Documentof The World Bank FOROFFICIAL USEONLY Report No: 48139-LS PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT INTHE AMOUNT OF SDR3.3 MILLION (US$5.0 MILLION EQUIVALENT) TO THE KINGDOM OF LESOTHO FOR A HIV AND AIDS TECHNICAL ASSISTANCE PROJECT August 3,2009 Health, Nutritionand Population Unit Southern Africa Country Cluster 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 Bankauthorization. CURRENCY EQUIVALENTS (Exchange Rate Effective May 31,2009) Currency Unit = Maloti Maloti 7.946 = US$1 US$l = SDR0.64597 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS AIDS AcquiredImmuneDeficiency Syndrome ART Antiretroviral Therapy ARV Antiretroviral (drugs) BCC Behavior Change Communication CAS Country Assistance Strategy CCCOE Children's Clinical Center of Excellence CCM Country Coordinating Mechanism cso CCSP Community Council Support Person csw Civil Society Organization Commercial Sex Worker DFID Departmentfor International Development UK DHS Demographic Health Survey ESP Essential Service Package GDP Gross Domestic Product GFATM Global Fundto fight AIDS, Tuberculosis, and Malaria GFCU Global FundCoordination Unit GoL Government of the Kingdom of Lesotho GTZ GermanDevelopment Cooperation HCW Health Care Workers HCTA HIV andAIDS Capacity and Technical Assistance project HIV Human Immunodeficiency Virus ILO International Labor Organization KYS Know Your Status LCN Lesotho Council ofNGOs LOMSHA Lesotho Output Monitoring System for HIV and AIDS M&E Monitoring and Evaluation M C Male Circumcision MCC MillenniumChallenge Corporation MCP MultipleConcurrent Partners MDR Multi-Drug Resistant MGYSR Ministry of Gender, Youth, Sports and Recreation MOFDP Ministry of Finance and Development Planning MOHSW Ministry ofHealth and Social Welfare MOLGC MinistryofLocal Government andChieftainship FOROFFICIAL USE ONLY MOTS Modes of Transmission Study MSM Menhaving Sex with Men MTEF MediumTermExpenditure Framework NAC National AIDS Commission NASA National AIDS Spending Assessment NGO Non-Governmental Organization NSP ovc National Strategic Plan Orphans andVulnerable Children PAU Project Administration Unit POM Project Operations Manual PEPFAR President's EmergencyPlan for AIDS Relief (US Government) PLWHA People Living with HIV and AIDS PMTCT Prevention of Mother to Child Transmission SRH Sexual and Reproductive Health STI Sexually TransmittedInfection TA Technical Assistance TB Tuberculosis UNAIDS Joint UnitedNations Agency on HIV/AIDS UNDP UnitedNations Development Programme UNFPA UnitedNations Population Fund UNICEF UnitedNations Children's Fund WHO World Health Organization XDR Extensively DrugResistant Vice President: Obiageli K.Ezekwesili Country Director: RuthKagia Sector Manager: EvaJarawan Task Team Leader: FennZhao 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. LESOTHO HIV and AIDS TechnicalAssistance Project CONTENTS Page I STRATEGICCONTEXTANDRATIONALE . .................................................................. 1 A. Country and sector issues.................................................................................................... 1 B. Rationale for Bank involvement.......................................................................................... 3 C. Higher level objectives to which the project contributes .................................................... 5 I1 PROJECT DESCRIPTION . .................................................................................................. 5 A. Lendinginstrument.............................................................................................................. 5 B. Project development objective and key indicators .............................................................. 6 C . Project components.............................................................................................................. 6 D . Lessons learned and reflected inthe project design ............................................................ 9 E . Alternatives considered and reasons for rejection............................................................. 10 I11. IMPLEMENTATION ..................................................................................................... 11 A . Partnership arrangements .................................................................................................. 11 B. Institutional and implementation arrangements ................................................................ 12 C . Monitoring and evaluation of outcomeshesults ................................................................ 13 D. Sustainability ..................................................................................................................... 14 E . Critical risks and possible controversial aspects ............................................................... 14 F. Loadcredit conditions and covenants ............................................................................... 17 I V . APPRAISAL SUMMARY ................................................................................. .............17 A . Economic and financial analyses....................................................................................... 17 B . Technical ........................................................................................................................... 18 C. Fiduciary............................................................................................................................ 18 D. Social................................................................................................................................. 20 E. Environment ...................................................................................................................... 21 F. Safeguard policies.............................................................................................................. . . 22 G. Policy Exceptions and Readiness ...................................................................................... 22 Annex 1: Country and Sector or ProgramBackground .......................................................... 23 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies ..................32 Annex 3: ResultsFrameworkandMonitoring ......................................................................... 34 Annex 4: DetailedProjectDescription ...................................................................................... 45 Annex 5: ProjectCosts................................................................................................................ 55 Annex 6: ImplementationArrangements .................................................................................. 56 Annex 7: FinancialManagementand DisbursementArrangements ..................................... 60 Annex 8: ProcurementArrangements ....................................................................................... 68 Annex 9: Economicand FinancialAnalysis .............................................................................. 86 Annex 10: SafeguardPolicyIssues ........................................................................................... 102 Annex 11:ProjectPreparationand Supervision .................................................................... 103 Annex 12: Documentsinthe ProjectFile ................................................................................ 105 Annex 13: Statement of Loansand Credits ............................................................................. 107 Annex 14: Countryat a Glance ............................................................................................... ~ 1 0 8 Annex 15: Map No IBRD 33434 . .............................................................................................. 111 LESOTHO HIV AND AIDS TECHNICAL ASSISTANCE PROJECT PROJECT APPRAISAL DOCUMENT AFRICA AFTHE Date: August 3,2009 Team Leader: Feng Zhao Country Director: RuthKagia Sectors: Health (60%); Other social services Sector Managermirector: Eva Jarawardyaw (23%); Sub-national government Ansu administration (10%); Central government administration (7%) Themes: HIV/AIDS (25%); Health system performance (25%); Participation and civic engagement (24%); Decentralization (13%); Other accountability/anti-corruption (13%) Project ID: P107375 Environmental screening category: Partial Assessment LendingInstrument: Technical Assistance Grant [ 3 Loan [ ] Credit [XI Grant [ ] Guarantee [ 3 Other: For Loans/Credits/Others: Total Bank financing (US$m.): 5.00 ProDosedterms: Total: 2.53 2.47 5.OO Borrower: Ministry of Financeand Development Planning P.O. Box 19466 Maseru 100 Lesotho Tel: +266 223 10826 Fax: +266 223 11041 thahanet@finance.gov.ls Responsible Agencies: National AIDS Commission P. 0.Box 11232 1 Maseru 100 Lesotho Tel: +266 223 26794 Fax: +266 223 27210 Ministry of Healthand Social Welfare P.O.Box 514 Maseru 100 Lesotho Tel: +266 22-314404 Fax: +266 223 23010 Ministry of Local Government andChieftainship P.O. Box 686 Maseru 100 Lesotho Tel: +266 223 15008 Fax: +266 223 11269 Project implementation period: Start: August 27,2009 End: January 31,2015 Expected effectivenessdate: November 16, 2009 Expected closing date: January 31,2015 Does the project depart from the CAS incontent or other significant respects? Ref:PAD I.C. [ ]Yes [XINO Does the project require any exceptions from Bank policies? Re$ PAD IKG. Have these beenapproved by Bank management? I s approval for any policy exception sought from the Board? Doesthe project include any critical risks rated "substantial" or "high"? Ref: PAD III.E. [ ]Yes [XINO Does the project meet the Regional criteria for readinessfor implementation? Re$ PAD I K G. [XIYes [ ]No Project development objective Re$ PAD II.C., TechnicalAnnex 3 The project aims at buildingcapacity of government agenciesandcivil society organizations at both the national and local level to address the identified key gaps inimplementing the National HIV and AIDS Strategic Plan inan effort to contain andreversethe epidemic. Project description [one-sentence summary of each component] Re$ PAD II.D., Technical Annex 4 Component 1:Improving institutional capacity to implementthe multi-sectoral response ($1.8 million). This component i s intendedto support capacity building of national level institutions, bothpublic and private, insupport of Lesotho's HIV andAIDS multi-sectoral response. Component2: Improving capacity to scale up the health sector response ($1.9 million). This component will mainly support implementersinthe health sector to buildcapacity for delivering 11 .. essential and effective HIV services and to mitigate the impact o fthe epidemic. Component 3: Capacity Support to the decentralized local response ($1.3 million). This component will buildcapacity through provision o f technical assistance to government and civil society implementers at district and community levels to plan, coordinate, implementand monitor a range o f defined essential HIV and TB services that needto be inevery community for an effective, expanded HIV response to scale. Which safeguard policies are triggered, ifany? Re$ PAD IKF., TechnicalAnnex 10 Environmental Assessment (OP/BP 4.01) Significant, non-standard conditions, if any, for: Re$ PAD HI.F. Board presentation: None Grant effectiveness conditions: 1) The Recipient has established the Project Steering Committee. 2) The Recipient has adopted the Project Operations Manual. 3) The Recipient has updated the Chart ofAccounts, ina mannersatisfactory to the Association. 4) The Recipient has prepared and finalized terms o f reference, acceptable to the Association, for the recruitment o f the auditors. Covenants applicable to project implementation: 1. Ensure that all the implementing agencies (notably NAC, PAU and P Uwithin the MOHSW) shall be maintainedwith adequate resources, terms o f reference and staff, satisfactory to the Association. 2. MOHSW shall, not later than twelve (12) months after the Effective Date, develop and submitto the Association, for its review and comments, a staff development plandesigned to enhance the capacity and effectiveness o f its staff interms o f the realization o f the objectives o f the Project. 3. MOHSW shall proceed thereafter to implement the plan, taking into account any comments provided thereon by the Association, and inaccordance with the guidelines and procedures, and indicative time frames, provided inthe plan. 4. Ensure that the N A C i s maintained, throughout Project implementation, with a functional management team and a clearly defined management structure, satisfactory to the Association. 5. Furnishto the Association, for review and comments, as soon as available, but inany case not later than March 3 1 o f each year, its proposed annual work plan and budgetfor the Project for each subsequent year o f Project implementation, o f such scope and detail as the Association shall have reasonably requested, except for the annual work plan and budget for the Project for the first year o f Project implementation, which shall be furnishedno later than one (1) month after the Effective Date. ... 111 I. STRATEGICCONTEXTANDRATIONALE A. Country and sector issues 1. Lesotho has the third highest HIV adult prevalence rate in the world at 23.2' percent. For a small country with a population of 1.8 million, completely surrounded by South Africa, HIV presents an unprecedented challenge. There are an estimated 62 new infections and 50 deaths due to AIDS each day (implying that the epidemic threshold has not yet been reached and that the pool of HIV positive persons - who need care and treatment, and who can infect others - keeps growing). At the end of 2007, there were an estimated 270,000 people living with HIV (PLWHA), of whom 11,801 are children. Life expectancy at birthhas dropped to 36.8 years. The total number of orphans was estimatedto be around 108,700 in2007. 2. The impact of the HIV epidemic is devastating on all aspects of society. The demographic structure of the country i s changing as large numbersof people die intheir productive years, thus creating a rising and high dependencyratio. Inaddition, Lesotho had negative population growth in recent years mainly as a result of the HIV epidemic. Economically, the epidemic disrupts capital optimization by striking at a quarter of adult Basotho and diminishing labor inputs. Critical skill shortages are being felt in government services as well as in the business sector. The social fabric is fraying due to the large burdenof orphans and vulnerable children (OVCs) and others living with HIV/AIDS. Households are being reduced to asset stripping, if not outright penury. The inter-generational spillovers are substantial, as the OVCs are often deprived of education, good nutrition and health care and will be ill-equippedto deal with the future. 3. Two diseases and onepatient. Lesotho has the fifth highest Tuberculosis (TB) incidence inthe world with 635 cases per 100,000 people. TB deaths havetripled since 1990 and it is now the leading cause of death for those with HIV and AIDS. With 80 percent of HIV positive patients co-infected with TB, the HIV epidemic has dramatically increased the threat of TB. Multi-Drug Resistant (MDR) and Extensively Drug Resistant (XDR) TB are on the rise, threatening both Lesotho and the Southern Africa Region as a whole. This "two diseases, one patient" issue needs to be addressed ina carefully coordinated way. 4. The country shows strong commitment tofighting HIV. The country regards HIV as the one of its most important development issues, declaring it as a national emergency in 2000. Since then, several major policies have been adopted by the Government, including the National HIV and AIDS Policy, National Orphan and Vulnerable Children Policy, HIV Testing and Counseling Policy, and Blood Transfusion Policy. The Labour Code Act was amended to prohibit discrimination against PLWHAs, and a Legal Capacity of Married Person's Act was passedto empower women to fight HIV and AIDS. The NationalAIDS Commission (NAC) was establishedin2005 to replace the Lesotho AIDS Program Coordination Authority (LAPCA) and strengthen coordination of the national response. A National HIV and AIDS Strategic Plan (2006-2011) (NSP) and a corresponding HIV and AIDS Monitoring and Evaluation Framework (2006-2011) were approved inDecember 2006. Inparticular, the NSP identifiedthe main drivers of the epidemic - multiple and concurrent sexual partnerships (MCP) and cultural factors 'Data presented inthe PAD, unless otherwise identified, is taken from the Lesotho UNGASS Country Report of Jan. 2006 - Dec. 2007, as finalized and presented in June 2008. 1 including gender inequality and women's disempowerment. The NSP focuses on achieving four main strategic objectives: (a) strengthening management and coordination mechanisms; (b) preventing transmission of HIV; (c) treatment and care; and (d) mitigating the impact of the epidemic in the population. In addition, Lesotho expressed openness to work with vulnerable groups inHIV andAIDS prevention and control. 5. The coverage of several key HIV and AIDS interventions has improved. The strong political commitment and increasing social mobilization plus increasing internal and external funding have contributed to improvement in several key HIV and AIDS related interventions in recent years. The coverage of Prevention of Mother to Child Transmission (PMTCT) increased tenfold from 5 percent in 2005 to 56 percent in 2008. The roll out of Antiretroviral Therapy (ART) made significant progress, with 21,710 patients receiving treatment in 2007. The "Know Your Status" (KYS) campaign resulted in a total of 229,092 people being tested for HIV by December 2007, representing 12 percent of the population and about three times the number tested in 2005. Lesotho has maintained a TB case detection rate above 80% for the past 3 years, and currentlyhas atreatment success rate of 67%. 