I 11.9 I 60.0" I 40.0 I Ethiopia 5.7 4.3 55.1 44.9 Kenya 4.9 19.2 56.0 44.0 Malawi 9.8 Not available 58.9 41.1 Mozambique 5.8 8.9 71.0 29.0 Rwanda 4.1 12.7 50.6 48.8 Tanzania 4.9 Not available 45.2 54.8 Uganda 7.4 Not available 72.1 27.9 Zambia 5.8 17.4 47.1 52.9 Sub-SaharanAfrican 6.0 12.9 57.1 42.9 countries median Source: MoH. 2005. Madagascar National Health Accounts 2003 This section borrows heavily from the Madagascar PER Health Chapter. Commission for Health and Macroeconomics, WHO, 2002 loCalculated by the MoH, UNICEF and other partners 11The expenditure o fthe rest o f the world (5 percent) was added to that ofthe public sector (55 percent). 77 179. Foreign aid represents the largest source o f finance for the health system, followed by public and private funds. The 2003 National HealthAccounts estimated that donor funds account for 37 percent, public funds for 32 percent and the private sector contributions for around 31 percent o f the total sector financing. Household expenditures, which constitute the main source o f private financin,g, are out-of-pocket expenditures in both public and private facilities as pre- payment mechanisms only cover a small proportion o fthe formal sector workers. 180. The M o H manages the large majority of public funds, more than 80 percent o f all public expenditure on health in the last decade. Though budgetary allocations to the sector have increased in real terms and as a share o f the national budget over the past years 2004-2008 (Table 13 below), budgetary allocations o f 256 million ariary in2008 (around US$144 million or 8.4 percent o f the national budget) are still far away from the Abuja consensus o f allocating 15 percent o f total Government expenditure to the health sector. At the same time, actual spending on health has been lower than the plannedbudgetover the past three years (on average around 65 percent) demonstrating important shortcomings inthe sector's absorption capacity. l2 Table13 TotalBudget and Expenditure of MOH 2004-2008 2004 2005 2006 2007 2008 Allocationto MoH(inbillionAriary) 99.4 140.8 167.8 198.7 256.0 Share o fthe NationalBudgetf??) 5.9 6.5 6.4 7.1 8.4 Share of GDP e') 1.2 1.4 1.4 1.4 1.6 Allocation(real, inbillionAriary) 87.0 104.6 111.8 121.1 145.3 Realgrowth(%) 20.3 6.8 8.3 14.9 Actual spendingofMoHbudget, on commitmentbasis (inbillionAriary) 142.0 69.1 120.3 145.9 Share ofthe NationalBudget (%) 7.6 3.2 4.6 n.a Share of GDP (99) 1.7 0.7 1.o 1.1 Actual spendingofMoHbudget(real, inbillionAriary) 124.2 79.7 103.2 88.9 Realgrowth (%) 63.6 -5 1.3 74.1 21.2 Realexpenditureper capitainAriary 7484.0 2752.8 4182.4 4515.8 Realexpenditureper capitainU S $ 4 I 2 2 Executionrate (%) 142.9 49.1 71.7 73.4' Memo GDP deflator 14.3 17.8 11.5 9.3 7.4 NominalGDP (inbillionAriary) 8,155.7 10,095.7 11,781.0 13,729.0 15,677.0 Exchangerate (AriaryperUS$, annual average) 1,870.8 2,003.3 2,142.5 1,873.9 1,779.7 Population(millions) 16.6 18.6 19.2 19.7 20.2 Source: Madagascar PER Health Chapter based on datafrom theMinistry of Economics,Finance, andBudget, updatedfigures based on MFB and WB estimates Basedonpreliminaryestimates 181. Moreover, the distribution o f the health budget i s still largely in favor o f central administration, even though efforts have been made to improve the discrepancies between l2See annex 10 for an assessment of some of MoH's mainbudgetmanagement issues. 78 financing o f the central and regional administration^.'^ The salary budget had been de- concentrated to the six provinces (according to the previous territorial boundaries) but not yet to the regional level. Apart from salaries, around 38 percent o f the non-salary recurrent budget has been transferred to the regional level with the main beneficiary being the CHDl/CSB and the SDSPS in2008. The national policy o f decentralization and de-concentration (PN2D) foresees a transfer o f the non-salary recurrent budget to the CSBsKHD Io f 21 percent in 2008, whereas this share has been at around 10percent. Furthermore, the PNZD also foresees that 46 percent o f the non-salary recurrent budget is allocated to the central level in 2008. Allocations in 2008, however, were still at around 62 percent. 182. The total health budget for M o H in2009 falls short o f the two possible projections made in the sector's MTEF 2009-2011. As shown in Table 14, the first scenario is conservative assuming the M o Hwill finance only the most critical activities. The second scenario assumes the financing o f the most critical activities as well as a number of sector reforms (including community participation, financial allocations and performance allocations at the decentralized levels and a high impact service package that is largely subsidized). Unfortunately however the approved budget for 2009 does not meet even the total estimated needs o f the conservative scenario, with a difference o f about MGA 45 billion. In the second scenario, the difference is MGA 106 billion. Due to the low execution rate o f the MoH, the difference with actual expenditures would inreality be much higher. Table14: Comparisonbetween actual health budget andprojectionsof the MTEF Actual Spending 1 Budget I 1 MTEFProjections 2005 2006 2007' I 2009* I 2009 2010 2011 2012 Scenario 1 Healthbudget (inbillions ofAriary) 69.1 120.3 145.9 374 428 436 464 Scenario 2 Healthbudget (inbillions ofAriary) 69.1 120.3 145.9 435 530 532 592 Basedonpre1imin`k-y estimates(MFB) * Loide finances2009 183. The Government is unlikely to sustain these low levels o f expenditures on health, much less achieve the expenditure levels o f the MTEF, without additional financial aid. The CRESAN I1project which has financially supported the health sector since 1999closed inDecember 2007. This project alone increased the funding o f the Ministry by US$40 million. For instance, in2004 this project financed close to 31percent o f all MoH expenditures classified as investments. This figure rose to 65 percent in 2005. The SHSDP which followed CRESAN I1has been effective since August 2007 and disbursedUS$3.24 million. Other projects that have supported the sector have already closed or are approaching their closing dates. 184. Like the SHSDP, the proposed project intends to fill part of the financial gap for the sector. Currently foreign support to the sector i s mainly organized through projects, although the Government has also benefited from general budget support from the World Bank and the EU. ~ l3MOH, Appui Technique pour l'amelioration du processus budgetaire du MOH - Revue comparative, recommandationset Pland'action, 2008 79 The volatility of donor funds, and varied management and monitoring procedures for each project creates large transaction costs for the Ministry. As seen in Table 15, investment expenditures in the sector have experienced large variations, partly due to the volatility o f donor funds which finance large parts of the Ministry's investment budgetand to low execution rates o f this expenditure. As in all programmatic approaches, all donors agree not only to support a health strategy with a corresponding MTEF but also to progressively harmonize their procedures to follow a unique monitoring and evaluation systems is expected to lessen the volatility o f donor support and decreasethe transaction costs. Table15 Growthrate of investmentexpenditureof MoH 1998 1999 2000 2001 