Document of The World Bank Report No: 66134 v1 RESTRUCTURING PAPER OF THE HIV AND AIDS TECHNICAL ASSISTANCE PROJECT IDA-H5020 TO THE KINGDOM OF LESOTHO December 16, 2011 Human Development Africa Region Health, Nutrition and Population (AFTHE) ABBREVIATIONS AND ACRONYMS AU Accounting Unit CSO Civil society organization DAC District AIDS Committees DP development partners GFATM Global Fund to fight AIDS, TB and Malaria GFCU Global Fund Coordinating Unit HMIS Health management information system IO Intermediate outcome LCN Lesotho Council of NGOs LOMSHA Lesotho Output System for HIV/AIDS LTA long term technical assistance M&E monitoring and evaluation MCC Millennium Challenge Corporation MOFDP Ministry of Finance and Development Planning MOHSW Ministry of Health and Social Welfare MOLGC Ministry of Local Government and Chieftainship NAC National AIDS Commission NDSO National Drug Supply Organization NGO Nongovernmental organization NSP National HIV/AIDS Strategic Plan OVC Orphans and vulnerable children PAD Project Appraisal Document PU Procurement Unit PEPFAR US President’s Emergency Plan for AIDS Relief PDO Project Development Objective PR Principal recipient SDR Standard Drawing Rights Regional Vice President: Obiageli Katryn Ezekwesili Country Director: Ruth Kagia Acting Sector Manager / Director: Jean J. de St. Antoine/Ritva Reinikka Task Team Leader: Kanako Yamashita-Allen 2 LESOTHO HIV/AIDS TECHNICAL ASSISTANCE PROJECT RESTRUCTURING PAPER A. SUMMARY 1. This paper seeks the approval of the Country Director to restructure the Lesotho HIV/AIDS Technical Assistance Project (P107375; IDA-H5020) and to amend the financing agreement. The proposed level II restructuring aims to: (i) realign the project with the new National HIV/AIDS Strategic Plan (NSP) 2011-2016 by focusing attention on key prevention and mitigation measures (ii) ensure a more strategic focus by consolidating and prioritizing capacity strengthening support; and (iii) sharpen the results focus through a revised results framework with clearer linkages between the activities to be financed and the expected outcomes. The Project Development Objective (PDO) of building capacity of government agencies and civil society organizations remains relevant and will not be modified. 2. The need for restructuring and the broad strategic directions were discussed during the April-May 2011 supervision mission. Subsequently, the Bank team provided technical support to the government to reach consensus among key stakeholders on a core group of priority technical assistance activities. During the annual meetings the Bank team met with the delegation and firmed up commitment to the restructuring which was finalized during the October 2011 mission. B. PROJECT STATUS Background 3. The project continues to make important contributions to Lesotho’s response in the fight against HIV/AIDS. The US$5 million grant was approved on August 27, 2009, became effective on January 14, 2010, and is scheduled to close on January 31, 2015. To date, roughly US$1.5 million or 29 percent has been disbursed. The PDO of “building capacity of government agencies and civil society organizations at both the national and local level to address the identified key gaps in implementing the National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic� remains relevant. 4. The original project design was based on a gap-filling approach which aimed to leverage resources from other Development Partners (DPs) such as the Global Fund to fight AIDS, TB and Malaria (GFATM) and US President’s Emergency Plan for AIDS Relief (PEPFAR). The project focused on capacity building of key implementers of the HIV/AIDS programs to enhance effectiveness and maximize the impact of these investments funded by other partners. It consisted of three components. Component one focused on building capacity to implement the multi-sectoral response through the National AIDS Commission (NAC) and the Lesotho Council of NGOs (LCN). Component two aimed to strengthen capacity to scale up the HIV health sector response through the Ministry of Health and Social Welfare (MOHSW). Component three supported the decentralized HIV response through the Ministry of Local Government (MOLGC), and civil society organizations. The National AIDS Commission was responsible for overall coordination. The project is managed by staff based in the MOHSW, including a Project Operations Advisor, Procurement Manager, and a Finance Manager. 