6. Lesotho is at a crossroads in the jght against HIV and AIDS. The country and its partners now have a rare opportunity to make a difference. First, although there is no significant decline in the adult HIV prevalence rate (which could partly be the result of the roll out of the ART program), adult HIV incidence rate decreased from 2.9% in2005 to 2.3% in2007 and new infections dropped from 26,000 to 21,558 in the same period. This is the first time the HIV epidemic has shown signs of declining. Second, following several major analytical studies (sponsored by the Government, Bank and UNAIDS), we have a better understanding of the drivers of the epidemic, which include multiple concurrent partners, unsafe sexual behaviors, low condom use, limitedmale circumcision as well as social-economic factors. This provides the intellectual underpinning for tackling the epidemic effectively. Third, we have increasing knowledge on what works on the ground. For example, the UNGASS 2008 report listed the PMTCT and the KYS campaigns as best practices. Fourth, increasing resources for HIV programs, both internal and external, are available. Ifused effectively and efficiently, there is a real possibility of making a dent inthe epidemic. 7. Lesotho enjoys increasing supportfrom developmentpartners. The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), IrishAid, US Government (PEPFAR), Department for International Development (DFID), German Development Cooperation (GTZ), European Commission (EC), UN Family (International Labor Organization, Joint UN Program on HIV/AIDS, United Nations Development Program, United Nations Population Fund, United Nations Children's Fund, World Health Organization, and the World Food Program), and the Bank are committed to the implementation of the "Three Ones" principles and are providing funding to support the national response. About 57 percent' of HIV/AIDS spending for the period2005/06 and 2006/07 was sourced from international partnerswhile 43 percent came from Government. Among the major external financiers, GFATM i s by far the largest external financer in the HIV area, with a cumulative amount of US$114 million for HIV and TB programs (of which, more than US$102 million is earmarked for HIV). PEPFAR is also LesothoNationalAIDS SpendingAssessment2007. 2 increasing its financial support to fighting HIV. EC provides a grant (US$16.0 million3) to support the country's OVC program. 8. Despite this progress and increasedfunding, resources have not been usedfast enough and effectively enough in contrast to the urgency of the epidemic. Despite the increasing resources from both the Government and development partners, the national response has significantly fallen behind in terms of the optimal coverage of key interventions required to address the epidemic effectively. The implementation of the National Strategic Plan (2006-2011) has been slow. Based on the UNGASS 2007 report and the National AIDS Spending Account (NASA), for the three-year period 2005/06 to 2007/08, more than 76 percent of resources was budgeted for direct programs (prevention; treatment, care and support; and impact mitigation). No significant support was given to strengthenthe implementing system, which largely explains why, with larger amounts of money pumped into the system, the allocated resources for HIV programs were absorbed relatively slowly due to the limited capacity at both the national and local levels. The National Strategic Plan (2006-2011) calls for greater attention to system strengthening and capacity building-whilst improvingthe efficiency of coordination efforts. 9. Critical capacity gaps impede the implementation of the NSP. A joint assessment by the Government and partners concluded that the low absorptive capacity and slow implementation pace are mainly due to several critical gaps in the implementing systems. The following were jointly identified as the key bottlenecks: (i) coordinating capacity for multi-sector response; weak (ii)limitedresearchcapacityto organizeandusescientific evidenceto guideimplementation; (iii)fragmented national HIV M&Esystems; (iv) weak implementation capacityto scaleup those effective interventions that address the key drivers of the epidemic; and (v) uncoordinated local response with low capacity to monitor the implementation of HIV services, and limiteduse of monitoring information to improve program planning and service delivery. There i s an overwhelming consensus that removing those bottlenecks will require both technical and financial support, which inturnwill help speed up the implementation ofthe NSP. B. Rationalefor Bank involvement 10. TheBank has a comparative advantage to help address these key gaps. As a grant-giving agency, GFATMmainly focuses on financing major intervention programs instead of addressing gaps in the implementation systems. In addition, GFATM has no local presence and therefore cannot provide hands-on technical support. Similarly, EC's implementation and technical capacity on the ground is very limitedand relies on partners to help implement its programs. For example, the design and implementation of its OVC program was contracted out to UNICEF. PEPFAR, financed by the U S Government, normally implements its programs using separate implementation arrangements from the Government system. UN agencies mainly provide technical support and normally do not provide significant financing. The Bank, with its financing and technical capacity, i s in a unique position to help address the key gaps in implementing the NSP. During project preparation, joint missions with development partners (e.g. GFATM, UNAIDS, etc.) and wide consultations were conducted, and both the Government and partners regard the Bank's support to addressing the key gaps crucial to the country's fight against HIV Amount basedon Euroto USDexchangerate as of May 4,2009. 3 and AIDS. This project is also expected to be a building block for the future SWAP type of coordination for the national HIV and AIDS program. 11. Playing a catalytic role has been the Bank's strategic position in supporting Lesotho's Jight against HIV and AIDS. Due to the limited IDA allocation for Lesotho and increasing financing from other partners, the Bank is not a major financier of the country's HIV and AIDS programs in dollar terms. Yet, the Bank is regarded by both the Government and partners as a critical player inthe HIV area, which is mainly due to its effective catalytic and complementary role. This is demonstrated by the Bank's HIV and AIDS Capacity Building and Technical Assistance Project (HCTA) (Gr. H113-LSO), a US$5 million IDA grant, which closed on schedule inDecember 2008 with satisfactory ratings. All the plannedproject activities were fully completed. The HCTA project disbursed 82% of grant proceeds and the remainder was undisbursed due to sharp exchange rate fluctuations near project closing that resulted in substantial additional resources that could not be fully expended. The HCTA was the only collaboration between the government and development partners exclusively focusing on strengthening the implementing system and concentrated on helping the disbursement of the large GFATM grants (Round 2). Basedon the mid-termevaluation and ICR (inprogress) as well as feedback from partners, the HCTA, although small indollar terms comparedto the size of the GF grants, has helped fill critical gaps in the implementation systems (particularly in financial and grant management, procurement, M&E, development of strategies and operational plans) and contributed to the recent improvement inthe national response. As a result, the ratings of the implementation of the GFATM grants have improved from an almost "no go" (cancellation of the grants) three years ago to a fully satisfactory rating now, which is one of the best ratings in the Southern Africa sub-region. IDA'Sefforts are much appreciated by the Government and GFATM as well as other partners. Both the Government and partnersaskedthe Bank to continue to play the catalytic and complementary role. 12. Theproposedproject is consistent with the CAS.The Bank is one of the strong supporters of the country's efforts in fighting HIV and AIDS. The CAS (FY06-09) set fighting HIV and AIDS as a priority area and requires all Bank operationsto includemeasuresto address HIV and AIDS. This project was explicitly includedinthe CAS as a key instrument of the Bank's support to the country's fight against HIV and AIDS. It will build on the HCTA and continue to maximize the Bank's comparative advantages insupport ofthe national response. 13. The gap-Jilling approach is strongly welcomed by partners and the Government, which has shown strong ownership during project preparation. A government team has actively led project preparation. A multi-sectoral working group was established, comprising staff from government agencies (e.g. the Ministry of Finance and Development Planning (MOFDP), Ministry of Health and Social Welfare (MOHSW), Ministry of Local Government and Chieftainship (MOLGC), National AIDS Commission (NAC)), civil society, and development partners. The working group ledthe identificationof the key gaps in implementing the NSP. The project design was built on the detailed project proposal prepared by the Government. In addition, the Bank team enjoys an excellent working relationship with the MOFDP, MOHSW, MOLGC and NAC. The GFATM, UNAIDS, and other partners have regarded this project as a critical element for the implementation of the NSP and their programs. 4 14. The approach of this proposed project is unique and innovative and could hold lessons for the Bank's support to HIV andAIDSprograms in other countries. This project, together with the previous HCTA, is differentto almost all other Bank's HIV projects. Ittakes into account the increasing financing from other partners to HIV and AIDS programs and explicitly focuses on complementing others' support by removing the implementation bottlenecks and helping the funds to be used faster and more effectively. This approach is consistent with the international calls for better harmonization and is welcomed by the Bank's counterparts and partners. In addition, the project i s built on global and regional experiences. Recent global evidence on HIV and AIDS interventions was also incorporated in project design through a technical workshop organized during project preparation. C. Higherlevelobjectivesto whichthe projectcontributes 15. HIV not only has been directly killingthousands o fBasotho at their most productive ages but also is largely responsible for other poor health outcomes (e.g. high level of infant and maternal deaths, malnutrition, and tuberculosis). It also adversely affects economic development and poverty alleviation. By helping address one o f the largest development and health challenges (HIV and AIDS) facing the country, this project would directly contribute to saving lives and improving health outcomes. It will help put Lesotho back on track toward the MDGs, particularly Goal 7 (combating HIV/AIDS, tuberculosis and other diseases), Goal 4 (reducing child mortality), and Goal 5 (improving maternal health). Ultimately, the project would contribute to economic growth and poverty alleviation (MDG Goal 1). 16. The Government has declared HIV as a national emergency and established controlling HIV as a priority in its Poverty Reduction Strategy Paper and Growth Strategy Paper. The Bank's CAS (FY06-09) and the new CAS currently under development both emphasize responding to HIV as one o f the major pillars for the IDA'Ssupport for the country's efforts in economic growth and poverty alleviation. This project was explicitly included inthe CAS as part o f the IDA'Ssupport to the fight against HIV and AIDS in Lesotho. By directly supporting the implementation o f the National HIV and AIDS Strategic Plan and complementing other partners' HIV programs, the project will support key strategic Government priorities. 11. PROJECT DESCRIPTION A. Lendinginstrument 17. Specifically, it is a technical assistance grant with a medium-term focus (5 years) that will finance goods, works, consultants' services, training, and operating costs in support o f the implementation o f the National HIV and AIDS Strategic Plan in general and effective HIV and AIDS interventions inparticular. The project will buildon the existing institutional arrangements for the HCTA and continue to fill critical gaps in the country's implementation systems. Although the project will cover the entire country, it will have a focus on the local and community-level response to the HIV epidemic and on effective interventions that could lead to a reversal o f the epidemic. 5 B. Projectdevelopment objectiveand key indicators 18. The project aims at building capacity o f government agencies and civil society organizations at both the national and local level to address the identified key gaps in implementingthe National HIV and AIDS Strategic Plan in an effort to contain and reverse the epidemic. 19. The design o f the project components and the selection o f the project activities are based on their addressing the following key gaps, which were jointly identified during project preparation: (i)weak coordinating capacity for multi-sector response; (ii)limited research capacity to organize and use scientific evidence to guide implementation; (iii)fragmented national HIV M&E systems; (iv) weak implementation capacity to scale up those effective interventions that address the key drivers o f the epidemic; and (v) uncoordinated local response with low capacity to monitor the implementationo f HIV services and limited use o f monitoring information to improve program planningand service delivery. 20. As this project is a gap-filling technical assistance project, the success of the project will be measured by: (i) satisfaction with HIV coordination; (ii) extent to which the national client the response i s informed and guided by research and scientific evidence; and (iii) the extentto which the district level monitoring and evaluation system i s functional. C. Projectcomponents 21. The project design was derived from in-depth consultations with the Government and partners (including civil society organizations). The following principles were agreed to guide the designo f the project: P The project should support the implementation o f the National HIV/AIDS Strategic Plan (NSP) particularly those interventions proven to be effective, aiming at filling in critical capacity gaps inimplementing activities andprograms outlined inthe NSP. 9 The project should adopt a gap-filling approach, taking into account the government and other partners' ongoing programs and complementing existing efforts. 9 The project should build on the experience of the HCTA and support proven interventions. 9 With the problem of slow execution of both internal and external resources, mainly due to capacity gaps in the management and implementing systems, the IDA project should focus on providing key capacity support to strengthen the systems. P Given the limited project resources, it should avoid an ambitious design. The project should set priorities and avoid evenly distributing its resources across the proposed components. Given that the current project has mainly supported the capacity at the national level and the significant capacity gaps exist at the local level, support to the decentralized local response deserves particular attention. b Giventhe multi-sectoral nature of the project, project preparation should be inclusive to involve civil society organizations, includingthe Business Coalition, the Church Leaders Forum and the Traditional Healer's Council, and be conducted in a coordinated way by the relevant government agencies. 6 22. The project takes into consideration the changing environment since the HCTA became effective, shiftingfrom a focus on GFATM grants by the HCTA to a broader focus on the overall national response. However, it would be too ambitious for a US$5 million equivalent project to systematically address all the issues around the broad National HIV/AIDS Strategic Plan. It was agreed that this project should focus on the five key bottlenecks that have impeded implementation o f the NSP (See description o f the identified key bottlenecks in the PDO section). 23. The three project components are structured to address the key gaps mentioned earlier. Component 1 has a focus on strengthening capacity for the national level institutions to coordinate the multi-sectoral response and improving the research and M&E capacity to guide policy-making and implementation. Component 2 mainly supports the health sector to scale up the high-impact interventions targeting the epidemic drivers. Component 3 provides urgently needed support to the district level and local communities to strengthenthe local response which has suffered from a lack o f resources and attention. Component 1:Improving institutional capacity to implement the multi-sectoral response (US$l.8 million equivalent). 24. Lesotho has made progress in its national HIV response, but gaps remain in implementation due to lack o f capacity and coordination, and lack o f information (evidence) with which to improve the effectiveness o f the response (by implementing those interventions that will work most effectively at reducing the number of new infections). This component builds on the previous HCTA project and complements existing programs. HCTA project focused on establishing a grant management mechanism within the N A C and supporting the management capacity for implementing the GFATM grants within the Global Fund Coordinating Unit (GFCU). This project i s intended to support capacity building o f national level institutions, both public and private, in support o f Lesotho's HIV and AIDS multi-sectoral response. These national level institutions include: National AIDS Commission; selected line ministries (Labor and Employment, Education and Training, Youth, Gender, Sports and Recreation, and Works and Transport) to mainstream HIV and AIDS implementation; the Global Fund Coordination Unit (GFCU) in the Ministry of Finance and Development Planning; Umbrella Civil Society Organizations; Business and Labor Coalitions; and the Lesotho Council o f NGOs selected under Round 8 as the second GFATM principal recipient. Specifically, the component will: (i) strengthen the NAC's capacity to coordinate the national multi-sectoral response; (ii) strengthen the country's HIV and AIDS research capacity to generate timely and accurate evidence to guide a more effective national response; (iii) contribute towards the implementation o f a national HIV monitoring and evaluation system; and (iv) strengthen the N A C capacity to monitor resources for a better functioning o f the HIV national strategic plan. The component will also provide financial and technical support for mainstreaming HIV and AIDS activities in selected key ministries and relevant institutions inthe private and civil society sectors. 