2002 2003 2004 2005 2006 Yearly changeininvestmentexpenditure 65 -3 26 8 -79 396 164 -82 8.5 Source: WorldBank. PER Health Chapter C. Economic Analysis 11: Addressing efficiency and equity inthe health sector: Justification of Government intervention and efficiency benefits from the JHSSP 185. Government intervention in some o f the activities financed by JHSSP is justified as they are aimed at reducingmarket failures due to the presence o f externalities or public goods. JHSSP will also finance activities aimed at reducing the inequalities in access and utilization o f health services and some o f these activities will also improve efficiency inthe use o f public resources. Externalities 186. One o f the commonjustifications for government intervention inmarkets is the presence o f externalities, where economic agents can impose a cost or benefit to others without paying or charging for it. Without government intervention, too much o f the negative effect or too little o f the benefitwould be produced. Whenpreventing or treating an infectious disease individuals do not necessarily take into account the effect o f their action (or lack thereof) on others. Without government intervention, the level o f preventive and curative efforts will be lower than optimal. Madagascar JHSSP aims at financing many activities aimed at prevention and treatment o f many o f these diseases such as: immunization for childhood illnesses, testing and treatment o f sexually transmitteddiseasesand malariacontrol. Public Goods 187. Some o f the interventions used to prevent infectious diseases can be characterized as public goods. Nobody can be excluded from benefitingfrom a public good and a having a person benefiting from it does not decrease the potential benefit to others. These characteristics render almost impossible the private provision o f these goods. JHSSP will finance such activities. Sub components under the Institutional Strengtheningand Monitoring and Evaluation - which aims at building medical waste management capacity and strengthening the epidemiological surveillance capabilities - can be justified by these same considerations together with information campaigns for activities. 80 Equity 188. There are large income inequalities in the utilization o f health services in Madagascar, due partly to lower physical access to health services in rural isolated areas, and partly to financial and cultural barriers to access services. Government provision o f services can also be justified on the basis o f equity considerations, and most o f the activities that will be financed by JHSSP meet this criterion by focusing on rural and underserved areas. 120 - 100 - 100 - 90 - _------IJr- d 4' 80 - 80- 70 - / / 60- 0 / 0 60 50 - 40 // -C.CC CC -C. @ 40 - ,..- IcH`' ----- .-,/ 30 - 4- 20 - 20 - 10 - o i 0 - * ~ 189. Ingeneral, a case can be made for the provisionofhealthservices that the poor consume more than the non-poor, where the income elasticity o f consumption i s low. People living in rural isolated areas are more likely to be poor than people living inurban areas. The poverty rate in urban areas is about 52 percent while in rural areas is about 74 percent. Therefore, services targeted to the latter - mobile clinics and outreach activities - are more likely to be used by the poor inisolated areas and areas with low density o f population, and will be financed by JHSSP. Inaddition, preventive and treatment services for infectious diseases can also benefit the poor more thanthe rich as they are more likely to suffer from these diseases. The last EPMhousehold survey showed that the poor were more likely to report malaria and diarrhea than the non-poor. The provision o f services to treat and prevent these diseases will therefore benefit the poor more thanthe non-poor. Table16 Typeof illness reported in the last two weeks across income quintiles Illness Poorest I1 I11 IV Richest Total Fever or suspicion o fmalaria 46,9 42,9 48,9 41,9 39,9 43,9 Diarrheal diseases 12,s 14,2 13,l 12,l 10,6 12,4 Source: EMP 2005 190. Also, basic health services, especially in rural areas, tend to be used more by the poor than by the rich who visit private services or higher level public facilities. JHSSP will finance the rehabilitation and equipment o f health centers throughout the, country, the redeployment o f midwives to basic health centers, the contracting o f private doctors to move to and serve distant rural communities. 81 191. As the private sector is almost not present inrural areas, improving the services provided bypublic service facilities does not riskthe displacement o fthe private sector inthese areas. Table I 7 Place of consultationacross incomequintiles and urban and rural areas CH* CSB 1 CSB 2 Private clinic Privatedoctor Other Total Urban Poorest 20.1 18.6 38.8 3.1 3.2 16.2 100.0 I1 14.9 11.3 31.6 5.9 24.3 12.1 100.0 I11 20.4 14.7 25.4 16.3 13.2 10.0 100.0 IV 11.2 10.5 29.4 8.1 31.9 8.9 100.0 Richest 23.3 4.9 20.6 7.5 32.7 11.0 100.0 Total 19.0 9.5 26.2 8.3 26.0 11.0 100.0 Rural Poorest 5.1 25.5 58.0 0.9 6.2 4.1 100.0 I1 4.9 19.0 53.9 2.1 7.0 13.0 100.0 I11 3.5 12.9 56.9 3.O 12.6 11.3 100.0 I V 1.2 11.6 66.9 2.1 11.4 6.9 100.0 Richest 5.7 10.0 50.8 3.6 20.4 9.4 100.0 Total 4.0 15.1 57.3 2.5 12.2 9.1 100.0 Source: EMP 2005 192. The project will also finance activities aimed at increasing financial accessibility o f the poor to basic health services. Currently, most private expenditure on health i s out-of-pocket expenditure, which is extremely regressive and exposes families to the risk o f impoverishment in case o f illness. Pre-payment mechanisms cover a very small percentage o f the populations. Government intervention in risk pooling mechanisms can also be justified as an intervention intended to alleviate the lack o f insurance markets. 193. The recurrent budget o f the M o H i s unequally distributed across regions, and in general, richer regions receive higher amounts o f recurrent budget per capita than poorer regions. Madagascar JHSSP will seek to lessen this unequal distribution o f resources by financing services in underserved areas. One o f the activities to be financed by the project will be mobile health teams that will offer health services to isolated populations in hard-to-reach areas, and in areas with low populationdensity. Allocative Efficiency 194. The 2003 National Health Accounts classified all health expenditure of M o H across different functions, and estimated that about 39 percent o f all resources managed by M o H were spent on ambulatory services provided by CSBs and hospitals, 17 percent on preventive and public health services, and 7 percent on inpatient care. In general, the distribution o f public resources in Madagascar health sector gives priority to the most cost effective interventions to ensure health improvements as the largest percentage was used for both preventive and public health services and ambulatory care. However, there i s room for improvement, as a fifth of all resources went to the central administration of the ministry and as many resources, about 0.5 percent o f the entire budget o f 2006, went to the construction o f a medical complex in Antananarivo that i s not in use. Madagascar JHSSP will further improve the allocative 82 efficiency o f public expenditure as it will finance preventive care, public