3 Implementation Progress 5. The project has been rated moderately unsatisfactory for the past 12 months, due to the: (i) slow pace of implementation stemming from delays in putting in place a project team and difficulties coordinating a large number of small technical assistance contracts across several institutions; and (ii) deficiencies in monitoring and reporting with lack of comprehensive data on results and poor linkages between activities and expected outcomes. The gap filling approach (i.e. whereby the Bank has served as donor of last resort, funding capacity building activities not funded by other partners) has resulted in fragmentation of activities and frequent reprogramming requests that were not always strategically aligned to the PDO. Most recently, the government has taken the decision to scale back the mandate of the National AIDS Commission which has resulted in high staff turnover and a difficult environment for carrying out the project. In light of the current context, the team proposes to restructure the project to ensure that activities are more strategic and better linked to the expected outcomes, and that the institutional arrangements are streamlined. Financial Management 6. As of October 2011, financial management is assessed as moderately satisfactory. All interim financial reports have been submitted in a timely manner. The first external audit report was also received on a timely basis in September 2011 and has been evaluated as satisfactory by the Bank’s financial management specialist. C. PROPOSED CHANGES 7. In order to better align the project to the new NSP, it was agreed that capacity building support would be better prioritized and targeted with a view to: (i) building institutional capacity of civil society organizations to implement high impact HIV activities, which remains a critical objective of the NSP; (ii) strengthen supply chain management and support critical training; and (iii) bolster implementation of the decentralized HIV response in alignment with the new decentralized reform of the local government structures. The specific changes in each component are summarized below. 8. Component 1: Improving Institutional Capacity of NGOs/CSOs to implement HIV programs. Component 1 will now focus exclusively on capacity building of the Lesotho Council of NGOs and will no longer support the National AIDS Commission. Two major activities will be supported: (i) enhancing the institution’s ability to build skills and operational capacity of civil society organizations (NGOs/CSOs) to provide community-based HIV services; and (ii) strengthening LCN’s capacity to prepare and manage grants from the GFATM and other institutions. 9. Component 2: Scaling up the Health Sector Response. The second component will focus on key prevention and mitigation measures rather than funding the full range of HIV interventions. Many of the initially planned activities are now financed by other development partners hence Bank funding will now be better targeted. Activities will be consolidated and focused on: (i) strengthening key aspects of the supply chain for HIV and related health commodities; and (ii) providing training and capacity building to key personnel, including social workers who play a key role in providing support for OVCs. This support is provided in coordination with the European Union and UNICEF which have been financing the OVC cash transfer program in Lesotho. In addition, once the contracts of the current project staff (i.e. procurement and financial management) expire in November 2012, the MOHSW has agreed to 4 assume these functions through the Accounting Unit and Procurement Unit. This will reduce overhead, free up resources, and increase the sustainability of these fiduciary functions within the ministry. 10. Component 3: Supporting a Decentralized local response. Component 3 would continue to build capacity of decentralized institutions through the Ministry of Local Government (MOLGC) while support for LCN activities has been consolidated under component 1. In line with the government’s decentralization policy, the project will continue supporting capacity building of district and community councils to mainstream HIV/AIDS activities in other sectors at the local level. 11. Results Framework. The PDO remains relevant and has not been modified. The results framework has been refined to include new indicators that: (i) capture new activities (e.g. improvements in the supply chain); (ii) better measure ongoing capacity building support to the LCN (e.g. enhanced financial reporting), and (iii) drop indicators which are no longer valid (e.g. satisfaction with HIV coordinators who are being phased out). In addition, intermediate indicators were added to better reflect project achievements to date under the original design (e.g. draft policy guidelines on adoption of OVCs). The two new PDO indicators are as follows: (i) percent of Global Fund quarterly grant performance ratings that meet or exceed an adequate expectation�, (ii) consolidated three-year rolling condom forecast and procurement plan in place; and (iii) number of