7 Component 2: Improving capacity to scale up the health sector response (US$1.9 million equivalent). 25. This component will mainly support Ministry of Health and Social Welfare units to build capacity for delivering essential and effective HIV services and to mitigate the impact o f the epidemic. Specifically, it will fill gaps inexisting programs to support: (i) integration o f effective HIV services with other health services such as TB and sexual and reproductive health; (ii) mitigate the impact o f the epidemic on Orphans and Vulnerable Children (OVC); and (iii) strengthen institutional capacity for evidence-based planning, monitoring and evaluation. This component will build on earlier support provided under the HCTA and complement support provided by other development partners such as the GFATM, European Commission and the Millennium Challenge Corporation (MCC). The specific capacity building support will improve implementers' ability to: (a) facilitate implementationof HIV prevention interventions, including BCC and male circumcision; (b) strengthen integration o f the TB and Sexual and Reproductive Health (SRH) services; (c) manage pediatric HIV cases, including PMTCT; (d) expand and manage the OVC program; (f) manage and analyze health information at the district level for program improvement purposes; (g) facilitate evidence-based planning through operational research into what works best in HIV service delivery and integration; (h) provide a more adequate legal framework for the health sector; and (i)manage procurement o f essential HIV commodities. Component 3: Capacity Support to the decentralized local response (US$I,3 million equivalent). 26. This component will build capacity through provision o f technical assistance to government and civil society implementers at district and community levels to plan, coordinate, implement and monitor a range o f definedessential HIV and TB services that need to be inevery community for an effective, expanded HIV response and to ensure Universal Access. This component will build upon and supplement the successful experience o f the earlier HCTA project which provided capacity building support to larger NGOs but nothing directly to the district level and below. Support inthis component will improve implementers' ability to provide activities that fall within the defined package o f essential services, known as "the Essential HIV andAIDS Services Package (ESP)", which provides a menuo f activities that may be provided at the sub-districtlcommunity level. It covers five areas - changes in sexual behavior, prevention of mother-to-child transmission, access to HIV services, OVCs, and support for HIV positive people. Specifically, this component will: (i)support Community Councils to coordinate the implementation and monitoring o f provision o f the ESP; (ii)develop and strengthen the operational and management capacities o f the District AIDS Committee and the proposed Community AIDS Committee to harmonize HIV and TB activities at the community level; and (iii)strengthen the skills and operational capacity ofthe community-based organizations to provide, monitor, evaluate and report on HIV and TB services at the community level. 27. Some activities under this component are currently supported by German Technical Cooperation (GTZ), for which funding ended in June 2009, and it is expected that retroactive financing inthe amount o f not more than US$lOO,OOO equivalent will be required for the period July to September 2009 approximately. 8 D. Lessons learned andreflected inthe project design 28. Lessons learned from the previous Bank operations and analytical work both in Lesotho and nearby countries, the recent Country Portfolio Performance Review (CPPR), CAS Completion Report, andpartners' programs include: Given the weak management capacity and technical capacity in Lesotho, project design and implementation needs to be backed up to ensure implementing capacity. It is important for the Government and the Bank to: (i) unrealistic and ambitious project avoid design; (ii)ensure practical institutional arrangements; and (iii)consider specific activities or components for capacity building and technical assistance. As more resources are becoming available to finance HIV programs, it is the Bank's comparative advantage to focus on system strengthening. The Bank's hands-on implementation support is much needed given that the GFATM as a grant-providing agency can only provide limitedimplementation support. Sustained government commitment and coordination among government agencies are keys to the success of the national response. M&E systems are vital to guide the national and district level responses, and strengtheningthe country systems should be given attention from the onset. The limited impact of the HIV program on prevalence is understandable given that multiple factors, not all under the control of the projects, can influence outcomes. The government and Bank should pay greater attention to investigate the determinants of prevalence, probablyjointly with other development partners. The Bank and other development partners acknowledge that the National HIV/AIDS Strategic Plan (NSP) has been a major step forward, but that it has yet to bear full fruit depending on the significant upgrade of implementation capacity. The use and strengthening of existing systems is preferred over creating separate fiduciary and other systems. Additional lessonsfrom the Implementation Completion Report (ICR) of the HCTA have been incorporated into the project design. Specific lessons include: (i)ensuring that implementation capacity remains after provision of technical assistance has ended by supporting capacity building of existing local staff (through external training or on-the-job training) as well as including specific skills transfers in the expected results for proposed technical assistance contracts. This will be addressed by explicitly including building local capacity and skills transfer in the technical assistance contracts and working with the Government to develop medium-and long-term plans to internalize the key positions; (ii) implementation showed HCTA that some procurement delays were caused by lack of clarity between user departments on the functions to be performed by various technical assistance consultants. Within this project, the coordination mechanism withinimplementing agencies (particularly the MOHSW) will be set up and responsibilities for each participating departmendunit will be clearly defined in the Operations Manual; and (iii)weak logistics management of drugs and supplies was also highlighted and will be supported under Component 2 of this project to improve the logistics managementof drugs and to avoid stock-outs. 9 E. Alternatives considered and reasons for rejection 30. No operation: As the HIV epidemic is devastating all aspects o f society, fightingthe HIV epidemic i s both a national priority and a major pillar o f the IDA'Sassistance to Lesotho as stressed in the CAS. This project will be the Bank's only stand-alone HIV project in Lesotho. It builds on the success of the previous Lesotho HIV and AIDS Capacity Building and Technical Assistance Project (Gr. Hl13-LSO) and will continue to play a critical role in strengthening the implementation systems for the National HIV and AIDS Strategic Plan and complementing other partners' HIV programs. Both the Government and the partners (particularly the major external financers o f the HIV programs, e.g. GFATM, PEPFAR, etc.) regard the Bank's HIV technical assistance project as a critical instrument for the success o f the national strategic plan as well as external financing. Inaction will not only jeopardize the Bank's reputation but also adversely affect the implementation o f the NSP and other partners' HIV and AIDS contributions to the achievement o fthe NSP. 31. A full-blown HIV Project: As GFATM and PEPFAR, as well as other partners, are investingsignificant funds into Lesotho's HIV and AIDS programs, consensus has emerged from both the Government and development partners that the best way for the Bank to support the HIV and AIDS programs inthe country is to continue to focus on implementation systems. This will help remove capacity bottlenecks and speed upthe pace of implementationof other partners' HIV programs. In addition, the limited IDA allocation to Lesotho prevents IDA from investing significant IDA resources in mainstream costly HIV interventions. The previous HCTA project, which focused on building capacity and filling critical gaps in the implementation systems, performed satisfactorily and was regarded as an excellent means for the Bank to use its comparative advantage particularly in system and fiduciary strengthening in an effort to complement (instead o f competing with) other partners' financing. The HCTA was much appreciated by the Government and partners(particularly GFATM) and has contributed to a very significant improvement inthe performance o f the GFATM grants. This project will build on the previous project and continue to focus on system strengthening and technical assistance for the purpose o f improved effectiveness. 32. HCTA repeater using the same design: The HCTA was designed mainly to support the implementation o f the GFATM Round 2 grants, the major resource to finance the national response at that time. The situation in Lesotho has changed significantly since the start o f the HCTA. First, the country ownership o f the national response was greatly strengthened by the approval o f the National HIV Strategic Plan, which was developed in consultation with development partners and civil society. The Government i s financing close to 50 percent o f the overall national HIV response. Implementingthe National HIV Strategic Plan i s now the focus o f the national response. Second, more partners are now supporting the Lesotho HIV and AIDS programs. All partners agreed to operate under the overall national strategic plan. Third, the implementation o f the GFTAM grants is well on track and capacity built by the HCTA to implement the GFATM grants i s well maintained by the Government, which allows this project to broaden its focus. Based on the reasons above, it i s appropriate for the project to shift from a narrow focus on GFATM grants to a broader focus on the overall national response. 10 33. Combining the project with the ongoing Health Sector Reform Program Phase II (Cr. 4118-LSO): This proposed HIV project is a multi-sectoral project with multiple ministries and agencies involved, includingthe MOFDP, MOHSW, MOLGC, and NAC as well as civil society organizations. The Health Sector Reform Program Phase I1(HSRP Phase 11) is part of a three phase Adaptable Programmatic Loan (APL) designed to support the overall health sector reform program with a focus on service delivery, health care financing, human resource management and medical waste management. The HSRP Phase I1has been implementedby the MOHSW. Giventhis distinction, the proposedproject will have a different implementation structure, results framework, and M&E system from the HRSP Phase 11, which makes it difficult to combine the two. In addition, the HSRP Phase I1 is scheduled to close in September 2009, which leaves no time for the implementation ofthis project. 111. IMPLEMENTATION A. Partnershiparrangements 34. As the HCTA was intended to support the implementation of the GFATM grant, its preparation and implementation was closely coordinated with the Portfolio Manager of the GFATM, members of the Country Coordinating Mechanism (CCM) and the Local Fund Agent (LFA) as well as civil society organizations. This proposed project continues to build on the collaborating spirit of engaging development partners and civil society organizations. With its expanded focus on the implementation of the whole national strategic plan (instead of the GFATM grants in the case of the HCTA), this project was prepared through extensive consultations with partners providing support to HIV and AIDS in Lesotho. The Bank task team conducted joint project preparation missions with the GFATM, the Millennium Challenge Corporation (MCC) and other development partners. UNAIDS, especially, has been actively participating in project preparation on behalf of the UN agencies. Civil society was engaged from the onset of the preparation and the LCN served as a key member inthe Technical Working Groups. 35. Joint analytical work and assessments with partners were organized to inform the design of the project. Inparticular, the HIV Modes of Transmission Study (MOTS), which was jointly conducted by the NAC, MOHSW, UNAIDS, and the Bank helped identify the major drivers of the epidemic, and the HIV response gaps. The national HIV M&E system assessment and design, also ajoint effort by a number of partners (including the World Bank Global HIV/AIDS Program), provided background evidence for the project design. 36. Under the health sector Sector-wide Approach (SWAP), the Government and development partners supporting the health sector have establishedseveral mechanisms to ensure collaboration and country ownership, including one joint plan and one MTEF, common M&E and fiduciary systems, and a joint annual review. As part of the common fiduciary system, a Project Accounting Unit (PAU) and Procurement Unit (PU) were established to handle financial management and procurement respectively. Most of the partners including GFATM, IDA, Irish Aid, DFID, African Development Bank, UN agencies are jointly supporting the PAU and PU and also using them to disbursefunds. The HCTA also supported and usedthe PAU and PU for financial management and procurement. This project, based on procurement and financial 11 management assessments, will continue to take advantage o f the capacity o f this common fiduciary system and disburse its funds through P A U and PUto different project implementers. B. Institutionalandimplementationarrangements 37. This multi-sectoral project i s intended to support the implementation o f the National HIV Strategic Plan. Its implementation arrangements therefore reflect the implementation requirements o f the national strategic plan, involving several key players which include the MOFDP, MOHSW, MOLGC, NAC, and L C N (representing the CSOs). Component 1 o f the project will be mainly implemented by NAC, the GFCU, and LCN. The MOHSW will be responsible for implementing Component 2. The implementation o f Component 3 will be led by the MOLGC and LCN. To ensure coordination among the implementing agencies, a Steering Committee, comprising senior officials o f the implementing agencies, is being established to provide overall policy and implementation guidance. The multi-sectoral Technical Working Group (TWG), which comprises technical staff o f the implementing agencies has played an active and effective role in project preparation. During project implementation, Technical Working Groups for each component will be established, which will be responsible for addressing technical and implementation issues within the project as well as preparing the annual work plan and budget for each component. 38. Inaddition, a Steering Committee will be established and maintained-throughout Project implementation, with mandate and composition satisfactory to IDA, to be chaired by NAC, and comprising director level or above officials o f the Implementing Agencies. The Steering Committee shall be responsible for providing overall policy and implementation guidance and approving o f annual work plans and budgets. 39. The project will maximize the use o f existing systems and capacity created by the HCTA. First, all the implementing agencies, except the MOLGC, participated in the HCTA and are therefore familiar with the implementation o f an IDA project. Second, the project will support and use the existing HCTA fiduciary arrangements-the PAU and P U of the MOHSW will continue to take on financial management and procurement responsibilities respectively. The TWG will develop its proposedannual work planand budget for the Project for each subsequent year o f implementation, and provide it to the Bank for review. The annual work plan should include such details as reasonably agreed with the Bank and implementing agencies and be implemented taking into account comments from the Bank. The annual work planand budget for the first year o f Project implementation should be provided no later than 1 month after the project Effectiveness Date. 40. The following adjustments are also made to reflect the changes indesigno fthis project in comparison to the HCTA. First, the leading implementingagency o f the HCTA was the principle recipient o f the GFATM-the GFATM Coordination Office of the MOFDP. For this proposed project, with its focus on the national strategic plan, the N A C will be responsible for coordinating the implementation o f the project. Second, the HCTA focused on capacity building at the national level, while this project extends its support to the local level in response to the urgent need for local response support identified during project preparation. Therefore, the 12 MOLGC will take the lead in implementing the support to the local response. Implementation responsibilities within each agency have been clearly defined. C. Monitoring and evaluation of outcomeshesults 41. Lesotho i s committed to ensuring that all sectors o f the government, civil society, and development partners use the country's one national HIV monitoring and evaluation system, which has been operational since 2005. Annex 3 contains a summary o f the status o f the M&E system, the key system weaknesses, the technical support contributions o f other partners, and a description o f how this project will support the capacity building o f the national and district level HIV M&E system, as one o fthe key ways inwhich the implementationsystem can be improved. 