health activities, and - in the case o f hospital care - will only finance first referral hospitals for activities related to maternal health. The focus is on the most cost-effective interventions to prevent and treat the illnesses by emphasizing health interventions that can be provided at household and community level, and services that can only be provided at primary health care facilities. This is reflected in the project's emphasis on information campaigns, strengthening o f community participation on health care, and on improving the quality o f the services provided by basic health centers. By improving coordination and harmonization among donors, the project will also improve allocative efficiency by diminishing transaction costs and thus diminishing administrative costs that M o Hhas when handlingdifferent donor supported projects. D. EconomicAnalysis111: Systems andprocess-relatedbenefits 195. The benefits o f Madagascar JHSSP can be determined in terms o f (i) systems- and process-related benefits, e.g., better planning, financing, organization and management o f the health sector and other key actors; and (ii) household-oriented benefits, as exemplified by better access and utilization o f health services and improved health status, especially o f vulnerable groups livinginrural areas, women and children. 196. Health care delivery reforms under PDSSPS and the activities supported by JHSSP aim to improve both the quality o f services and access to the poor: Access to good qualityprimary care services. Improved quality o f care at the primary care level and improved access will have positive impacts on poverty reduction. The increased utilization o f quality health services at the primary acre level is expected to reduce the need for hospitalization and protect poor households against financial shocks. The benefits o f increased primary care funding will go disproportionately to the poorer households who currently receive no or poor quality o f services. Expansion of coverage for priority programs. Improvements in mother and child health, prevention o f the spread o f HIV/AIDS and addressing communicable diseases have been identified as priority areas for coverage expansion under PDSSPS. All four are critical health issues for the poor, and to this extent the expansion o f services will directly benefit the poor by reducingbarriers to accessto care Improvement in implementation and monitoring capacity. The M o H has not been able to execute its entire budget in recent years and has had difficulties in ensuring an equal or at least a progressive distribution o f financial and humanresources across the country, and has therefore not been able to reach vulnerable and isolated pockets o f the population. Without removing these bottlenecks inthe management o f human and financial resources, the health system will not be able to fully reap the benefits o f investments. Despite the government's strong commitment, improvements in service delivery will be limitedwithout improvements inthe capacity of the different decentralized levels, particularly the district level which is in charge o f service delivery. The newly created regional level will see an increase in responsibility in the coming years. The JHSSP will finance many activities aimed at strengtheningcapacity at various levels in the health system, including at the district and regional levels to manage primary health care services. 197. The Madagascar SHSDP supports the overall development and strengthening o f health systems. Activities financed and undertaken under Madagascar JHSSP are expected to result in 83 significant improvements across a range o f demand-side, supply-side and institutional aspects o f the health system, especially in the production and delivery of quality services in rural and remote areas. The project will also provide technical assistance for capacity building, with the aim o f strengthening institutions and promoting good governance. It will provide the government with evaluations o f pilot interventions to inform and enhance the quality o f policy debates and encourage evidence-based policy development. It will facilitate the introduction o f stronger incentives for results, and strengthen collaboration and consistency across sectors in order to promote development effectiveness. And finally, it will support the .development of strategic partnerships with donor agencies and other actors with the aim of promoting harmonizationandaid effectiveness. 84 Annex 10: Public Finance Issuesinthe Health Sector Madagascar Joint Health Sector Support Project A. Financingof the Health Sector 198. The PDSSPS has identified a number o f key bottlenecks to increased access and use o f health services in Madagascar, among which it highlights the low level o f health financing and inefficiencies in resource allocation. The Madagascar SHSDP has played an important role in building capacity within the Ministry and coordinating on-going interventions by the development partners. Despite improvements, the health sector continues to face a number o f budgetmanagement problems. Budgetplanning 199. The Ministry has faced a number o f challenges inthe preparation o f its budget envelope. Delays in the transmission o f the budget framework paper by the MFB to line ministries regarding the 2009 budget law has limited the time for M o H to revise its draft 2009 budget proposal according to actual budget envelopes (inscribed in the budget framework paper) and thus to finalize the MTEF prior to the budget hearings. Moreover, the Ministry has allocated significant administrative capacity to update this MTEF, the budget envelopes for 2010 and 2011 are, however, based only on "needs assessment" o f the Ministry (regions and districts), disconnected from a global MTEF that i s not yet in place. On the whole, delays in the finalization o f the MTEF and the absence o f reliable medium term resource envelopes has constrained M o Hto use the MTEF as a strategic planningand advocacy instrumentas well as for its dialogue withthe MFBinbudget hearings. 200. Inaddition, the MoH budget preparation process is fragmented. While budget planning andbudgetingo f activities is a harmonizedprocess at the local level followingthe preparation o f the work programs, the process at the central level is not unified. The preparation o f the recurrent and investment budget is separated which reinforces inconsistencies between investment and (non-salary) recurrent expenditures. Medium-term recurrent cost projections o f existing and planned investments are not made in a systematic manner; there i s also little affordability o f existing policies and the sustainability o f present investment decisions. Furthermore, the financing o f the Ministry's investment budget depends largely on donor funding making it vulnerable to the erratic nature o f donor funding commitments, often lowering the level o f actual disbursements. 201. Budget planning at the local level continues to improve, although budget management capacity still remains a challenge. The planning, programming and monitoring functions o f regional and district health management teams have been continuously strengthened. All regions and districts have adjusted their budgetingprocess to the new budget/program format, and some have begun to introduce performance-based planning using management tools and technical support from various partners.The performance o f the district management teams has started to improve as a result, and all but a few o f the districts are now able to formulate their three year plansand develop annual work programs along clear norms and criteria. 