council approved projects that include an HIV component in the project. The results framework now includes explicit definitions of the denominators and numerators and data sources to facilitate data collection. The details are provided in Annex I. 12. Institutional arrangements. Given the Government’s recent decision to downsize the NAC,1 it was agreed that the MOHSW will assume the overall coordination of the project, including the monitoring and reporting of results. With the Accounting Unit (AU) and Procurement Unit (PU) already based in the MOHSW, this change will consolidate responsibilities and functions. The legal covenant which stated that the NAC be maintained with adequate resources, a functional management team, and a clearly defined management structure will be dropped. The proposed restructuring will reduce the number of implementing agencies to three, namely MOHSW (lead agency), LCN, and MOLGC. While the NAC is being scaled back, a recent development that LCN may no longer be the Principal Recipient of the GFATM Round 8 Phase 2 has been taken into consideration in adjusting the project’s focus to strengthening this umbrella organization’s capacity to serve as a voice for civil society and strengthen its affiliates’ capacity to obtain and manage grants. The project Steering Committee and Technical Working Group responsible for policy and guidance will be consolidated into a Project Committee to be chaired by the MOHSW, and officials representing the GFCU, MOFDP, MOHSW, MOLGC and LCN at the director level or above in order to further streamline the institutional set up. 13. Financing and disbursements. Taking into consideration the amounts disbursed/committed and the proposed changes, the restructuring would result in a new allocation between the three components in the grant agreement, as shown in the table below. No changes are proposed to the disbursement arrangements. There is only one disbursement category: goods, works, consultant’s services, training, and operating costs for a total of US$5 million, and that will not change. 1 All of the existing contracts of the remaining NAC staff will be terminated on December 31, 2011. The government has not taken a final decision on the future of the NAC and it is not clear when new, streamlined NAC will be fully staffed and functional. 5 Project Costs Current Proposed Project Components Allocation in US Allocation in US millions millions Component 1: Improving Institutional 1.8 1.5 Capacity of NGOs/CSOs to Implement HIV Programs Component 2: Scaling up health sector 1.9 2.3 response Component 3: Supporting the 1.3 1.2 decentralized local response 5.0 5.0 Total Project Costs 14. Fiduciary Arrangements. No changes are expected in the financial management and procurement arrangements. Procurement will continue to be processed through the Procurement Unit. A revised Procurement Plan is under preparation to reflect the proposed changes in the restructuring paper. 15. Safeguards. The project’s environmental category B remains unchanged. D. APPRAISAL SUMMARY 16. The proposed changes have no major effect on the original economic, financial, technical or social aspects of the project as appraised. The restructuring does not involve any exceptions to the Bank policies. Risks and Mitigation Measures 17. Three risks have been identified that stem from the restructuring. First, there are potential difficulties that the MOHSW may face in coordinating the LCN and the MOLGC. This will be mitigated by ensuring that the Project Committee within the MOHSW is chaired by a senior official to provide high level leadership and credibility. Second, there may be delays in having the MOHSW assume responsibility for financing the procurement and finance manager positions. This will be mitigated by inclusion of language in the amendment letter to the financing agreement which stipulates that the MOHSW maintain the Accounting Unit and the Procurement Unit with adequate resource, terms of reference and staff satisfactory to the Bank. Third, the MOLGC may have insufficient capacity to mainstream HIV/AIDS activities. To address this potential risk the project team will support the MOLGC to carry out its activities. Furthermore, the Bank team will strengthen oversight and supervision of the project and monitor closely the forthcoming changes to the implementation arrangements. The overall residual risk is considered as substantial. 