42. Inmonitoringthe project results andoutcomes, two main factors were taken into account: a) Nature of indicators: Intypical stand-alone Bank-funded HIV projects, results are measured through improvements in the coverage o f HIV service delivery, and changes in behavior as a result o f these services. However, as this project i s focused on capacity building, the measurement o f project success will focus on: (i) immediate outputs o f capacity development the efforts; (ii)the functioning o fthe HIV response management and M&E systems themselves (not HIV service coverage and behavior change); and by (iii) overall ability to meet HIV response the targets. Indicators from the Africa HIV Results Scorecard that focus on these aspects have been included inthe results framework. b) Level of indicators: Given the nature o f the project - to support critical HIV response capacity gaps across a range o f sectors involved in HIV response management and the stated intent o f buildingthe capacity o f systems and structures involved inHIV response management - the project will measure both immediate capacity development outputs and the extent to which HIV service delivery targets have been met (instead o f focusing on the extent o f HIV service delivery for a few HIV services). 43. The indicators in the project results framework will be collected either through the national M&E system, inparticular LOMSHA, or through the two new sources of data collection included in Component 1. Given the weaknesses in the M&E system at national and district levels in Lesotho, the project design includes not only measures to strengthen the national M&E system, but also specific funding to ensure that the project results can be monitored. Two specific evaluation tools have been budgeted for inthe project design: Client satisfaction survey: This survey will assess the extent to which the clients o f HIV coordinators in Lesotho (HIV coordinators being the NAC, MOHSW, DHMTs and district councils) are satisfied with the levels and types o f HIV coordination services provided by these institutions. Qualitative research to assess improvements in capacity as a result of the project: Because the project fills gaps in overall capacity o f the HIV response in Lesotho, assessingthe changes brought about through the project cannot only be assessed interms o f increases in HIV service delivery. Improvements in managerial style, capacity to coordinate, capacity to interpret data, etc. should also be assessed qualitatively from the 13 user's perspective. The project has included funding for two rounds o f qualitative research - before the project's mid-point and before the project's completion - to assess the significant changes that have taken place as a result o f the activities funded by the project. D. Sustainability 44. The project will help build institutional and implementation capacity required for implementing the national strategic plan. In particular, the project will help build capacity for research, M&E, planning, public expenditure and financial management, procurement, private sector engagement, etc. The skills and procedures built by the project are expected to benefit the public sector particularly. The project also focuses on engaging civil society and builds capacity for NGOs, both national and local, to contribute to the national response to the HIV epidemic. This will help sustain collaboration between the public andprivate sector. 45. Institutionalizing the systems created or supported by the project remains a concern. The HCTA produced mixed results in this area. While the positions for head o f N A C and the directorktaff o f the HIV Directorate o f the MOHSW have been internalized and are fully financed by the regular budget o f the Government, the MOHSW procurement manager and finance manager continued to be financed through external funding. This is mainly due to restrictions arising from civil service regulations, the less competitive salary scales for civil servants as well as the brain drain to richer countries. Progress has been made recently by moving the finance manager from an international technical assistant to a local technical assistant, while both the procurement manager and the finance manager are locally hired. The MOHSW has formulated a,medium term plan on building local capacity. This project will continue to work with the Government to ensure the project support i s sustainable. 46. The US$5 million equivalent grant is a small amount relative to the Government's budget for HIV and other major partners' financing. The project aims to help create long-lasting capacity and fill critical implementation gaps, but the financial requirement after the project i s completed will be very modest. It is expected that the Government will continue to finance proven project activities as needed. E. Critical risks and possible controversial aspects Multiple implementingagencies are involied which may cause coordination problemsand delays Committee, a Technical Working Group and within agency coordinating bodies. P NAC will be designatedto be accountable for overall coordination inproject 14 Humanresourceconstraintsdue to Moderate 9 The projectis not designedto implement HIV/AIDS and braindrainto South major HIV interventionprograms; it is rather to Africa and other developedcountries fillcritical gapsinthe implementingsystem. may weaken the overall HIV 9 The projectwill help buildplanning, implementingcapacity research, andM&E capacity to help Lesothocope with humanresourceconstraints. The new BoardofNAC is inplaceand Low 9 The Bank hasbeenassuredby the the government is makingarrangements Governmentthat the new leadershipofthe NAC for recruitmentofthe new Chief will be in placebeforethe projectstarts Executive. Transitioninthe NAC implementation. leadership may affect the 9 The Government will maintain a implementationofthe project functional management team and clear management structure inNAC throughout the moiect. Key people, particularlythose Moderate 9 The Government hasmadepromising responsiblefor fiduciary aspects, may progressto train local consultantsto replace leavethe post once their contracts end internationalconsultants. Almost all staff inthe PAUand PUare now locally hired. 9 Inthe mediumterm, the Bank (through HealthSector ReformPhase3 project)willjoin other partnersofthe existingSWAPto finance the contracts ofthe key persons. 9 Inthe longterm, the Governmenthas agreedto develop a planto eventually internalize the fiduciary functionsintothe Government regularsystem. The MOLGC is unfamiliarwith the Low 9 The projectis to scale up an existing IDA project,which may cause delays in programat the local level that has been implementation implementedby the MOLGCand supported by other partners (i.e. GTZ). 9 The fiduciary functions will be handled by the MOHSW. 9 MOLGC staffwere actively involvedin projectpreparation,whichhas helpedto familiarizethem with Bank operations. Althoughthere havebeenno corruption Low 9 The Bankteam will reviewthe project cases found inthe Bank HIV and health implementationarrangementsduringsupervision projects, there was an alleged missions. This will includereviews of project corruptioncase associatedwith an fiduciary(FM, Disbursement, andProcurement) AfricanDevelopmentBank funded arrangements. The projectwill submit quarterly healthproject. This case was identified IFRsto monitorprogress and it will be audited and stoppedby the MOFDP's Public annuallyby the Auditor General. DebtManagementDivisionandthe 9 Bank supervision missionswill include personinvolvedis beinginvestigated consultations with the MOFDP's PublicDebt for possibleprosecution. ManagementDivision. 9 Large undefinedreimbursablecategories will be eliminatedin projectcontracts. The decentralizedlocalresponse Moderate 9 The localresponsecomponenthasa component may becomplicatedby limitedfocus, which is basedon an existing issues aroundthe overall programwhich is agreedand supportedby 15 I decentralizationprocess andturf battles different stakeholders. NAC has nominatedthe district levelresponse as one ofthe best practices inthe country. 9 LOMSHA, together with the ESP, provides a common framework and basisfor stakeholders at the districtlevelto work on a set of district levelHIV response objectives. 9 A requirement will be built intothe projectto ensurethat HIV responsetargets are developed at the district level (Le. targets for all the ESP indicators),and ensure that the ESPwill bethe focus of coordination,monitoringand implementationefforts at the district level. Significant change in policiesand Low 9 The projecthas a practicaldesign directionmay occur inthe transition focusingon strengtheningthe implementation from the current NationalHIV and systems, which is expectednot to be affected AIDS Strategic Plan(2006 -2011) to significantlyby policy changes the nextplan, which may require > The projectMid-term Review is changes inprojectdesign and scheduled in2011, which will providean implementation opportunityfor the projectto make adjustments as needed. Ratingis basedon the general countryfinancial managementissues andthe issuespeculiarto the project. Risk mitigatingactions are identifiedon pages 61-62. Procurementrisk Moderate Riskmitigatingactions are identified inthe procurementrisk mitigationtable on pages 72-73. OverallRiskRating Low 47. Governance and Accountability Aspects. This project includes specific activities that will strengthen the existing governance (inclusiveness, transparency and empowerment) structures. For instance, the project will strengthen the interaction between local government authorities, community-based organizations and other stakeholders in order to improve the HIVIAIDS response, as outlined by the MOLGC's Gateway approach, by supporting both the community-based organizations and the local government authorities to more effectively coordinate their activities. Furthermore, the project addresses a key governance and accountability constraint - weak capacity at all levels o fthe national HIV response and provides - support to address these constraints at each level to ensure efficient use o f public resources. The client satisfaction survey that will be undertaken will also reinforce the efficient use of resources and transparency of activities by engaging with stakeholders to improve social accountability in the national response. The project will have adequate financial management systems in place to ensure that funds are used for the purposes intended and to prevent material errors and fraud. IDA will review the adequacy o f project financial management during implementation review missions and the Government will ensure internal oversight and external audits of financial management through the implementation o f the project. The project will be audited annually by the Auditor General. 16 F. Loadcredit conditionsand covenants 48. Conditions for Effectiveness: >>> The Recipient has established the Project Steering Committee. The Recipient has adopted the Project Operations Manual (POM). The Recipient has updated the Chart of Accounts, ina manner satisfactory to the Association. > The Recipient has prepared and finalized terms o f reference, acceptable to the Association, for the recruitment o fthe auditors. 49. Project Covenants: > Ensurethat all the implementingagencies (notably NAC, PAUandPUwithin the MOHSW) shall be maintained with adequate resources, terms o f reference and staff, satisfactory to the Association. > MOHSW shall, not later thantwelve (12) months after the Effective Date, develop and submit to the Association, for its reviewand comments, a staff development plan designed to enhance the capacity and effectiveness o f its staff interms o fthe realization o fthe objectives o fthe Project. > MOHSW shall proceed thereafter to implement the plan, taking into account any comments provided thereon by the Association, and inaccordance with the guidelines andprocedures, and indicative time frames, provided inthe plan. > Ensurethat the N A C is maintained, throughout Project implementation, with a functional management team and a clearly definedmanagement structure, satisfactory to the Association. > Furnishto the Association, for review and comments, as soon as available, but in any case not later than March 31 of each year, its proposed annual work plan and budget for the Project for each subsequent year o f Project implementation, o f such scope and detail as the Association shall have reasonably requested, except for the annual work plan and budget for the Project for the first year o f Project implementation, which shall be furnished no later than one (1) month after the Effective Date, IV. APPRAISAL SUMMARY A. Economicand financial analyses 50. Lesotho has the third highest HIV prevalence in the world, after Swaziland and Botswana. The impact o f HIV/AIDS on poverty and economic growth is considerable. The epidemic i s estimated to have lowered growth by about 7 percent, and contributed significantly to the poverty situation inLesotho where 37 percent o f households live below the poverty line. 5 1. Evenwith the increasingfunding to the country's HIV programs, Lesotho is at the lower- end o f spending in the fight against HIV/AIDS compared to other countries in southern Africa. Lesotho currently spends 2.5 percent o f its GDP on HIV and AIDS. There are no indications that Lesotho i s overspending given the magnitude of the epidemic. The unfunded resource requirements o f the National HIV Strategic Plan remain large. As Lesotho i s highly reliant on external funds to fight HIV and AIDS, the capacity of the country systems to effectively implement external funds is essential. In addition, it i s important for Lesotho to actively seek 17 efficiencies from HIV spending by: (i) increasing the allocation for prevention activities that can address the key drivers o f the epidemic; and (ii) strengthening research, planning, evaluation and implementation capacity in view o f achieving results. By focusing on critical gaps in the HIV programs and building much needed capacity, this project should contribute to improved effectiveness and efficiency o f HIV spending. 52. The anticipated financing should have no fiscal impact and will not increase operating expenditures. The engagement o f the Bank through the proposed project should facilitate more robust implementation o f domestic, existing GFATM and other potential resources for HIV. The proposedproject will ensure sustained financing (through improved utilization o f resources), and TA financed under the project will assist the national program to employ cost-effective standards. B. Technical 53. The HIV epidemic in Lesotho is characterized as a "generalized epidemic". The HIV prevalence is closely associated with risky sexual behaviors among general households. As in other Southern African countries, the principal mode o f HIV transmission in Lesotho i s heterosexual contact, principally through multiple concurrent partnerships. Although knowledge that "faithfulness" preventsHIV i s widespread for women and men, a highpercentage still report having multiple sex partners. Similarly, while knowledge o f condoms as an HIV prophylaxis is generally known to the Basotho, condom use i s still low even in high-risk sexual intercourse. Male circumcision, a proven cost-effective intervention, i s not associated with lower rates o f HIV infection inLesotho probably becausethe traditional "circumcision" is largely symbolic. 54. The National HIV Strategic Plan has included interventions to address the drivers o f the epidemic. One key bottleneck for scaling up the interventions i s the weak implementation capacity in the country. The Bank's experience in supporting HIV and health sector reforms has shown that institutional capacity i s crucial to achieve results. Effectively responding to HIV/AIDS inLesotho requires improved institutional capacity, not only financial resources. This project is designed to focus on institutional capacity for implementingthe national strategic plan. Such an approach i s in conformity with international standards o f complementary partnershipfor development and i s appropriate to the immediate needs o f the Government o f Lesotho. 55. Specifically, this project will contribute by assisting the government in strengtheningits operational and management capacity to focus on high-impact interventions. Strengthening implementation o f high-impact interventions such as: (a) a more cohesive prevention program on partner reduction; (b) medically indicated male circumcision; and (c) more intensive integration of HIV services with traditional public health interventions such as family planningand maternal and child health are included inthe project activities. C. Fiduciary 56. Financial management: A Public Expenditure Financial Accountability (PEFA) Framework Assessment was conducted in 2006/07. The assessment found that Lesotho scored well in 7 areas (scored above C). These areas include credibility and comprehensiveness o f the 18 budget, orderliness and participation in the budget process, the introduction o f a MTEF and predictability in the availability o f funds for commitment o f expenditures. Inthe remaining 17 areas assessed, Lesotho scored C in 6 areas: management o f expenditure arrears, oversight o f aggregate fiscal risk from other public sector entities, effectiveness o f internal control and internal audit, accounting, recording and reporting, external audit and donor practices. Actual capacity at the moment remains largely weak. The ability o f the Government to attract and retain qualified FM staff remains under pressure and Bank projects have therefore traditionally relied on outside advisors (financial, procurement, and technical) to assist projects' implementation. Since 2007, progress has been made in a number o f areas, including deepening o f the MTEF, drafting o f the Public Financial Management and Accountability Act, launching a project for the design and implementationo f an IntegratedFinancial Management Information System (IFMIS), preparation o f outstanding public accounts up to 2006/07, auditing o f public accounts, and adoption o f newprocurement regulations. 