85 Budget execution 202. The implementation o f the domestically financed budget is subject to regularization on a tri-semester basis. In 2008, the MFB augmented the commitment ceilings o f recurrent and investment expenditures for the M o H to increase the Ministry's budget execution. Apart from the regularization o f expenditures, a number o f execution procedures exist that constrain the ability o f the Ministry and other line ministries to execute their budget, even though efforts are made by the MFB to simplify expenditure procedures. According to one evaluation study, on average twenty different steps and at least seven days are required to process e~penditure.'~ Budgetexecution was partially streamlined following the introduction of a modemcomputerized integrated financial management system (Syst2me Inte'gre' de Gestion des Finances Publiques, SIGFP) in 2006. A new, simplified software is currently installed following a number o f technical problems with a new SIGFP version. The regions will only have access to the new system starting in2009. 203. Procurement procedures are based on a new procurement code, introduced in 2004, that follows international standards. Audits conducted in four sector ministries (including the MoH) over the past years, indicated an increase o f compliance but also a need for more capacity building and institutional development combined with strong oversight by the procurement oversight authority to ensure that the new regulations are systematically applied. 204. Despite some improvements inMoH's budget execution over the past years, the Ministry continues to experience severe difficulties in executing its budget. The execution rate (on commitment basis) o f M o H budget amounted to 65.8 percent in December 2008. Some of the main budget management difficulties are: i)delays incertain expenditure procedures (for example the nomination o f the Credit Manager) due to bureaucratic bottlenecks or limited capacity at the central and local level (e.g. the establishment o f commitment plans by the ORDSEC's) hindering the Ministry to make timely commitments against the budget at the beginning o f the budget year; ii)delays in the application o f procurement procedures owing to insufficient technical capacity o fthe GAC's, weak functioning o f the procurement units Unite' de Gestion de la Passation de Marche's (UGPM) and delays in the nomination o f the Personne Responsible des Marche's Publics (PRMPs) inthe regions; (iii) the dysfunction o f the ORACLE system (frequent breakdowns) and the still ongoing trial period o f the new software that does not allow timely and accurate access to information on budget allocations, commitment and actual expenditures; and (iv) insufficient information flow related to the commitment o f expenditures at the central level (i.e. the insufficient regularization o f grants and TVA, the continued manual collection o f information based on thefiches de centralisation comptable (FCC), the absence o f financial districts in some regions which delays the process o f commitment, delays in the transmission o f information from the local level to the central administration). 205. The Ministry's 2008 budget inscriptions included projects that have been already closed (i.e. the European Union, GTZ, AFD and FSP) which has inflated the budget envelope o f the Ministryandadversely impactedthe execution rate ofgrantsandloans. l4 The main reason for this excessive oversight and approval requirements is red tape and ineffective administrative procedures, which according to independent evaluations does not translate into higher quality o f services. 86 206. At the regional level, the share o f the budget allocated to the basic health centers and transferred by the districts has been either small or none in the past. In order to increase the budget allocated to the CSB and CHDl, the Ministry separated the management o f the district sunituire et de protection sociule (SDSPS)'s recurrent budget by providing a budget line for health centers (CSB, CHD, CHRR, CHU) and, separately, for the office o f the SDSPS. The share o f the recurrent budget to be allocated to both entities has been left to the discretion o f the SDSPS's medical inspectors. Even with the boosting o f their budget, the execution rate o f the health centers investment budget is very weak. According to a rapid field study, delays in the commitment o f expenditures are due to delays in the nomination o f the PRMP that impacted adversely the execution o f program^.'^ The field visit also highlighted that most CSBs do not know their budget envelope. In fact, regional Directorates are often informed about completed works and services o f the budget during the reception ceremony. The rapid assessment also showed that two regions had transferred the implementation o f its investment budget to central administration as they did not have the capacity to implement it. 207. Furthermore, the implementation o f the annual plans by the Districts is still weak due to poor implementation capacity, insufficient resource flows to the regions and districts, and low capacity for procurement o fthe large quantities o f commodities and equipment neededto expand health services. Support to regional and communal administrative authorities is also still weak owing to substantial limitations at central level, where budget management functions remain weak and require increased efforts to strengthen the administrative and managerial capacity o f the healthsystem. Budget monitoring 208. The M o H has a number of internal documents (Le. the National Health Policy 2005, PDSSPS 2007-2011 and its respective action plan (PMO), and the MAP) that, ideally, should assist the Ministry in the budget planningprocess. To feed into the different reports, the M o H prepares mid-year reports on a monthly, tri-semester, bi-semester and annual basis at all administrative levels o f the Ministry. The range o f reporting requirements constitutes a severe administrative burden for the Ministry. The health centers; for example, are required to prepare more than 20 reports on a monthly basis that are send to the program manager at the central administration, with a copy to the DDDS. This does not only require the allocation o f an important share o fthe staffto preparethe reports but it also raises questions whether the Ministry can effectively use this wide range o f information to feed into its strategic planning process duringthe fiscal year.I6 209. The M o H continues to strengthen its budget management to remove administrative bottlenecks and to address allocative inefficiencies and institutional weaknesses. An important initiative was the set up o f a task force ("cellule d'uppui") in 2007 that was responsible for the preparation o f the MTEF as well as the 2009 budget program. The task force is made up o f representatives o f various administrative units (the Secretary General, the DEP, the DF and the DDDS, which has significantly improved the collaboration between various Directorates on l5MOH, Appui Techniquepour l'ameliorationdu processusbudgetairedu MOH-Revuecomparative, recommandationset Pland'action, 2008 l6MOH, Appui Technique pour l'ameliorationduprocessusbudgetaireduMOH-Revuecomparative, recommandationset Pland'action, 2008 87 budget planning.Nevertheless, the work o fthe task force has mainly focused on budget planning at the central administration, whereas it could also play an important role in training and continuous assistance on budget management to the de-concentrated units; and therefore the overall coordination and harmonization o f the budget planning and costing process across all administrative levels. 