6 Annex 1 Revised Results Framework Project Development Objective: The project aims at building capacity2 of government agencies and civil society organizations at both the national and local level to address the identified key gaps3 in implementing the National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic. PDO Outcome Action Unit of Baseline Actual Values Target Values Data Collection and Reporting Indicators Taken Measure D=Dropped C=Continue Data Source/ Responsible for 2009 2010 2011 2012 2013 2014 Frequency N= New Methodology Data Collection R=Revised Strengthen Implementation capacity (project management, procurement, FM etc) GF Percent of Global N percent 0% 25% 50% 50% 75% 75% Quarterly Grant performance LCN Fund quarterly grant Report performance ratings that meets or exceeds an adequate expectation 4 Strengthen Planning capacity related to key gap Consolidated 3 year Pipeline or MOHSW, Dept of rolling condom N Yes/No No No No Yes Yes Yes Annual Channel database disease unit forecast and procurement plan in place5 2 Capacity-building in the areas of planning; project/program, procurement and financial management; M&E; HR; governance & leadership. 3 The key gaps identified in the NSP 2011 – 2016 are as follows: inadequate prioritization and coverage on prevention, lack of human resources, fragmented systems for mitigation, slow mainstreaming. 4 GFATM Performance Ratings under Round 8, Phase1 (LSO-809-G07-H): A1 (Exceeds expectations); A2 (Meets Expectations); B1 (Adequate); B2 (Inadequate but potential demonstrated); C (Unacceptable). 5 Presence of a 3 year procurement plan for condoms. This indicator has been included as the new NSP emphasis the need to increase condom prevention. Forecasting and procurement planning are critical in getting the supply side corrected and both have to be in place in order to consider the indicator met. Project Development Objective: The project aims at building capacity2 of government agencies and civil society organizations at both the national and local level to address the identified key gaps3 in implementing the National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic. PDO Outcome Action Unit of Baseline Actual Values Target Values Data Collection and Reporting Indicators Taken Measure D=Dropped C=Continue Data Source/ Responsible for 2009 2010 2011 2012 2013 2014 Frequency N= New Methodology Data Collection R=Revised Strengthen leadership capacity Number of council District council approved projects N Number 0 0 64 128 160 Annual report to national MOLGC that include an HIV 192 6 level component. Percent of clients that express satisfaction with HIV coordinators at national and district Client satisfaction D percent 45% 50% 60% 75% 80% Annual NAC levels (NAC, survey MOHSW, DACs and DHMTs) Percent of trained umbrella organizations, district councils, community HIV service councils, NGOs, coverage D percent 0% 15% 25% 40% 50% LOMSHA system NAC CBOs and FBOs that report, every submit LOMSHA six months forms on time in the last 2 quarters 6 This indicator is capturing the mainstreaming of HIV activities in other sectors and projects. The District council approves small scale projects submitted by community councils. 8 INTERMEDIATE OUTCOMES Project Development Objective: The project aims at building capacity of government agencies and civil society organizations at both the national and local level to address the identified key gaps in implementing the National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic. Intermediate Unit of Outcome Action Taken Baseline Actual Values Target Values Data Collection and Reporting Measure Indicators D=Dropped C=Continue Data Source/ Responsible for 2009 2010 2011 2012 2013 2014 Frequency N= New Methodology Data Collection R=Revised Component 1 Percent of development NAC financial partners that are D percent 0%7 0% 20% 40% 50% NAC financial data NAC records part of the HIV SWAp Percent of national coordination Meeting minutes Meeting structures8 that D percent 0% 20% 30% 40% 50% and attendance attendance NAC have had at least records registers 80% attendance in the last 2 meetings Percent of umbrella organizations with costed HIV Umbrella Umbrella strategic plans, of organization Umbrella D percent 0% 0% 20% 30% 40% organization which funding for financial records organizations reports at least 80% of the and work plans plan has been secured Percent of reports submitted within 5 working days of Implementation All implementation N Percent 0 0 25% 50% 60% Quarterly the due date to the 75% agency Reports partners WB and GFATM by the three 7 The results framework of the PAD states, “Health SWAp is not yet in existence, and will only become operational in a few years.� 8 M&E Technical Working Group, Research Working Committee, Communication Technical Working Group, Prevention Technical Working Group, Leadership Forum, AIDS Forum. 