57. The fiduciary aspects o f the project will be implemented by the Ministry o f Health and Social Welfare (MOHSW) Projects Accounts Unit (PAU). The MOHSW has overall responsibility for all components of the project. Overall responsibility for project FM rests with the P A U Finance Manager, who i s experienced in financial management o f Bank-financed operations, including the Health Sector Reform Projects (phase Iand 11) and the closed HIV and AIDS Capacity Buildingand Technical Assistance (HCTA) Project. 58. The project's accounting records will be maintained using the cash basis of accounting. The project will comply with International Public Sector Accounting Standards (under the Cash Basis o f Accounting), as promulgated by the International Federation o f Accountants (IFAC). The accounting policies and procedures, including chart of accounts, will be documented inthe Financial Procedures Manual. 59. IDA funds will be disbursed based on quarterly interim unaudited financial reports (IFRs). These reports will include a statement o f sources and uses o f funds, an updated six- month forecast, Designated Account Activity statement and statements o f eligible expenditure under contracts that are subject to and not subject to prior review. The project financial statements will be audited by the Office o f the Auditor General in accordance with International Standards on Auditing promulgated by the International Federation o f Accountants (IFAC) and audit reports will be submitted to IDA within 6 months after the financial year-end, i.e., 30 September each year. 60. The overall conclusion o f the financial management assessment is that the project's financial management arrangements have an overall risk rating o f "Moderate". The FM arrangements satisfy IDA'Sminimum requirements under OP/BP 10.02 except for the issues mentioned inthe financial management action plan. 19 61. The table shows the FMactionsto be met andthe responsibleparties. Action Responsibility Completion date 1 Updated Chart of Accounts to be able to PAU Effectiveness identifyproject activities anddisbursements categories 2 UpdatedFinancial ProceduresManual PAU Effectiveness (withinthe POM) to be usedby PAU 3 Audit terms of referenceprepared PAU and IDA Effectiveness 62. Procurement: Management of the procurement of works, goods and equipment, and consulting services under the project will be the responsibility of the Procurement Unit (PU), which is under the Department of Planning and Statistics of the MOHSW. The PU has successfully implementedthe HSRP I1and the HCTA. Most of the staff in the PU are qualified and experienced and will be part of the implementation team of the new project. The procurement capacity within the PU is adequate. A qualified and experienced Procurement Manager is charged with carrying out procurement at the MOHSW and is supported by two professional staff who are university graduates and nine supporting staff. The PU has existing systems in place to carry out the procurement function. In addition to internal quality assurance systems and controls, there is a procurement manual that guides procurement implementation. The overall risk assessment rating for this project is Moderate. A table outlining the detailedrisk mitigationaction planfor procurement is provided inAnnex 8. 63. The project will be carried out in accordance with the "Guidelines: Procurement under IBRDLoans and IDA Credits" published by the Bank inMay 2004 and revised inOctober 2006 and the "Guidelines: Selection and Employment of Consultants by World Bank Borrowers," dated May 2004 and revised October 2006. A procurement plan for works, goods and consultants' service contracts has been prepared and was finalized during negotiations. It includesprior review thresholds andthe timing of each milestone inthe procurement process. D. Social 64. As of 2002/03, approximately 37 percent of households in Lesotho lived on less than $1 per day and about half of households lived below the national poverty line. Particularly vulnerable groups include women (who have long had an important role in the economy of Lesotho but who are still severely under-recognized from a legal and cultural perspective), the large swath of the adult population battling HIV/AIDS, children orphaned by HIV/AIDS, and people who are chronically food insecure. The divide between rural areas (where 76 percent of the population lives) andurbanareas inLesotho remains wide. 65. The project is expected to have a significant, positive social impact through: (i)building capacity both within the Government and civil society to better target and serve vulnerable groups; (ii)strengthening capacity within the Government to collaborate with civil society and among different ministries(MOHSW, NAC, MOLGC,and MOFDP); and (iii) building capacity withincivil society and the private sector to implementproposals andotherwise participate inthe scaling-up of the national responseto HIV/AIDS. 20 66. The project will specifically build capacity to better serve and target vulnerable groups in multiple ways. For example, technical assistance to the MOHSW's Department o f Social Welfare to implement interventions targeted towards orphans and vulnerable children, consistent with the Social Welfare Policy. The Department will also be supported to strengthen its capacity to collaborate with NGOs and monitor interventions for orphans and vulnerable children. Other technical assistance will also be provided to address key vulnerable groups such as men having sex with men (MSMs), commercial sex workers (CSWs) and other vulnerable groups identified by the Modes o f Transmission (MOT) study. The National Action Plan on Women, Girls and HIV and AIDS (NAP), housed with the Ministry of Gender, Youth, Sports and Recreation (MGSYR) was reviewed recently through ACTafrica support and a key recommendation called for increased collaboration between the N A P team and: (i) the NAC to ensure that the indicators used inthe NAP are appropriate and aligned to the NSP (the N A P i s a sub-set o f the NSP, under the section dealing with Vulnerable Population Groups); and (ii)the MOHSW on improved mainstreaming o f gender aspects within their IEC, prevention, treatment and care programs. 67. Finally, through the participation o f civil society, it will enhance these organizations' capacity to better serve vulnerable community populations. The project will support capacity building for civil society - including umbrella organizations - and communities to develop and implement proposals to contribute to the scaling up o f the national response. E. Environment 68. .This is a technical assistance project and there will be no major civil works or infrastructure development undertaken duringthe project. Minor works will involve construction o f two prefabricated offices on premises already owned by the Lesotho Council o f NGOs. Accordingly, there will be no land acquisition under this Project. 69. The activities to be supported by the project are expected to improve capacity and increase access to health and HIV related services. Increased access to health services would result in some increase in the amount o f medical waste generated by the various health care facilities in the country, such as the testing centers. If not properly managed, the increased medical waste generated would result in increased contamination risks. The project, therefore, triggers OPBP 4.01: Environmental Assessment, and has been classified as Category B- Partial Assessment. A National Health Care Waste Management Plan i s in place that will inform the collection transportation, treatment and disposal o f medical waste to be generated during the implementation o fthe project. 70. In terms of capacity for implementing the Health Care Waste Management Plan, the MOHSW has recently established a health care waste management unit for handling health care waste. This function was previously managed under the Pollution Control Unit within the Ministry. Currently there are two officials in the newly established health care waste management unit. The implementation o f the Health Care Waste Management Plan i s also being supported by the Bank's HSRPI1and MCC. 21 71. Lesotho has recently become a signatory to the Libreville Declaration on Health and Environment in Africa. (Libreville, 29 August 2008). The Declaration reaffirms a commitment by the countries to implement all conventions and declarations that bear on health and environment linkages. This initiative i s seen as a step towards widening the scope for environmental issues inthe health sector in Lesotho, F. Safeguardpolicies ISafeguardPoliciesTriggered I Yes I No 1 TBD I EnvironmentalAssessment (OP/BP4.01) X NaturalHabitats(OP/BP4.04) X Pest Management(OP 4.09) X Forests(OP/BP4.361 X PhysicalCulturalResources (OP/BP4.11) X IndigenousPeoples (OP/BP 4.10) X InvoluntaryResettlement(OP/BP 4.12) X Safetv of Dams(OP/BP 4.371 X Projectsin DisputedAreas (OP/BP 7.60) X Projectson InternationalWaterways(OP/BP 7.50) X Safety of Dams (OP/BP 4.37) X Projectson InternationalWaterways(OP/BP 7.50) X ProiectsinDisnutedAreas (OP/BP 7.601 X G. PolicyExceptionsand Readiness 72. The project does not require exceptions from Bank policies. The project meets the regional criteria for readiness for implementation. 22 Annex 1: Countryand Sector or ProgramBackground LESOTHO: HIV andAIDS TechnicalAssistance Project 73. HIV is an unprecedentedchallenge for Lesotho, a small country with a population of 1.8 million that is completely surrounded by South Africa. Lesotho has the third highest HIV adult prevalence rate in the world at 23.2 percent. There are an estimated 62 new infections and 50 deaths due to AIDS each day. 270,273 people live with HIV as of the end of 2007, of which 11,801 are children. Life expectancy at birth has dropped to 36.8 years. AIDS-related orphans reached 108,000 in2007. 74. The HIV epidemic impact is devastating on all aspects of society -- changing the demographic structure as large numbers of people die in their productive years, thus creating a high dependency ratio. Economically, the epidemic disrupts capital optimization by striking at a quarter of adult Basotho and diminishing labor inputs. Critical skill shortages are being felt in government services as well as inbusiness. The social fabric i s fraying due to the large burdenof orphans and vulnerable children (OVCs) and others living with HIV/AIDS. Households are being reduced to asset stripping, if not outright penury. The inter-generational spillovers are immense, as OVCs are often deprived of access to education, good nutrition and health care and will be ill-equippedto deal with challenges inthe future. 75. With 80 percent of HIV positive patients co-infected with Tuberculosis (TB), the HIV epidemic has dramatically increased the TB threat to Basotho's health. Lesotho has the fifth highest TB incidence in the world with 635 cases per 100,000 people. TB deaths have tripled since 1990 with it being the leading cause of death for those with HIV and AIDS. Multi-Drug Resistant (MDR) and Extensively Drug Resistant (XDR) TB are on the rise, threatening the Southern Africa Region as a whole. This "two disease, one patient'' issue needs to be addressed inacarefully coordinated way. 76. The country regards HIV as the one o f its most important development issues, declaring it as a national emergency in2000. Since then, several major policies have been adopted by the Government, including the National HIV and AIDS Policy, National Orphan and Vulnerable Children Policy, HIV Testing and Counseling Policy, and Blood Transfusion Policy. The Labour Code Act was amended to prohibit discrimination against people living with HIV, and a Legal Capacity of Married Person's Act was passed to empower women to fight HIV and AIDS. The National AIDS Commission (NAC) was established in 2005, to replace the Lesotho AIDS Program Coordination Authority (LAPCA), to strengthen the coordination of the national response. A National HIV and AIDS Strategic Plan (2006-2011) and a corresponding HIV and AIDS Monitoring and Evaluation Framework (2006-2011) were approved inDecember2006. In particular, the National Strategic Plan (2006-2011) identified the main drivers of the epidemic - multiple and concurrent sexual partnerships (MCPs) and cultural factors including gender inequality and women's disempowennent - and is focused on achieving four main strategic objectives: (a) strengthening management and coordination mechanisms; (b) preventing transmission of HIV; (c) treatment and care; and (d) mitigating the impact of the epidemic inthe population. 23 77. The strong political commitment and increasing social mobilization plus increasing internal and external funding have contributed to improvement in several key HIV and AIDS related interventions in recent years. The coverage of Prevention of Mother to Child Transmission (PMTCT) increased tenfold from 5 percent in 2005 to 56 percent in 2008. The rolling out of Antiretroviral Therapy (ART) made significant progress, with 21,7 10 patients receiving treatment in2007. The "Know Your Status" (KYS) campaign helpeda total of 229,092 people to be tested for their HIV status by 2007, representing 12 percent of the population and about three times the number tested in 2005. Lesotho has maintained a TB case detection rate above 80% for the past 3 years, and currently has a treatment success rate of 67%. 78. Despite this progress, the national response falls significantly behind in terms of the optimal coverage o f key interventions required to address the epidemic effectively. The implementation of the National Strategic Plan (2006-2011) has been slow. The major challenge to expediting and expanding the response to the epidemic remains as weak implementing systems at both the national and local levels, which urgently require support on capacity building, organizational strengthening, and the creation of an enabling environment at all levels. 79. Lesotho enjoys increasing support from development partners. Global Fund to Fight AIDS, Malaria and Tuberculosis (GFATM), IrishAid, US Government (PEPFAR), DFID, GTZ, European Union, UN Family (ILO, UNAIDS, UNDP, UNFPA, UNICEF, WHO, and the World Food Programme), and the Bank are committed to the implementation of the "three ones principles" and are providing funding to support the national response. GFATM is by far the largest external financer inthe HIV area, with a cumulative amount of US$ll4 million for HIV and TB programs (of which, more than US$102 million alone is earmarked for HIV). The recently approved Round 8 proposals, namely HIV/AIDS (US$60.5 million) and TB (US$25 million) for five years, have now almost doubled these cumulative figures. 80. Two issues were identifiedinthe UNGASS2007 report and the National AIDS Spending Account (NASA): (i)despite the increasing funding from both the Government and partners, significant financial gaps remain. For the fiscal year 2006/07 alone, the funds shortage was estimated to be Maloti 477 million (US$48 million); and (ii) based on the data from NASA for the three-year period 2005/06 to 2007/08, more than 76 percent of resources was budgeted for direct programs (prevention; treatment, care and support; and impact mitigation). No significant support was given to strengthen the implementing system, which largely explains that, while larger amounts of money are pumped into the system, the allocated resources for HIV programs were absorbed relatively slowly due to the limited capacity. The National Strategic Plan (2006- 2011) calls for greater attention to system strengthening and capacity building. 81. Lesotho with the third-highest HIV prevalencerate inthe world-23.2% of the total adult population in2005, and more than 40% of the population aged 30-40 years - leaves HIV as the most important growth and poverty reduction threat. The principle mode of transmission is heterosexual contact, mostly through multiple concurrent partnerships, often intergenerational ones. The latter factor leads to a higher rate of infection among younger females than males. After age 40, the rate of infectionamong menis higher. High riskgroups include: 24 0 miners (who are 9 percent more likely than non-miners to contract HIV controlling for all other risk factors) and sexual partners o f miners (who are 6 percent more likely thanother women to contract HIV,controlling or other riskfactors); 0 adults with low levels o f education, especially females 0 currently marriedmales and formerly married females; and 0 people living inmiddle income households, and those living inurban areas, especially females4 82. The rise o f HIV/AIDS means that the probability o f death among Basotho adults has increased tremendously. Adult mortality rose from less than 2 percent per five-year period inthe 1970s to more than 8 percent for males and 12 percent for females in the first four years o f the current decade. As a consequence o f the steep increase in mortality, the number o f orphans i s risingrapidly, and faster than inother African countries. In2004, 30 percent o f all children had lost one or both parents. The long-term effects o f orphan-hood are not well known. Fears o f "child-headed households" had not materialized by 2004, as both the Demographic Health Survey (DHS) and the Home-Based Survey (HBS) survey found very few o f these, but analysis shows that orphans are less likely to progress normally through the school system and less likely to enroll in secondary school (where the fees are high). Double orphans, maternal orphans, and orphans who are not living with relatives are the most disadvantaged in terms o f educational outcomes, suggesting that efforts should be made to place orphans with family members. 