210. To address delays in budget execution in 2008, the Ministry implemented a number o f measures that aim to improve its executionrate, including: i)assistance provided to the DULMT, SME, DDDS and in particular, the region o f Analamanga (facing one o f the lowest execution rates) on the implementation of their budgets; ii)circulation o f guidelines on the management of the Public Investment Program (PIP) at the regional level; iii)support to de-concentrated units for the use o f email for the transmission o f information; as well as iv) a closer collaboration with the Directorate o f the Information System o f the Ministry o f Finance to reinforce the utilization o f the SIGFP at the MoH. Moreover, a comparative study with the Ministry o f Education was carried out in May-June 2008 to assess best practices and lesson learned on budget planning, execution and monitoring between both ministries. The findings o f the studies will be integrated inapublic finance priority actionplanofthe Ministry. 88 Annex 11: Safeguard Policy Issues Madagascar Joint Health Sector SupportProject 211. The JHSSP will mostly involve activities such as: policy and institutional reforms; financing reforms; strengthening human and institutional capacity; support to priority health programs to improve maternal and child health and control major diseases; and community involvement in local health service management and support to community-based health activities. Civil works involved will be mostly rehabilitation o f existing health facilities and the project will not support acquisition o f land for the construction o f new health facilities. N o negative environmental impact i s envisaged in the proposed project. Although the project may finance malaria campaign activities as a lender o f last resort ifthe Presidential Malaria Initiative is not able to sufficiently finance the malaria project, Madagascar ratified the Stockholm Convention on Persistent Organic Pollutants in 2005, and the Government does not plan to use any DDTinspraying duringthe project implementationperiod. 212. The handling, collection, disposal and management o f health care waste and other infected materials is the most significant environmental issue associated with the national health program. Thus the project is rated as category B and triggers OP 4.01 Environmental Assessment due to the potential risks associated with the ineffective medical waste management in health facilities. In fact, the inappropriate handlingo f infected materials constitutes a risk not only for the staff in hospitals and in municipalities who are involved in health care waste handling and transportation, but also for families and street children who scavenge on dump sites, most o f which are inadequate. To mitigate this risk, a Medical Waste Management Plan (MWMP) shall be available and appropriately costed with clear institutional arrangements for its execution. 213. In September 2005, the MoH adopted the National Policy for Medical Waste Management, which contains the following elements: (i)global and specific objectives as regards management o f medical waste; (ii)specification o f the legal framework; (iii)waste characteristics with the prescribed elimination modes; (iv) norms, safety standards and measures to be adopted as well as critical equipment; and (v) a description o fthe monitoring systemand an action planwith impact and results indicators for a period o f four years. The National Policy for Medical Waste Management was approved and disclosed on March 23,2007 inthe Infoshop and inthe country between March20 and26,2007. 214. The analysis o f the implementation and supervision o f the National Policy has shown that: (i)the National Office for the Environment o f the Ministry o f the Environment has been responsible for supervising the implementation o f the policy at the provincial and district level in a satisfactory manner; and (ii)the M o H has demonstrated clear ownership o f the problems related to management o f medical waste and has been an integral player in the development o f this policy as well as information, education and communication and training activities conducted at various levels. In addition, a MWMP was also developed for the MSPP, and i s under implementation. Prior to appraisal o f the MSPP 11, the M W M P was disclosed in-country and inthe Infoshop. Thus the Borrower has demonstrated the capacity to properly develop and implementa MWMP, which is the only safeguard-related study requiredfor this project. 89 215. The existing MWMP includes proper disposal of hazardous bio-medical waste and a bio- safety training program for the staff o f all hospital, health centers and community-based programs, including traditional midwives and practitioners, who may be involved in HIV/AIDS testing and treatment. M o H has been responsible for implementation o f the MWMP, and has demonstrated capacity to properly implement the plan. Since May 2004, M o H has installed 200 small-scale burners to bummedical wastes inall health centers rehabilitatedunder IDA-financed healthprojects. Supervisionmissions have determined that burners are being used at the CHD of Ankazobe, Antanifotsy and Faratsiho. 216. The World Bank evaluation o f the execution o f the National Policy for Medical Waste Management undertaken inApril 2008 shows that: The health sector has put in place three departments to implement the National Policy: (i) Service dYppui a m Ge'nies Sanitaires (SAGS), (ii) Service des Vaccination (SV), et (iii) le Sous Programme Pre'caution Universelle (SPPU). The SPPU i s in charge o f the characterization o f the sorting and collection system of medical waste following the medical waste management template inAppendix 1o f the National Policy. The SAGS i s incharge o f designing and providing the elimination equipment for each health center, and since January 2007, has already put in place several removable incinerators (Montfort) as well as simple incinerators. A technical audit was undertaken in February 2007 on the efficiency o f the elimination equipment according to the different types o f incinerators. The findings and recommendations o f technical audit have been implemented to improve the quality o f incinerators inheath centers; The health sector has undertaken several trainings and capacity building efforts linked to the management and elimination o f medical waste in health facilities o f various sizes and has provided elimination equipment inrehabilitatedhealthcenters; and The budgeto f the M o H does not yet include a specific line item for the financing o f medical waste management in health centers. As a result, when health centers receive insufficient budget, medical waste management is not considered as a priority; thus, many health centers still do not use the medical waste management infrastructure and do not implement medical waste management plans. Overall, the M o H remains weak inthe monitoring and supervision o fmedical waste management inhealth centers. 