9 INTERMEDIATE OUTCOMES Project Development Objective: The project aims at building capacity of government agencies and civil society organizations at both the national and local level to address the identified key gaps in implementing the National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic. Intermediate Unit of Outcome Action Taken Baseline Actual Values Target Values Data Collection and Reporting Measure Indicators D=Dropped C=Continue Data Source/ Responsible for 2009 2010 2011 2012 2013 2014 Frequency N= New Methodology Data Collection R=Revised implementing agencies (LCN, MOLGC and MOHSW)9 Percent of Project Committee meetings held with 100% attendance N Percent 0% 50% 50% 100% 100% 100% Semi-annual Minutes MOHSW by each implementing agency10 Percent of NGOs trained in program N Percent 0% 0% 0% 40% 60% 80% Annual Training records LCN management skills Component 2 Percent of outstanding issues identified during supervision 90% Aide Memoire, AU N Percent 25% 50% 80% 85% Annual mission addressed Progress reports within the allocated time Policies & Guidelines -An updated national Health N Yes/No No No No Yes Yes Report MOHSW Law Yes 9 This includes both financial and programmatic reports. For LCN, these are the PR reports required to be submitted to GFATM on a quarterly basis, and M&E data to the AU on HTAP. For MOLGC, submission of M&E to the AU on HTAP, and MOHSW reports will be submitted to AU on HTAP. 10 Implementation agencies include LCN, MOHSW and MOLGC. 10 INTERMEDIATE OUTCOMES Project Development Objective: The project aims at building capacity of government agencies and civil society organizations at both the national and local level to address the identified key gaps in implementing the National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic. Intermediate Unit of Outcome Action Taken Baseline Actual Values Target Values Data Collection and Reporting Measure Indicators D=Dropped C=Continue Data Source/ Responsible for 2009 2010 2011 2012 2013 2014 Frequency N= New Methodology Data Collection R=Revised -Draft guidelines for conducting N Yes/No No No No Yes Yes Report MOHSW ethical research Yes -Policy guidelines on adoption of N Yes/No No No No Yes Yes Yes Report MOHSW orphans -Draft module on identification and referral of OVCs Institute Training included in the N Yes/No No Yes Yes Yes Yes Yes Annual MOHSW Social Worker Program Training Program Cumulative percent of Auxiliary Social Workers trained in NHRT identification, C Percent 0% 0% 50% 100% 100% 100% Annual MOHSW records referral and follow- up of OVCs Percent of trained implementers that implement behavior and social Health Education change D Percent 0% 20% 30% 50% 60% Bi-annual Unit communication programs that address MCP 11 INTERMEDIATE OUTCOMES Project Development Objective: The project aims at building capacity of government agencies and civil society organizations at both the national and local level to address the identified key gaps in implementing the National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic. Intermediate Unit of Outcome Action Taken Baseline Actual Values Target Values Data Collection and Reporting Measure Indicators D=Dropped C=Continue Data Source/ Responsible for 2009 2010 2011 2012 2013 2014 Frequency N= New Methodology Data Collection R=Revised Percent of district health management teams that report routine health D Percent 10% 50% 60% Annual MOHSW system data on time Component 3 Number of HIV ESP11 interventions 700 N Number 0 556 877 Annual ESP reports MOLGC implemented Percent of district and community councils that have been visited at least D Percent 0% 60% 100% 100% Bi-annual LOMSHA system once a year for technical support in data management Percent of community and district councils trained in D Percent 0% 60% 100% 100% Bi-annual LOMSHA system LOMSHA and in data management 11 HIV Essential Service Package (ESP) includes intervention that support prevention through change in sexual behavior, PMTCT, access to HIV testing services, support to orphans and vulnerable children and support for persons who are HIV positive. This indicator is a result of the work completed by the community council officers hired under the project to support the implementation of the ESP. 12 INTERMEDIATE OUTCOMES Project Development Objective: The project aims at building capacity of government agencies and civil society organizations at both the national and local level to address the identified key gaps in implementing the National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic. Intermediate Unit of Outcome Action Taken Baseline Actual Values Target Values Data Collection and Reporting Measure Indicators D=Dropped C=Continue Data Source/ Responsible for 2009 2010 2011 2012 2013 2014 Frequency N= New Methodology Data Collection R=Revised Percent of trained NGOs, CBOs and FBOs that have received at least D Percent 0% 40% 50% Bi-annual LOMSHA system one mentorship visit in the last 12 months Percent of NGOs, CBOs and FBOs D Percent 0% 40% 50% Bi-annual LOMSHA system trained in LOMSHA 13 14