83. Lesotho is also more than 15 years behind the leading countries in Africa (e.g., Uganda) inpreventing and coping with the HIV/AIDS epidemic and thus faces the most severe crisis on the continent. Over the past three years, however, Lesotho has taken a number o f important steps to reverse this situation, including the formation in 2005 o f the National AIDS Commission (NAC), the body coordinating the national response, and the national strategic plan, which among other things identifies strategic areas o f focus and assigns responsibilities among the myriad donors, NGOs, and government agencies and bodies active in combating the epidemic. The NSP covers all key areas-prevention, treatment, and impact mitigation, including support for orphans-and is a country-wide, cross-sectoral strategy. While the plan i s recognized as a major step forward, its effectiveness against the epidemic has been limitedby several factors: 0 lack o f clarity on roles and responsibilities between the districts and the national government, especially as the decentralization agenda moves forward; 0 long-standing human resource gaps in the health sector (for example, despite efforts at training, Lesotho's nursingstaff declines every year to external migration); capacity constraints in ministries, reflected in the inability to spend allocated funds and carry out programs (for example, an estimated 7 million condoms procured in 2004 for distribution by the Ministry o f Healthwere in storage for almost a year), 0 constraints o f the N A C in developing a comprehensive information base about the epidemic and to monitor the response to efforts to combat the disease; This analysis is basedon 2004 DHS data, which includeda sero-survey.It is possible, for examplethat married women are now at as high a risk as unmarriedwomen, depending on how behaviorhas evolved. This underscores the need for more fkequent data collection. 25 0 few attempts within the government or its development partners to evaluate the results of interventions; and 0 differing procedures and practices among multiple donors, which makes coordination andmonitoringan enormous challenge. 84. Overarching all of these institutional constraints is the inability of the government to develop a response tailored to high-risk groups-young women and married women-and to address multipleconcurrent partnerships, which i s one of the highest rates inthe world according to recent survey data. One infive meninLesotho reported having two or more sexual partners in the last four weeks. Such MCPs without condom use are particularly dangerous because the risk of transmission of HIV i s highest inthe first three weeks following infection. The active use of condoms could reduce this transmission, but marriedwomen are particularly reluctant to request the use of condoms even though their knowledge of the risk of sexually transmitted diseases is quite high. This is an important source ofvulnerability that needs to be addressed ifthe epidemic i s to be halted. 85. Provision of prevention material through the school system has been delayed inpart due to cultural sensitivity to implement a curriculum that is explicit about sexual transmission and recommends the use of condoms. At this point, the sources of information for youth are after- school and summer programs run by NGOs. These programs seem to be working, though, as anecdotal evidence shows a higher degree of awareness, at least among teenagers, than in the 2004 survey. But overall, most prevention efforts are not targetedto, for example, young women at high risk of contracting HIV/AIDS from older men. Rather, they are very general in their message. 86. Lesotho has focused major efforts on increasing access to treatment. Despite the still-high prevalence rates, the government data indicates that more than 40 percent of adults who need treatment get it, with the first-class World Health Organization (WHO) drug regimen. This is a major achievement, and better than any other country in Southern Africa. Many organizations are involved, in part to help overcome the limitations of the public network, including the staffing shortages. But only a small number of the estimated 18,000 childrenwith HIV/AIDS are getting treatment. 87. Three main factors seem to drive the rate o f new infections of HIV/AIDS in Lesotho: low coverage of male circumcision, socio-cultural norms (including tolerance of sexual violence), and multipleand concurrent sexual partnerships. 88. 26.4 percent of females in Lesotho are HIV positive compared to 18.8 percent o f males. Divorced women have the highest infection rate, 49.7%, followed by widows at 46.5%, married women at 28.8%, and single women at 16.6%. Urban women have a much higher rate. Prevalence also varies by region, from 29.7% in the worst affected district (Leribe) to 17.7% in the least affected (Mokhotlong).' Female factory workers (women constitute the majority of factory workers) have a very high infectionrate, at 43.2 percent6.The lowest prevalence rate for women i s found in the lowest wealth quintile, while for men it is found in the highest one. GoL/UNAIDS estimates, 2005 GoL/UNAIDS estimates, 2005 26 Having been in more than one marriage i s a significant risk factor for women in rural areas. Gender relations provide fertile ground for the gender infection imbalance: unprotected sex betweenteenage girls and adult men, mainly unprotectedbecause women are not able to insist on safe sex7; older men exercising greater power because they have more maturity and higher income. Older men involved in sexual relationships with younger women are more likely to be HIV infected. For both menand women, prevalence rates peak betweenages 30 and 40, peaking at a 40% rate at age 30 for women but peaking for men at age 39. Yet these differences in `low' and `high prevalence' mask the overall reality of a deeply-entrenched, continuously-growing HIV at hyperendemic levels. 89. Age shows an alarming gender pattern, as the impact on young women is dire. The percentage of HIV-positive women is greater comparedto infectedmenin almost all age groups except men 40 years and older. The prevalence of HIV is considerably higher among young women than among young men: the 15-24 age group has a 10 percent infection rate overall but further analysis shows that the rate for young women is 14 percent compared to 6% for the young men, a pattern consistent with other countries in SSA. The infection rate i s less than 10 percent between 18-19 years. By age 22, 30 percent of young women will have been infected, to reach almost 40 percent by age 24 years. 90. Among the factors driving HIV infection in Lesotho are culture and tradition. Twenty four percent of Basotho have multiplepartnersconcurrently. This practice has been reinforced by men's long history of labor migration to South Africa where they had greater exposure to possibility of infection, and by societal and social norms that make such practices acceptable. They carry this to their wives when they go back home. At the same time, wives who are left behindare known to also have extramarital relationships inthe absence of their husbands. Both men and women practice unsafe sex. Condom use does not seem to have made impressive inroads among the Basotho menand women. Culture and tradition have also led to an inability to confront the threat of HIV within a marriage or union (despite widespread multiple partnerships). Less than 60 percent of couples reported ever discussing HIV/AIDS with their spouse. Many of these couples live in urban areas. Surprisingly, men who have had more than one marriage are 16% less likely to discuss HIV/Aids with their partner (Corn0 and de Walque, 2007). 91. UNAIDS (2006) observes that the principal mode of transmission of HIV in Lesotho is heterosexual contact, specifically multiple concurrent partnerships. Internal and external migration, often necessary to gain access to wage and salary employment, also drives the HIV/Aids epidemic inLesotho. As noted above, the epidemic started with migrant male miners, and is also an issue for migrant female textile workers. Traditionally, migrants (external or internal) do not move with their families, and multiple partnerships result - both among those who stay and those who migrate. In a 2004 survey, two thirds o f men and one third of women reported having sex with someone other than their long term partner in the past year. These 'Dupas P., "Relative Risks andthe market for sex: Teenagers, Sugar Daddies and HIV inKenya," 2006. 27 patterns have created a dangerous "network effect" inthe transmission of HIV through multiple partners. * 92. The institutional response to the HIV/AIDS crisis in Lesotho today is multifaceted, coordinated by the National AIDS Commission. The initial response was fragmented, weak, and undertaken mostly by donors and external NGOs. Although the number of new infections is reported to have peaked in about 1996,.HIV/AIDS prevalence has been roughly constant since 2000 - the number of new infections stable or rising slightly, and the number of deaths steadily climbing. The government has been working with other organizations on prevention action, mainly of mother-to-child transmission (PMTCT); Behavior Change Communication (BCC); promotionof condom use, and facilitation of voluntary counseling and testing (VCT). Support to orphans and other vulnerable children (OVC) was intensifiedand laws encouragedpeople living with HIV/AIDS (PLWHA) to come out and mobilize themselves for treatment and other psychological and physical support. Access to treatment has expanded rapidly. While there is no doubt that the more aggressive and coordinated response which the public sector has mounted since 2005 has been a success, key stakeholders still report problems of fragmentation and inadequatefunding and outreachoutside of urbanareas. 93. Since 2005, the Government has significantly improved the coordinating mechanisms, adding more structures to enable itself and its partners to exchange information and work together. The first action NAC undertook was to prepare the National HIV and AIDS Strategic Plan, 2006-2011. The plan drew on the existing National HIV and AIDS Policy, on the joint review of the national HIV and AIDS responseup to that point, and stakeholder consultation, to provide a framework for the many uncoordinated responses. The joint review stated that the national response had been based mainly on goals of individual implementing agencies rather thanon anational strategic direction. 94. The plan identifies key strategic objectives in thematic areas with specific targets, some with concrete timelines. It also includes ways of measuring these targets, sources of funding for accomplishing these targets, and the organization responsible for reaching the target. The four strategic foci are: (a) Management and Coordination Mechanisms; (b) Prevention Challenges; (c) Treatment Care and Support; and (d) Impact Mitigation. 95. Funding for the Strategic Plan comes from a variety of sources. However, the greater part of funding for HIV/AIDS programs throughout the country is from a series of grants from the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM). Lesotho has been approved for grants from 3 Rounds of Global Funds grants, with a total of $39 million from Rounds 2 and 5. The grants have targeted prevention, care and support of the infected, VCT and scaling up of TB and STI interventions. The Round 3 grant focuses on OVC. In 2007, an additional grant was provided to focus on TB with partners from the civil society as implementers: CHAL, National University of Lesotho (NUL), Traditional Health Practitioners Council (THPC) and to assist the National TB Program. With the GFATM grants, increased * The ratio of women to men here is not entirely plausible, and may reflect the quite common reluctance of women to reveal these relationships, even in a confidential survey. 28 accountability structures have been put in place.' With the infusion of large amounts of funds from GFATM, efforts inthe different componentsof the HIV and AIDS program have improved appreciably. 96. InMarch2004, GoL launchedthe Know Your Status Campaignto encourage Basothoto come forward for HIV testing and counseling as an HIV prevention measure, but also as a way of enabling the infected to receive care and treatment. During the launch, the Right Honorable Prime Minister of Lesotho got tested for HIV inhis home state of Qacha's Nek, making a strong statement against the stigma attached to HIV testing in Lesotho. The campaign's aim was that "all people over 12 years old living inLesotho would know their HIV status by the end of 2007", a goal which proved too ambitious. The campaign has received technical support from the WHO and financial backing from the GFATM, the UnitedNations Development Program (UNDP) and the Global Business Coalition on HIV/AIDS. More of both are needed for the campaign and actual testing to meet its goals. 97. An average of 7,000 babies becomes infected with HIV every year." In addition, a sizable proportion of HIV-infected women (38.7 percent) intend to have a child. Thus, there is considerable potential for mother-to-child transmission. WHO reports that there has been "a steady upward trend in the proportion of pregnant women, 20-24 years old, testing HIV positive." The Government has aimed for universal free access to PMTCT services for all seropositive women. Informationon PMTCT services is supposedto be provided to all pregnant women and their partners. The NSP goes further and calls for establishing "universal access to PMTCT services in 100 percent of health care service delivery facilities in the country."" The Family Health Division of MoHSW initiated PMTCT in 2003. If a pregnant woman tests positive, she goes through follow up tests, is assisted with medication, receives counseling for her and her partner, and with the helpof WFP, receives nutritionalfood distributedat the testing centers. PEPFAR funds partners that provide technical assistance for PMTCT and assists with personnel training at some sites. PMTCT services are offered at all the hospitals in the country and at 180 health centers. But, many women go to local clinics for their antenatal check ups, which do not have the capacity for PMTCT services, starting with testing. 98. In 2007, the number of HIV-positive pregnant women on ART for PMTCT had risen from 5% in 2005 to 26.2%. In that year, the government announced a new plan whose goal is universal access to PMTCT services and reduce the risk of mother-to-child transmission by 80 percent by 2011,through apartnership betweenthe MoHSW, WHO, and UNICEF.l2 99. Nearly 18,000 children aged 0-14 are HIV positive,13 yet in 2006 the estimated ARV coverage rate among children was 14 per~ent.'~ the end of July 2007, 1,743 children were on By Global FundHIV and AIDS Bi-Annual ProgressReport, Round2 Phase 11, Jan.-Jun. 2007, Global FundTB Bi- Annual ProgressReportRound2 Phase 11, Jan-Jun. 2007, Bi-Annual ProgressReportfor Round5 Global Fund Support inLesotho, ReportingPeriodNov. 2006-Apr.2007. loGovernment of Lesotho, "Guidelines to preventMother to Child Transmission of HIV," June 2004, www.health.gov.ls/documents/Revised%20PMTCTO2~GUID~LlNES,pd~ "NationalAIDSCommission,NationalHIVandAIDSStrategicPlan(2006-2011). I*Lesotho: New Planto ReduceHIV InfectionsinChildren" (April 2007): www.irinnews.ordRe~1ort.aspx?Re~1ortId=71633 l3UNAIDS website: http://www.unaids.org/en/CountryResponses/Countries/lesotho.asp 29 ARVs". The Baylor School o f MedicineBristol-Myers Squibb Children's Clinical Center of Excellence (CCCOE) opened in 2005 and i s treating HIV-positive children in coordination with the MOHSW as a public-private partnership. To address Lesotho's shortage of pediatricians and qualified health care professionals, the CCCOE supplies volunteer pediatricians to work at the clinic treating HIV-positive children and to train Basotho health care providers. The NSP includes plans to reach all HIV-positive children who need treatment by 2011 by training many more health care workers and creating an accreditation process. The latter will enable trained nurses to administer pediatric medications, relieving some o fthe burden from the few doctors. 100. The NSP aims to place 90 percent o f AIDS patients under home care instead o f being cared for at hospitals. Home-based caregivers receive no compensation for their work. To increase capacity, caregivers will be trained inbasic home-based care standards and application, and efforts to involve men increased. Funding will come from GoL, Irish AID, UN, and GFATM, while the MOHSW is the governmental coordinating body. Some NGOs assistwith the program but there are many less formal groups organized by community members or self- organizedto provide support. 101, The recently-completed Lesotho Modes o f Transmission Study, implemented by the N A C with technical support from the World Bank Global HIV AIDS Program and UNAIDS, on the sources o f new HIV infections made specific recommendations as to how the HIV prevention response could be improved (see Box 1). l4http://hivinsite.ucsf.edu/global?page=crO9-lt- OOandpost=19andcid=LT#Access%20to%20Care%20and%20Treatment IsSustaining Treatment for AIDS in Lesotho, Presentation by Dr Ramatlapeng, MOHSW, Lesotho, 2007 30 Box I: Key Recommendationsfrom the Lesotho Modes of Transmissionstudy Policy level recommendations 1. Strengthenimplementationof existingpolicies by capacitatingproviders, and ensure quality services. 2. Integrate"partner reduction" andthe specific risk of concurrencyas key elementsofHIV preventionsuccess into&l future policies, strategiesandguidelinesthat address HIV prevention. 3. Reviewthe forthcomingBCCstrategyto ensurethat it: is grounded in evidenceregardingpriority populations (suchas steady couples) andpriorityrisk behaviors(suchas unprotectedextra-maritalsex); harnessesthe capacityof diversecommunity leaders and champions to drive local activities; usedas a powerfulresource mobilizationtool. 