217. To address this weakness, the Government o f Madagascar through the M o H sent a commitment letter to the World Bank in September 2008 that the future M o H budget as from 2009 onwards will include the necessary budget for medical waste management for rehabilitated and equipped health centers. The relevant detailed MWMP presents the strategic objectives o f the M o H and seeks to ensure the conformity o f health centers with the National Policy o f Medical Waste Management. As such, within this framework and to further strengthen the implementation o f the National Policy on the Medical Waste Management, the project will finance: (i) containers for syringes, trash bins, boots, gloves, masques for the maintenance personnel; on-site sanitary pits); (ii)incinerator construction, (iii)training for health care personnel per health center financed, (iv) development o f monitoring mechanisms and management tools and instruments for the medical waste management in the health sector, and (v) public awareness campaigns regardingthe dangers o funsafe medical waste management. 218. The SAGS has been an integral player in the development o f the policy as well as information, education and communication activities and training conducted at various levels. 90 However, considerable work needs to be done on ensuring that the norms outlined inthe policy are applied to each type o f health facility. The most recent supervision mission (October 2008) developed an action planincollaboration with the SAGS to prepare a detailed planand timetable to reinforce the implementation o f technical medical waste norms for different types o f health facilities, along with performance indicators and budget. The relevant detailed MWMP was provided to the Bank in September 2008 andjudged satisfactory by the Bank.The project will be implemented in accordance with the provisions o f the MWMP, which shall not be amended or waived without the discussions andthe non-objection ofthe Bank. 91 Annex 12: Project Preparation and Supervision Madagascar Joint Health Sector Support Project Planned Actual PCNreview 07/17/2008 07/17/2008 InitialPIDto PIC 07/25/2008 07/24/2008 InitialISDS to PIC 07/25/2008 07/22/2008 Appraisal 10/08/2008 1011212008 Negotiations 01/26/2009 01/26/2009 Board/RVP approval 02/26/2009 Planneddate ofeffectiveness 06/30/2009 Planneddate ofmid-ternreview 0613012011 Plannedclosingdate 12131/2013 Key institutions responsible for preparation o fthe project: - inGovernment :Ministry ofHealthandFamilyPlanning, SHSDP - Donor partners included: African Development Bank, AFD, JICA, UNICEF, UNFPA, USAID, WHO Bankstaffandconsultants who workedonthe project included: Name Title Unit Maryanne Sharp Sr. OperationsOfficer & TTL AFTH3 LubnaBhayani Health Economist, Consultant AFTH3 Ando Raobelison PublicHealth Specialist, Consultant AFTH3 Adrien Dozol Jr. ProfessionalOfficer HDNHE IoanaKruse Economist, Consultant AFTH3 GervaisRakotoarimanana Sr. FinancialManagementSpecialist AFTFM SylvainRambeloson Sr. ProcurementSpecialist AFTPC LovaRavaoarimino ProcurementAnalyst AFTPC SiobhanMcInerney-Lankford Counsel LEGAF Suzanne Morris Sr. FinanceOfficer LOAG2 Paul-JeanFen0 EnvironmentalSpecialist AFTEN Nicole Klingen Sr. Health Specialist HDNHE AurelienKruse Young Professional OPCOS NorosoaAndrianaivo ProgramAssistant AFTH3 BenjaminLoevinsohn LeadPublicHealth Specialist& Peer Reviewer SASHD Christopher Walker LeadSpecialist & Peer Reviewer AFTH1 Bank funds expendedto date onproject preparation: 1. Bankresources: $100,000 i 2. Trust funds: -- 3. Total: $100,000 Estimated Approval and Supervision costs: 1. Remainingcosts to approval: $ 50,000 2. Estimated annual supervision cost: $100,000 92 Annex 13: Documents in the Project File Madagascar Joint Health Sector Support Project The following documents are available inthe projectfile: A. Project Documents s Project Appraisal Document for a Madagascar Sustainable Health System Development Project, April 20,2007 SecondHealthProject Concept Note Review Meeting, July 17,2008 s Manuel de ProcCdures pour la Gestion Administrative, Financibre, Comptable et Passationde march& duPDSSPSP, August, 2008 B. Health Sector Documents s ComptesNationaux de la SantC 2003 de Madagascar, MinSANPF, 2005 s Public Health Expenditures Review, Volume 11: SantC, Rapport No. 38687-MG. The World Bank, June, 2007 s Cadre des DCpenses a Moyen Terme du Secteur SantC 2009-2012, Madagascar. Note technique de prdsentation lors de la rCunion du groupe thematique Clargi, MinSANPF. July 04,2008 s Politique GCnCrale de 1'Etat 2008, Ministkre de I'IntCrieur, January, 2008 s EnqueteDdmographique et de SantC de Madagascar 2003-2004, InstitutNational de la Statistique (INSTAT) et ORC Macro. 2005 s Annuaire des Statistiquesdu Secteur SantC de Madagascar, MinSANPF, InstitutNational de la Statistique (INSTAT). Editions de 2003-2004-2005-2006-draft2007, s Enquete Periodique auprks des Menages, Rapport Principal. Institut National de la Statistique (INSTAT).Editions de 2003,2004,2005,2006. s Health SectorNote, Madagascar, The World Bank.May, 2005. s Cartes Sanitaires de Madagascar. Services des StatistiquesSanitaires, MinSANPF. 2007 s L e Secteur Pharmaceutiqueri Madagascar, Tahina Andrianjafy. 2004 s Liste Nationale des MCdicamentsEssentiels, MinSANPF. January, 2008 s La Situation des Enfantsdans le Monde, UNICEF. 2008 s L'Efficience et 1'EquitC des Formations Sanitaires malgaches, Serie de documents de travail N"76, HumanDevelopment Unit, The World Bank. May, 2005 s Enquetesur les dCpenses de sante publiqueet la distribution des services dans le secteur sante a Madagascar en 2006-2007. Nathalie Francken, Banquemondiale, UNICEF. May, 2008 s Situation de 1'Approvisionnement en Eau dans les Centres de sante de base, MinSANPF. August, 2008 s Allocation de Ressources et Acquisition de Services de SantC en Afrique. Qu'est-ce qui est efficace pour amkliorer la santC des pauvres ? SCrie de documents de travail No105, HumanDevelopmentUnit,The World Bank. March, 2006 s La Strategic de la Banque mondiale pour obtenir des Resultats dans le domaine de la SantC, de la Nutritionet de la Population, The World Bank. 2008 93 Performance-based Contracting for Health Services in developing countries: a Toolkit. BenjaminLoevinhson, The WorldBank Institute, 2008 Etude sur 1'Humanisationde l'H8pital a Madagascar :Determination des Causes de non- motivation dupersonnelde sante. MinSANPF, PHRD. September, 2007 Etude sur I'Humanisation de I'Hapital a Madagascar: Etudes et Analyses de I'Organisation et des infrastructures d'accueil de I'H'bpital. Proposition d'une Strategic Nationale pour 1'AmClioration de 1'Accueil. MinSANPF, PHRD. September, 2007 Etude sur I'Humanisation de I'H6pital a Madagascar: Causes de mauvais accueil et comportement du personnel hospitalier. Strategies d'amilioration. MinSANPF, PHRD, September 2007 Projet Pilote sur 1'Humanisation de I'H6pital : amelioration de l'accueil au niveau des hapitaux de rCference des RCgions de Diana et Boeny, Fiche Technique PDSSPSP, MinSANPF.2008 Pilote d'un financement de l'offre de services de sante base sur les performances, District d'Ambalavao et d'htsalova, Fiche technique, GAVI, Banque mondiale, MinSANPF. August, 2008 m Rapport de mission en vue de la definition d'une composante de Dkoncentration et de Dkveloppement des Formations Sanitaires, AFD. July, 2008 Prise en Charge des Maladies de 1'Enfant Communautaire, Documentation des Bonnes Pratiques.UNICEF, February, 2006 Enquete sur la Couverture Vaccinale, Rapport provisoire, Direction de la SantC de la Mkre et de I'Enfant, MinSANPF. 