4. Fast track creatingthe policy context for a massive scale up of "full" malecircumcision. Program level recommendations 5 . Ensure that behavior and social change messagesused in campaigns: focus on partnerreduction,mutualfaithfulnessand safer sex highlightthat some commonsocialnormsputthe nationat risk andtherefore that some adaptationof culturalpracticesand societynormsmay be required emphasizethe specific risks involvedin age/wealthdisparaterelationships promote condomuse innon-regularandtransactionalsex and for secondary preventionin discordant couples are developedwith broadinvolvementof all constituencies,and endorsedby politicalandother leaders concentrateon the benefitsof behaviorchange (e.g.partnerreduction:less STIs, jealousy, domestic violence and stress, less expensive, contributeto buildingtrust andpartner faithfulness andfamily stability). 6. Position male circumcision as a priority Scale up a comprehensivemale circumcisionprogram(a once-off - biomedicalinterventionaccompaniedby appropriatecounselingand communicationactivities) to complement behaviorand social change programspromotingpartnerreduction, faithfulness and safer sexualpractices. 7. Link proven prevention strategies, and continue to test innovative approaches in packaging, branding and marketing prevention servicespackages.Buildonthe lessons learnt inthe KYS campaign - forinstance,a "healthy couple" service packagewhich includes family planning, condompromotion,STIcounseling, diagnosis andtreatment,HTC, pre-ARTfor HIV-infectedpartners, relationshipcounseling, educationon sexual risk and specific issuespertainingto migrant couples. Linkingup servicesmust betterharnessthe potentialof reproductivecounselingand family planningto preventunintendedpregnanciesamongHIV positive mothers, women at child-bearingage incontactwith services,as well as concordantHIV positive and discordantcouples. 31 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies LESOTHO: HIV andAIDS TechnicalAssistance Project World Bank LatestSupervision(ISR)Ratings Sector Issues Project Implementation Development I Maloti Drakensberg Environment Transfrontier Conservation & Water Improvements APL PO56418 Transport Integrated Transport SIL Satisfactory Moderately (P075566) Satisfactory Health, Nutrition and Health Sector Reform Satisfactory Satisfactory Health, Nutrition and Satisfactory Satisfactory Population Building Technical Assistance (P087843) Financial and Private Private Sector Satisfactory Satisfactory Sector Development Competitiveness (P088544) - \- - - - -- - I Health, Nutrition and GPOBA W3 Lesotho Satisfactory Satisfactory , Population Health (P104403) Education Second Education Sector Development Project Satisfactory (Phase 11) (PO81269 Agriculture and Rural Agriculture Policy and Development Capacity Building Project Moderately Unsatisfactory (PO01402) Lesotho Road Transport Rehabilitation and Moderately Satisfactory IIMaintenance Project (P001403) 2nd Education Sector Education Development Project Satisfactory (Phase 1) (P056416) Community Development Social Protection Support Project Unsatisfactory (P058050) Health, Nutrition and IIHealth Sector Reform Population Project (P053200) Moderately Satisfactory Water LS-Highland Water Project IB (POO1409) Moderately Satisfactory I Other Development I Agencies Clinton Foundation Anti-Retroviral Drug Management and Support DFID ALAFA program 32 EuropeanCommission 1Orphans andVulnerableChildren(OVCs) FA0 I AgriculturalEmergencyReliefandRehabilitationProgramme;OVC 33 Y 6 a3c 3 c) d8 6 d i 6Y 0 E 0 e .I Y eE,e 0 -Y 3 4 L 5 0 0 0 -o 8 E 0 a s P k 1 .-c I II I g m s0 CI (d s 1 8 cd > s $1 3 N r( 3 3 N - 2 0 N - Arrangementsfor resultsmonitoring 102. Inthis section, an assessment of the capacity of the country's M&E system is presented (including implementation capacity and gaps), as well as a summary of key weaknesses o f the system, how other partners are contributing to M&E, and how this project will support the national and district-level M&E systems and, at the same time, ensure that data are available to measure this project's M&E results. A: Assessment ofthe capacity of countryHIV M&Esystem to measurethe projectresults At the national level, the NAC HIV M&E staff at HlVlAlDS A civil society capacity assessment Organizational has an M&E unit that is directorate: plans in place to move (funded by the previous World Bank HIV structures for currently understaffeddue to 1 these staff to the Health Planning investment)showed significantshortages M&E System resignation. Each of the 10 Unit.At the district level, HMlS in M&E staff at civil society level. districts in Lesotho has a NAC officers Data officer. 2: Human NAC has undertaken some Capacitybuildingefforts have been A civil society capacity assessment capacity for capacity building of CSOs in initiated, but more work is needed at (funded by the previousWorld Bank HIV M&E systems M&E, but not to sufficient level the district level,where HIS officers investment) indicated low levelsof M&E or sufficient numbers. and AIDS officers are new and do capacity at the implementerlevels, and Whereas GAMET has not have long experience in working fragmented capacity at the coordination supportedthe NAC Data together. levels I Officers, plans are also in place to provide more extensive support to NAC Data Officers. A national M&E TWG and 10 The HIS does not have a Some civil society organizations partnerships district M&ETWGs have been coordinatingcommittee in place, but participate in national levelforums, and established. Both membership MOHSW officials attend the HIV inter-CSO discussionstake place through and meetingfrequency have M&E TWG meetings (national level). the national CSO forums, but not been as initially planned partnerships around M&E between and need improvement. Partnershipsat the district level are not strong, and needs to be built. specific CSOs at the district and implementer level are not in place. ~ ~~~ A national M&E plan is in HOHSW has a HIS strategy and A civil society capacity assessment place, and was reviewed in implementationplan in place, after a (funded by the previous World Bank HIV Oct 2008 subsequent to an comprehensive HMN assessment investment) has revealedthat not all I M&E systems assessment that was done. CSOs have M&E plans in place. Where was undertaken. plans are in place, the focus is on program monitoringdata collection and reporting, and less on evaluation or the use of information to improve programmingor planning. A national M&E road map has M&E is budgetedfor as part of the A civil society capacity assessment plans been developed, but not yet Ministry's annual budgeting efforts. (funded by the previous World Bank HIV validated and not yet costed. investment)showed that M&E is mostly Given all the investments in not included in COS budgets. Where M&E in the next few years, funds have been assigned, it has mostly 40 such ajoint work plan is seen for program monitoringand essential to guide the overall supervision. operationalizationof the M&E plan. 6: Communicationand advocacy Communication and advocacy No specific focus from CSOs Communication efforts have been limited and efforts have been limited and not and culture for not coordinated, leadingto coordinated, leading to a lack of M&E limited appreciationof the clarity about the purpose and value purpose and value of M&E. of M&.E 7: Surveys and National behavioral HIV surveillanceat ANC sites is Not applicable CSOs can access - surveillance surveillance,need more undertakenon an annual basis, and national surveys and surveillance, frequent measures and coordinatedby the epidemiology although there are challengesin data behavioralsurveillanceto be unit at MOHSW. interpretation undertaken 8: Routine LOMSHA (Lesotho Output LOMSHA (Lesotho Output Some CSOs have program monitoring program Monitoring System for HIV and MonitoringSystem for HIV and systems in place, some do not, and some monitoring AIDS) has been developed as AIDS) is being developed as a do not collect any data. a system to collect all routine system to collect all routine data data about HIV in the country: about HIV in the country: data about data about the ESP (Essential the ESP from community structures, Services Package)delivered in and data about HIV services the community, and data about delivered at health facilities. For HIV services delivered at data about services delivered at health facilities. For data about health facilities,forms and registers services delivered in the have been designed by MOHSW. community,forms have been Most HIV services have separate designed for community monthly reporting forms and councils, CSOs and registers,whereas PMTCT data are government ministriesto use. reported in. 9: HIV National HIV database does A database is in the process of Only large, urban-based CSOs have HIV databases not have internet connection at being developed. informationsystems in place. These are the district level. not linked and do not use the same or compatible software (data can therefore not be linkedat the national level) 10: Supervision National guidelines have MOHSW is in the process of Not in place -CSOs do not do and data recently been developed,but developing these guidelines. supervision auditing not yet implemented. 11:HIV Social sciences research is not MOHSW is responsible for Extentof program evaluations by CSOs evaluationand yet coordinated in an efficient coordinating and ensuring ethical not known, and not well communicated - research manner. protocols for all biomedical but the sense is that these are limited in research. scope and frequency 12: Data At the national level, the NAC Annual Health system progress Civil society organizations use data, to a analysis, produces an annual HIV reports are prepared and indicators limited extent. When data are used, it is information response progress report in are reported on, although the data primarilytheir own data and not in dissemination which it reports all the latest have not been interpreted yet or triangulation or working in partnership and use indicator data, as well as other used as basis for programmatic with other CSOs. information relating to the decision-making,This is, in part, status of the national HIV becauseof challenges with data 41 response. Two such reports quality, consistency of indicators, have been prepared to date. and timely reporting. LOMSHA includesdata flow maps to disseminate information at the national, district and community level. B: Currentweaknesses with the HIV M&Esystems at nationalanddistrict level,the MOHSW H I S andthe civilsociety M&Esystems 103. The mainpriorities to strengthenthe three types o f systems summarized above, are: National level: Day-to-day technical National level: Support to Improved program monitoring systems, more support for the national M&E unit to improve data quality. Improved skilled staff and funding for M&E. Improvedfocus support the new staff and provide data quality, dissemination and on managing to HIV results, and improved use of leadership in the operationalization of the use of data. Funding and evaluations to confirm the success of programs. HIV M&E system. Improved and more sustainable partnerships. Increased database linkages to make data more easily available in `real time.' District level:Technical support to build District level: Operationalization the M&E system and improve partnerships of LOMSHA and the HIS between stakeholders working in M&E in Strategic Plan, and associated the district. Operationalizationof LOMSHA. capacity building for Improved data quality to increase stakeholders involved in the credibility of reports produced. Improved system at this level. Improved use of data to improve HIV-related supportive supervision, decision making. Improved dissemination dissemination and use of data, to of data and production of regular maximize the extent to which information products. accurate data are used to inform improvements in service delivery C:Technicalsupport currentlyprovidedto strengthenthe M&Esystems at various levels by differentpartners 104. Technical support for either HIV M&E systems building i s currently provided by a number ofpartners: US Government:The US Government's PEPFAR program has provided M&E systems building support for its own partners, and are also in the process o f strengthening the districts through a new program entitled `Enhancing Strategic Information.' This program i s helping to develop indicators and operationalize the system with which to monitor the delivery o f ESP services, and 42 the capacity of institutions at the district level to manage monitoring data, develop reports and interpret data. The World Bank and GFATM havebothprovided support for consultancies, capacity building and surveys. In addition, the World Bank's Global AIDS Program (GHAP) has also supported the NAC with developing the national M&E plan, the manuals and procedures for the Lesotho Output Monitoring System for HIV and AIDS (LOMSHA), support for local institutions to run M&E capacity building courses, technical support and mentorship. GTZ: Their involvement has been primarily in the strengthening of the district-level response. In the course of their support for the strengthening of the ESP and local government, they have also been interested in supporting the M&E aspects of the ESP, and have collaborated in this regard. UNAIDS has played a strong role in the country, with having a full-time resident advisor in country who focuses exclusively on M&E. WHO has focused on supporting the M&E aspects of the health sector response for HIV by supporting MOHSW at the national and decentralized levels. Support has also beenprovided for surveillance and research. In addition, other partners have also supported the HIS strengthening: the HMNteam, IrishAid and DFID. D:How this projectwill supportthe strengtheningof the nationalanddistrict-levelHIV M&Esystems 105. As per World Bank Operational Policy 13.60 and confirmed in the Bank's commitment to the Agenda for Action adoptedat the recent 3rd High Level Forum on Aid Effectiveness, The World Bank will aim to use country M&E systemsto measure the results of its own development efforts. Therefore, it was important in the design of this project to (a) understandweaknesses with the current M&E systems and (b) build in strengthening measures to strengthen the M&E systems inthe areas where support has not been provided by other partners. In each component, the project will strengthen the national and district level multi-sectoral HIV M&E system in the following way: Component 1 will strengthen national HIV research coordination capacity, and the operationalization of the LOMSHA system - Lesotho's national system for output monitoring of all HIV services in communities and at health facilities - including all ESP services. Component 2 will strengthen the technical and managerial ability of district health management teams to process, analyze and interpret health sector routine data. This component will therefore benefit not only those working with HIV data, but also the entire health information system implementation and operationalization at the district level. Component 3 will strengthen the ability of district councils, community councils and implementers of HIV services in the community to use, manage and report on LOMSHA datausing the standard forms and protocols provided inthe LOMSHA manual. 43 106. Therefore, it i s clear that each o f the three components o f the project addresses the M&E system weaknesses by focusing on a specific sectorAevel's M&E capacity gaps. Addressing these gaps in the M&E system i s not, primarily, for measuring the project's results, but to contribute to overall weaknesses in the HIV response architecture and therefore improve the overall response to HIV towards a more effective, efficient response. E:How project resultswill bemonitored: 107. Given the weaknesses in the M&E system at national and district levels in Lesotho, the project design includes not only measures to strengthen the national M&E system, but also specific funding to ensure that the project results can be monitored. Two specific evaluationtools have been budgeted for inthe project design: a) Client satisfactionsurvey: This survey will assess the extent to which the clients o f HIV coordinators in Lesotho (HIV coordinators being the NAC, MOHSW, DHMTs and district councils) are satisfied with the levels and types o f HIV coordination services provided by these coordinators. b) Qualitative research to assess improvements in capacity as a result of the project: Because the project fills gaps in overall capacity o f the HIV response in Lesotho, assessing the changes brought about through the project cannot only be assessed interms o f increases in HIV service delivery. Improvements in managerial style, capacity to coordinate, capacity to interpret data, etc. should also be assessed qualitatively from the user's perspective. The project has included funding for 2 rounds o f qualitative research- before MTR and before the ICR - to assess the significant changes that have taken place as a result o f the activities funded by the project. 