2008 StrengtheningRoutine Immunization inMadagascar,UNICEF. April 2008 Poverty and Social Impact Analysis: Health Care and the Poor. Republic o f Madagascar. The World Bank. June, 2006. L'ExpCrience pilote du Fonds d'Equite au niveau du CHD2 de Marovoay. MinSANPF, GTZ. July, 2007 Faisaibilite d'un financement par un fonds d'achats dans le cadre de l'approche sectorielle de la santd. MinSANPF, PHRD. September, 2007 Projet Pilote de Fonds de Prise en Charge Universelle pour les Soins obstetricaux et Ndonatals d'Urgence et des maladies des enfants de 0 B 6 mois, Fiche Technique PDSSPSP, MinSANPF. 2008 Rapport sur 1'Atelier d'Harmonisation du Fonds de Prise en Charge Universelle. July, 2008 Experience pilote de Subvention des CoOts connexes au traitement de la Tuberculose, Fiche Technique PDSSPSP, MinSANPF. 2008 Etude sur I'Harmonisation des Approches Communautaires a Madagascar-Phase 1 : Aperqusynthktiqueet Cartographie, MinSANPF. June, 2008 Guide des Promoteurs pour la mise en place de Mutuelle de Sante a Madagascar, MinSANPF. August, 2007 Guide pour le dkveloppement de la participation communautaire dans la gestion des pharmacies au niveau des CSB (FANOME), MinSANPF. 2004 Guide de Paquet d'Activites Communautaires pour le CoSAN, PDSSPSP, MinSANPF. 2008 Textes reglementaires portant creation des CoSAN au niveau des Fokontany et des communes, PDSSPSP, MinSANPF. 2008 94 D GuideKominina Mendrika, PDSSPSP, MinSANPF. 2008 Accelerating Malaria Control towards Elimination in Madagascar, Note technique de presentation a la ConfCrenceinternationale sur le Paludisme, Antananarivo. May, 2008 m Elaboration du plan de developpement des ressources humaines pour le secteur de la santC a Madagascar, rapport prdliminaire. Carl-Ardy Dubois, Suzanne Boivin, Lucien Albert. Unit6de sant6 internationale, UniversitC de Montreal. May, 2006. Etude sur les Mesures Incitatives pour faciliter 1'Attraction et la RCtention des Professionnels de santC dans les RCgions rurales et enclavCes de Madagascar. MinSANPF, PHRD. September, 2007 Initiative pour le redeploiement et la rCtention des professionnels de santC dans les Regions d'Androy, Melaky et Vakinankaratra, Fiche Technique PDSSPSP, MinSANPF. 2008 Note de Cadrage et proposition concernant I'Extension et la PCrennisation des installations des mddecins privCs communautaires en zones rurales a Madagascar, ONG SantC Sud. July, 2008 Guide OpCrationnellede la Contractualisation, MinSANPF, WHO. 2004 IntCgration d'un volet de prdvention sanitaire ((Eau-Assainissement-EnvironnementD, Noteprkparatoire. Service de 1'Assainisssementet du GCnie Sanitaire, April, 2008 Guide pour 1'Elaboration de Plans de DCveloppement SantC au niveau region et district, MinSANPF. 2008 Renforcement du systkme d'information sanitaire a travers 1'amClioration de la performance des districts sanitaires. Services des Statistiques Sanitaires, MinSANPF. February,2008 Charte DIORANO-WASH. February,2008 Guide de Surveillance IntCgrCe de la Maladie et Riposte (SIMR) de l'OMS, adapte et valid6 a Madagascar, MinSANPF. 2008 Renforcement de la gestion des produits antipaludiques et des autres intrants de santC a Madagascar, President's Malaria Initiative, MSH/SPS USAID Deliver Project, CDC, April, 2008 The WHO'S Global Tuberculosis Laboratory Initiative, http://www. who.int/tb :dots/laboratorv/ali Enqustesur LaCouvertureVaccinale, MadagascarFCvrier2008 UNICE/WHO JMP ProgressReport on Drinking Water and Sanitation, July 2008 C. Policy Documents Madagascar Action Plan 2007-2012, Commitment 5 : Health, Family Planning and the Fight against HIV/AIDS, updatedversion on 2008 PolitiqueNationale de SantC. June, 2005 Plan de dkveloppement du Secteur SantC et de la Protection Sociale 2007-2012. September 17,2007. On-going update Mission et Programmes Prioritaires du Ministere de la SantC et du Planning Familial 2008-2012, Presentation de son Excellence Monsieur le Ministre de la SantC et du Planning Familial au Grand Staff de Fianarantsoa.July 30,2008 95 Indicateurs de performance par niveau relatif aux programmes prioritaires du MinSANPF, 2008-2012. Note de presentation au Grand Staff du MinSANPF, Direction des Etudeset de la Planification, MinSANPF. July 30,2008 Declaration de Ouagadougou sur les soins de santC primaires et les systkmes de santC en Afrique aucours dunouveaumillknaire. April 30,2008. WHO D Politique PharmaceutiqueNationale. 2002 m Programme d'Action pour 1'Integration des Intrants de Sante ti Madagascar -Plan stratdgique2008-2012. June, 2008 D Feuille de Route pour la RCduction de la Mortalit6 Maternelle et Neonatale a Madagascar, 2005-2015. November, 2007 Politique integree de Planning Familial et SantC de la Reproduction des Adolescents, draft. 2008 Politique Nationale de Sante de 1'Enfant. September 2005 Politique Nationale de Nutrition, 2004 PlanPluri-Annuel complet duProgrammeElargi de Vaccination 2007-2011.2007 Plande Rehabilitation de la Chaine de Froid, piriode 2004-2013. November, 2003 Reforme hospitalike, les Axes StratCgiques, MinSANPF. 2007 Politique Nationale de Promotion de la Sante, draft 3. 2008 Politique Nationale de contractualisation dans le secteur de la SantC a Madagascar.2004 StratCgie Nationale de Lutte contre les IST classiques 2007-2012, Programme ISTNIH, MinSANPF, SE/CNLS. June, 2007 Plan d'Action de Madagascar pour une Reponse efficace face au VIWSIDA 2007-2012, SE/CNLS. May, 2007 Politique Nationale de Lutte contre le Paludisme2005-2009, MinSANPF. 2005 Plan StratCgique de Lutte contre le Paludisme - Madagascar: vers l'klimination du paludisme 2007-2012, MinSANPF. 2007 ProgrammeNational de lutte contre laTuberculose, MinSANPF. 2005 Politique Nationale contre la Bilharziose, MinSANPF. 2002 Plan d'Action 2006-2010 pour 1'Elimination de la Filariose lymphatique de Madagascar, MinSANPF. 2006 Coordination en mati&re de Ressources Humaines, Presentation du Directeur des Ressources Humainesdu MinSANPF au Grand Staff de Fianarantsoa.July 31,2008 Politique nationale de gestion des Etablissements de Soins et de SCcuritC des Injections, Septembre 2005 96 Annex 14: Statement of Loans and Credits Madagascar Joint Health Sector SupportProject ~~ Difference between expected and actual OriginalAmount inUS%Millions disbursements ProjectID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm.Rev'd PO95240 2007 MG - M N t r Sect. RecoveryandRestruct. 0.00 10.00 0.00 0.00 0.00 6.10 5.40 0.00 PO55166 2001 MG-ComDev FundSIL (FYOl) 0.00 178.00 0.00 0.00 0.00 0.00 0.00 0.00 PO01568 1998 MG-CommunityNutrition2 (FY98) 0.00 47.60 0.00 0.00 0.00 5.00 -13.40 1.44 PO74235 2004 MG-EnvPrgm 3 (FY04) 0.00 40.00 0.00 0.00 0.00 12.10 9.14 0.00 PO74236 2004 MG-GEF Env Prgm3 (FY04) 0.00 0.00 0.00 9.00 0.00 2.50 1.44 0.00 PO74448 2004 MG-GOV& InStD ~TAL (FY04) v 0.00 35.00 0.00 0.00 0.00 -2.90 -6.14 0.00 P103950 2008 MG-Governance& Inst. Development 0.00 40.00 0.00 0.00 0.00 31.20 0.00 0.00 PO83351 2006 IntegGrowthPoles 0.00 209.80 0.00 0.00 0.00 110.40 5.24 -4.19 PO74086 2007 MG-Irrigation & WatershedProject(FY07) 0.00 30.00 0.00 0.00 0.00 24.70 2.49 0.00 PO52186 1999 MG-Microfinance(FY99) 0.00 20.90 0.00 0.00 0.00 2.60 -1.78 1.11 PO76245 2003 MG-Mineral Res Gov SIL (FY03) 0.00 40.00 0.00 0.00 0.00 4.00 -3.56 0.00 PO90615 2006 MG-MultiSecSTI/HIV/AlDS 2 (FY06) 0.00 30.00 0.00 0.00 0.00 17.30 13.48 0.00 P105135 2008 MG-PRSCV (FY08) DPL 0.00 50.00 0.00 0.00 0.00 1.05 0.00 0.00 PO72160 2002 MG-Priv Sec Dev 2 (FY02) 0.00 23.80 0.00 0.00 0.00 -0.20 0.07 -3.91 PO51922 2001 MG-RuralDev Supt SIL (FYOl) 0.00 117.80 0.00 0.00 1.23 23.20 -3.25 -3.25 PO73689 2003 MG-RuralTransp APL 2 (FY03) 0.00 80.00 0.00 0.00 0.00 18.10 16.40 16.46 P103606 2007 MG-Sust. HealthSystem Development 0.00 10.00 0.00 0.00 0.00 0.80 -1.50 0.00 PO82806 2004 MG-TranspInfrastr InvestPrj (FY04) 0.00 165.60 0.00 0.00 0.00 28.50 10.53 10.53 P113224 2009 MG-SupplementalPRSC V Grant 0.00 0.00 10.00 0.00 0.00 0.00 0.00 0.00 PO94103 2007 MG-RegionalTelecoms (FY07) 0.00 30.00 0.00 0.00 0.00 28.20 0.00 0.00 P113134 2009 MG-Emerg. FoodSec. & Recons.Project 0.00 40.00 0.00 0.00 0.00 0.00 0.00 0.00 ERL (FY09) Total: 0.00 1,198.50 10.00 9.00 1.23 312.65 34.56 18.19 97 Committed DisbursedOutstanding **Ouasi partici **Ouasi partici FY ADDrOVal ComDany L o a n - Eauitv * G T M D a n t L o a n - Eauitv *GTIRM 2007/08 Abm 0.00 0.49 0.00 0.00 0.00 0.00 0.49 0.00 0.00 0.00 1998 Aef ghm 0.08 0.00 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.00 2006/07 BFV-SocGen 0.00 0.00 0.00 7.48 0.00 0.00 0.00 0.00 5.32 0.00 1992/2005/07 Bni 0.00 2.09 0.00 0.00 0.00 0.00 2.09 0.00 0.00 0.00 Bnileasing 0.00 0.10 0.00 0.00 0.00 0.00 0.10 0.00 0.00 0.00 2000/08/09 Boa-M 0.00 2.46 0.00 3.64 0.00 0.00 2.46 0.00 2.64 0.00 BP 2004 Madagascar 0.00 3.88 0.00 0.00 0.00 0.00 2.08 0.00 0.00 0.00 Credit 2006107 Lyonnais 0.00 0.00 0.00 7.48 0.00 0.00 0.00 0.00 0.00 0.00 Celtel 2007 Madagascar 25.00 0.00 0.00 0.00 21.00 12.00 0.00 0.00 0.00 10.08 Mc 2007/08 Madagascar 0.00 0.68 0.00 3.76 0.00 0.00 0.68 0.00 2.29 0.00 Total Portfolio: 25.08 9.71 0.00 22.36 21.00 12.08 7.91 0.00 11.22 10.12 * DenotesGuaranteeandRiskManagementProducts. ** QuasiEquityincludes both loanand equity types. 98 Annex 15: Countryat a Glance Madagascar a t a glance 6/2/08 Sub- Key Development Indicators Saharan LOW Madagascar Africa income Agedisntutioq 2006 7) Male Femle Population.md-year (millions) 19.7 770 2,403 7074 Sutfacearea(thousandsq. km) 587 24,265 29.215 60-64 PopuhtiongmMh(36) 2.7 2.3 1.8 5x4 M a n population (%oftotalpopulation) 22 36 30 $044 GNI(Atlasmethod,US$bilions) 6.6 648 1,562 sa41 GNIpercaDita LAtlasmethcd. US$) 330 842 650 2324 GNIper capita (PPP, nternatbnd$) 2,032 2.698 1014 04 GDPgmwth (%) 6.2 5.6 8.0 20 10 0 10 20 GDPper capb growth (%) 3.7 3.2 6.1 Dercent (most recent estimate,2oW-2W7) Povertvheadcountratioat$ladav(PPP.%) 61 41 Under-5mortalilyrate(per1,OM)) Povertyheadcountratio&$2a day(PPP,%) 85 72 L h expectancyatbirth(years) 56 47 59 Infant rmttalay(per1,WOlivebirths) 74 96 75 Childmalnutrition(%of childrenunder.5) 42 29 Adultliteracy,male(%of ages 15 andolder) 77 69 72 Adult litwacy.female (%of ages 15 and ddeij 65 50 50 Grossprimaryenrdlmnt, male (%of age group) 141 98 108 Grossprimaryenrdlmnt, female(% of age grcup) 136 86 96 Accesstoanimprovedratersource (%ofpopuktion) 46 56 75 Accesstoimproved sanitationfacilities(% ofpopulation) 32 37 38 Net Aid Flows 1980 1990 2000 2007 * I (US$rnllions) I Net OOA andoffioal aid 230 397 322 754 Growthof GDP and GDPper capita(%) Top3 donofs (in 2 W ) France 54 143 46 104 unlted states 10 22 32 61 Japan 44 Ad (96 dGNI) 5.7 13.4 8.4 100 Ad pwcapita(US$) 25 33 20 38 Long-Term EconomicTrends Consumerpces (annual %change) 11.8 10.7 I O 3 GDPrm!Aic&defbtor (annual% chance) 15.0 11.5 7.2 10 3 I --O-GDP -GDPpercapcta 1 Exchangerate(annualaverage, bcalperUS$) 42.3 298.8 1,353.5 1,873 9 Termsoftmde index(2000= 100) 79 100 51 1980-90 `1990-2000 200047 (averageannualgrowth%) Popuhtion,md-year(mlllans) 9 1 12.0 16.2 19 7 2 8 3 0 2 8 GDP(US$ mllons) 4,042 3.081 3,878 7.383 1 1 20 3 3 (% ofGW) AgIlCU~tUre 30.1 28 6 293 25 8 2.5 1.8 1.9 Industry 16.1 12 8 14 3 16 1 0.9 2.4 2 7 Manufacturng 11 2 12 3 12 7 2. 1 2.0 2.I SeNlces 539 58 6 565 58 0 0.3 2.3 3.7 Householdfinal consufndonexDendture 89.3 86 4 832 79 0 0.7 2.2 2.0 General gov? finalconsurnpbonexpenditure 12.1 8 0 9 0 9 4 0.5 0.0 7.6 Grosscapitalformabon 15.0 17 0 15 0 27 3 4.9 3.3 17.0 EXpwtSof gWdSandSBNICSS 13.3 16 6 307 16 8 0.8 3.8 1.0 Importsof goods and servces 29.7 28 0 380 357 5.7 4.1 9 8 Grosssaungs -2.4 9 2 9 4 13 3 Note:Figuresin italicsare fmyears other than those specified.2007 dataare prelminaly.Group dataare through2006... ndicatesdataare not availabb a.Addata arefor2006. DevebpmentEconomics,DevelopmentDataGmup (OECDG). 99 Madagascar Balanceof Payments and Trade M O O 2007 IGovernance indicators, ZWOand2006 (US$mBons) Total merchandise exports(fob) 829 1.229 Totalmerchandiseimpwts (or) 1,097 2,225 Voiceand acmuntabiliiy Net trade n goodsand SNICS -283 1,197 mstical staiiiiy Cwrentaccwntbahnce -218 -1,033 asa%ofGCP 5.6 -14.0 Regulatory quality Workers' remittances and Rile dlaw cmpensa!ion ofemployees(receipts) 11 - Controlof mrrupion Reserves ncbding gdd 288 602 Central Government Finance 1% d G P ) Cwrentrevenue(Induding giants) 12.4 11.6 Tax reveme 11.3 11.4 Currentexpenditwe 11.4 11.0 Techndoay and Infrastructure mo 2005 Ovemll surplus'deficit -5.7 -9.5 Pavedroads(%of totap 11.6 Highestmarginaltax rate(%) Fkedline and mobilephone Inchvidual subscrbers@er1,OWpeople) 8 40 Corporate Hightechnologyexpocts ( O hof manufacturedexports) 1.0 0.8 External Debt and Resuwce Flows Environment IUS$rn)%ons) Total debtoutstandingandchsbursed 4,691 1,601 Agnculturalland(%oflaxlarea) 47 47 Totaldebt service 117 35 Fcfestarea(Oh of hnd area) 24.9 24.6 Debtrelsf(HPC MDRI) 1,035 1,219 Nationdlyprotectedareas ph oflandarea) .. 5.8 Totaldebt (% of GDP) 121.0 21.7 Freshwaterreswrces per capta (cu.metes) _. 18.113 Tdaldebtservice(%ofexports) 9.7 2.1 FreshwaterMhdrawal (%of hternalresources) 4.4 Foreigndirectinvestment(netimlows) 83 0 C02emssicns per capla(mt) 0.14 0.73 POrtfdlOeqUlty(net nfiows) 0 0 GDPper unitof energy use (2000 PPP$per kgof oil equivalent) :omposition of totalexternal dett, 2006 Energyusepercapta(kgofd1eqItivalmt) BRD 0 IDA E 3 IBRD TOW deM &tandnganddidursed Dtsbunments Pnnclparepayments IntereSt payments JS rnllons IDA 'rota4debt wtstandnganddistiursed 1378 636 Risbursments 94 139 Private Sector Develoment mo 2006 Tot& debt swiee 27 28 T i m requred to start abusiness (days) - 7 Cost tostart abuslness(%ofGNIpercapita) - 22.7 8 4 T i m requred to registerproperty(days) - 134 of v&& IFCowi aeccunt 8 4 RisbumementsfotlFC awnaccwt 1 0 Rankeda?,a mqorconstrarnttobusiness Pmfaliosaes ptepaVmenfsand (% ofmanagerssurveyedwhoagreed) repapentsfor IFC ownacmunt 2 2 Access tdcost of frnancng 68 3 CWNpbW 46t MlGA Gross exmure 1 6 Stwkmarkel ~ p i t a l i ~ a (%oofGDf) b ~ 0 0 Bankcapitalto assettatio (%) 7 1 0 0 Note Figuresin tallcs arefor years other than those speofied 2007 data are prelimnary 612108 indicatesdataare not avalabk - ndcatesobservabonisnotapplicabe Devebpmmt E c ~ c ~ ~DevelopmentData Group (DECDG) K s . 100