44 Annex 4: Detailed Project Description LESOTHO: HIV andAIDS Technical Assistance Project 108. The project takes into consideration the changing environment since the HCTA became effective, shifting from a narrow focus on GFATM grants by the HCTA to a broad focus on the overall national response. The project was designed under several key guiding principles: consistency with the Lesotho National HIV/AIDS Strategic Plan, filling the gaps that other donors are unable or unwilling to address, and not being overly ambitious given the limited resource envelope. The three components proposed and described below form the result of these principles. This project will provide support to the three components described below, which address the capacity constraints in implementing: i)Support to the Multi-sectoral Response; ii) support to health sector response; and iii)Support to the decentralizedLocal Response. Component 1: Improving institutional capacity to implement the multi-sectoral response (US$1.8million equivalent) 109. Lesotho has made progress in its HIV and AIDS response. However, gaps still exist in the implementation of the national response. This component builds on the previous HCTA project and complements existing programs notably the Global Fund. It is intended to support capacity building of national level institutions, both public and private in support of Lesotho's HIV and AIDS multi-sectoral response. These national level institutions include: NationalAIDS Commission; selected line ministries to mainstream HIV and AIDS implementation; the Global Fund Coordination Unit in the Ministry of Finance and Development Planning; HIV and AIDS Umbrella Civil Society Organizations; Business and Labor Coalitions; and Lesotho Council of NGOs selectedunder Round 8 as the secondprincipalrecipient. The main activities comprise: 110. Strengthen capacity of National AIDS Commission to coordinate the national multi- sectoral response. The Commission is composed of three organs namely, the Board, HIV and AIDS Forum and Secretariat. The Forum comprises 14 representatives of key constituencies to the national response and is meant to play an important role for the commission, serving as the coordination, advisory and advocacy arm of the Commission. For a variety of factors, mainly related to governance, the Forum has been unable to effectively play its role. The challenges facing the Forum and recommendations for their resolution are described in previous exercises that reviewed performance of the Forum. The project will support short-term technical assistance to review previous work and where necessary provide updates, build consensus on the recommendationsand develop an implementation framework andplanto strengthen performance ofthe Forum. 111. National HIV and AIDS Research Agenda. In addition, NAC has developed a National HIV and AIDS ResearchAgenda which articulates researchpriorities from various sectors inthe country. Currently, there are overlaps and gaps in the implementation of HIV and AIDS research. Technical assistanceis requiredto review status of HIV and AIDS research, clarify and define roles betweenNAC and sectors inthe coordination, implementation and dissemination of HIV and AIDS researchactivities and establish a national HIV and AIDS research coordinating forum. The project will support NAC to design institutional arrangements for the national coordinating forum, made up of representatives of key sectors including government ministries 45 and academia. The national research coordinating forum is not meant to approve research proposals nor expected to be a permanent body; it will be responsible for reviewing, updating and setting the national HIV and AIDS agenda and promoting HIV and AIDS ethical research conduct and practice. 112. Monitoring and Evaluation. Under HCTA 1,NAC initiated HIV and AIDS community monitoring and evaluation, which is to be continued. The project will support printing and distribution of registers for recording community level activities. Support will also be extended to print and disseminate the Lesotho Output Monitoring System for HIV and AIDS (LOMSHA) manual inthe final stages of preparation. 113. Strengthen national capacity to monitor and effectively deploy resources for the implementation of the HIV and AIDS National Strategic Plan. Lesotho has been able to mobilize substantial resources for HIV and AIDS, but has witnessed increased complexity with monitoring the flow and deployment of these funds. Drawing on the first National AIDS Spending Assessment (2007) and the on-going exercise to develop a National HIV and AIDS Financing Plan, the project will provide short-term technical assistance to assist in the preparation of a harmonized framework for coordinated financing of the National HIV and AIDS Strategic Plan and tracking of HIV and AIDS resources within a sector wide approach (SWAP). This support will include assisting government to institutionalize tracking of HIV and AIDS funding through periodic NationalAIDS Spending Assessments. 114. Support selected key sectors to mainstream HIV and AIDS implementation. The Government of Lesotho has placed emphasis on HIV and AIDS mainstreaming through training and provision of necessary resources to both private and public entities. While progress is being realized, it is not uniform; some of the critical sectors are lagging behind. The project will provide technical assistance to review status of mainstreaming, develop a realistic HIV and AIDS mainstreaming strategy and provide operational advice to the key ministries and their client organizations. Priority will be given to the following ministries: Labor and Employment; Education and Training; Youth, Gender, Sports and Recreation; and Works and Transport. It is envisaged that the support will enable the ministries to define their respective mainstreaming strategies including institutional arrangements, and to extend HIV and AIDS mainstreaming to agencies that fall under them. There is a provision for ministries to spend two percent of their budgets on HIV and AIDS related activities; in addition, the ministries receive funding from NAC. HIV and AIDS workplace activities are already supported by the Global Fund and the other partners and will therefore not receive project support. Ministry of Defense, Police and Correction Services as well as Labor and Business Coalition will be supportedby other partners, USGand Global FundRound 8. 1 15. Support capacity building of Civil Society Organizations and private sector umbrella organizations. Civil society and private sector organizations are major players in the Lesotho's HIV and AIDS national response. The umbrella organizations are responsible for coordinating and supporting their constituencies. They include Association of Lesotho Employers and Businesses (ALE); Christian Health Association of Lesotho (CHAL); Lesotho Network of AIDS Service Organizations (LENASO); Lesotho Network of People Living with HIV/AIDS (LENEPWHA); Lesotho Inter-Religious AIDS Consortium (LIRAC); Lesotho Council of NGOs 46 (LCN); and Lesotho Youth Federation (LYF). Building on the success of the HCTA, the project will provide long-term technical assistance to the umbrella organizations to assist them in building capacity for coordination of their networks, develop strategic plans consistent with their mandates and HIV and AIDS National Strategic Plans and strengthen their capacity in organizational development including ensuring establishment of appropriate governance structures. Under Global FundRound 8 grant, a five-year civil society and private sector capacity development strategy was approved. The consultant based in Lesotho Council of NGOs will liaise with the Grant Management Unit, umbrella bodies and Global Fund sub-recipients to facilitate implementation of the strategy. The consultant will be expected to have extensive experience in organizational development strategies, including leadership and governance, program design and delivery, strategic and operational planning, monitoring and evaluation, and memberand stakeholderrelations. 116. Support implementation of the Global Fund grants in Lesotho. Under Global FundRound 8, two Principal Recipients were selected, the Ministry of Finance and Development Planning and the Lesotho Council of NGOs. Because of the newly created dual-track financing arrangement, there is needto build capacity of LCNto undertake its new PR role for civil society .and private sector organizations and to establish a secretariat to support the operations of the CCM and the two principal recipients. The GFCU in the Ministry of Finance and Development Planning will not requiresupport; its capacity was built during the HCTA project. 117. Background to LCN. LCN is a membershiporganization createdin 1990 and registered as a non-governmental organization in 1992. LCN is led by a 9-member Board of Directors. The membership of LCN is very broad and includes national as well as small organizations. Currently there are 118 member organizations. The members of LCN are organized around Commissions to facilitate cooperation, collaboration and engagement of members in the programs of LCN. There are six Commissions, namely (a) Democracy and Human Rights; (b) Disaster Management and Humanitarian Relief; (c) Health and Social Welfare; (d) Agriculture, Environment and Natural Resources; (e) Women and Children; and (f) Economic Justice. LCN has managedvarious donor grants inthe past and is currently managing a US$l.2 million multi- year grant from the African Capacity-Building Foundation. In addition, LCN i s in receipt of a six-month project grant from UNDP of approximately US$120,000 to support stronger civic engagement for effective government. 118. LCN Grant Management Functions. To undertake its new role as PRYLCN will require capacity building in the areas of financial management, grant management and monitoring and evaluation. Drawing on the experience of the HCTA, where Ministry of Finance and Development Planning was supported to build its capacity as the PRYthe project will provide long-term TA to LCN over two years to assist LCN develop its grants management capacity as a principal recipient. In addition, the project will provide short term TA in M&E and fiduciary management to assist LCN to develop and roll out implementation of the necessary grant management operations for its PR role. Already LCN is in process of developing an M&E Framework. LCN has an additional need of its physical infrastructure to support the PR functions. The LCNbuildings are fully occupied. LCNwill be supported with two fully equipped office structures to replace two dilapidated portables that are currently adjacent to the main building. These structures will provide space for eight new positions as well as working space for 47 technical service providers. In addition, LCN will be provided with a vehicle (one) for support supervision. At the end of the consultancy, LCN is expected to have an established Grants Management Unit and be able to provide implementation support to sub-recipients, umbrella bodies and implementing partnersfor the remaining part of Global FundRound 8 grant. 119. CCM Secretariat. Owing to the dual-track financing arrangements, the project will support the establishmentof a secretariat for the CCM. The CCM at present receivesUS$43,000 annually from the Global Fund to support the running costs of the CCM. These will be converted to support the Secretariat. The additional funding (US$157,100) sought from the project over the five years is meant to complement support by the Global Fund by supporting CCM Training (US$17,460) and CCM support - vehicle (one unit), Coordinator and office up keep (US$139,640). Operational costs for the vehicle and office upkeep will be financed for a period of two years, after which government will be expectedto take over the costs. 120. This componentwill support consultancy andtraining activities, and goods, Component 2: Improving capacity to scale up the health sector response (US$1.9 million equivalent) 121. This component will provide support to build capacity in the health sector for: (a) delivery of more effective HIV services that are more integrated with other services; (b) mitigate the impact of the epidemic on Orphans and Vulnerable Children (OVC); and (c) strengthen institutional capacity for evidence-based planning, monitoring and evaluation. This component will build on support by previous Bank project and complement support provided by other development partners such as the Global Fund, European Commission and Millennium Challenge Corporation (MCC). 122. Technical assistance and training will be provided in the following substantial and technical areas under each sub-component: (a) Improved delivery of HIV/AIDS services P Facilitate implementation of HIV prevention interventions, including BCC and male circumcision 9 Strengthenintegration with TB andSRH services P Managementofpediatric andadult HIV cases, includingPMTCT (b) Mitigatethe impact ofthe epidemic on OVC P Managementof OVC program (c) Strengthen institutional capacity P Improvehealthinformationmanagementandanalysis 9 Facilitateevidence-basedplanning through operational research 9 UpdatePublic HealthOrder to provide more adequate legalframework 48 i+ Improvesupply chainmanagementof drugs andmedical supplies 123. Only 10% of HIV funding in Lesotho i s spent on HIV prevention and a meager 2% is spent on HIV behavior and social change communication programs. HIV incidence inLesotho is 1.6%, meaning that every year new infections continue to occur. There is a clear need for scaling up HIV prevention programs. With support from HCTA (Phase 1) MOHSW recently developed National BCC Strategy and conducted initial training of personnel from government ministries andNGOs. The newly approved Global FundRound 8 will finance development and distribution of IEC materials along with mass media and community outreach BCC activities. The Bank . project will support: (a) training ofNGOs on highimpact BCC interventions; and(b) sharingof BCC experiences and knowledge and the district level. Currently, only medical doctors are authorized to perform male circumcisions (MC) in Lesotho and the availability i s confined to district hospitals, filter clinics and limitedprivate surgeries. MOHSW plans to expand provision of facility-based MC. The project will support adaptation and dissemination of M C guidelines and protocols to supplement the Global Fund support which will finance M C training for nurses as well as procurement and distribution of M C kits. 124. In order to address the HIV and TB co-epidemic, the Government of Lesotho requested assistance from the GFATM for HIV and TB service integration. Inaddition to US$25 millionto support TB service delivery, HIV/AIDS grant (US$60.5 million) under GFATM Round 8 includes TB/HIV support which will finance dissemination of co-management guidelines, and training of health care workers (HCWs) on integrated TB/HIV services and infection control. The Bank project will support the training of TB/HIV coordinators and in-service training for TB/HIV Medical Officer and TB Program Officers. In order to improve access and uptake of SRH (including FP) services through SRH and HIV service integration MOHSW i s developing joint guidelines and training manuals and will provide training to HCWs on integrated managementof S R H and HIV and procure commodities for S R H (including contraceptives) with assistance from the Global Fund. The Bank project will support development of tools to assess implementation of integrated S R H and HIV services and provide cascade training on assessment tools. 125. There is a great need to scale up pediatric HIV/AIDS care and management in Lesotho, given the increasing number of infants and children infected by HIV. The coverage of PMTCT programs has increased but still remains at 31% (2007). With an estimated 50,000 pregnancies, 12,800 infants are born to HIV-infected women each year. Many service providers do not feel they have adequate knowledge or experience to initiate and manage children on ARV treatment. The project will finance TA to provide on-the-job training to HCWs on HIV/AIDS pediatric care, including PMTCT. ARV treatment and monitoring (including procurement of first and second line ARVs for children) will be financedunder GFATMRound 8. 126. MOHSW initiated expansion of HIV/AIDS mitigation programs targeting Orphans and Vulnerable Children (OVC). Out of the estimated 180,000 OVC (2004) in Lesotho, approximately 50% are considered needy orphans and children. While the country's commitment i s articulated in OVC Policy (2006) and OVC Strategic Plan (2006-2011), the actual response has been fragmented due to lack of capacity. The project will support: (a) training of Auxiliary Social Welfare Officers in identification, referral and follow-up o f OVC enrolled in SW 49 program; and (b) building capacity to manage and coordinate OVC program. The Bank support will complement the funding MOHSW is receiving from the European Commission (Euro 12 million or US$16 million equivalent) which will support 60,000 OVC over a 4 year period with cash allowance, livelihood and psychosocial support. The existing GFATM will support the additional needy OVCs through their impact mitigationactivities. 127. MOHSW departments collect multitudes of data required by various vertical programs. This has resultedinoverburdening of the M&E system, while critical gaps inthe system remain, significantly impeding the quality of data and the extent to which data are used. The Bank project will support strengthening health information system at the district and community level for effective reporting and feedback through: (a) training of data clerks at health facility level; (b) finalization of the District Health Management Team (DHMT) Data Analysis Manual; (c) mentoring o f Health Management Information System (HMIS) officers on data analysis, quality assurance and data use. The Bank will continue to collaborate with MCC which is providing substantial support for HMISto ensure alignment and complementarities of supported activities. 128. MOHSW recently drafted a National Health and Social Welfare Research Policy (NHSWRP) in which formation of National Research Council and National Health Research Ethical Committee has been proposed. The project will provide technical assistance for finalization of NHSWRP and establishment of appropriate governing bodies. This will help develop capacity to evaluate researchproposals and to disseminate researchfindings for decision making and program planning. Inaddition, the project will support training of district health staff on operational researchinorder to facilitate evidence-basedplanning. 129. The Public Health Order of 1970, Medical Order No. 3 of 1972, Medical, Dental and Pharmacy Regulations of 1972 were enacted prior to the outbreak of the HIV and XDR and MDR TB epidemics and do not provide an adequate legal framework. Introduction of new services (especially ARV treatment, PMTCT, and treatment for MDR and XDR TB) is posing new challenges such as drug adherence, drug resistance, dis-inhibition of patients on ARV treatment, dis-inhibition of those who have undergoneHIV testing, and secondary prevention for HIV+ people. Meanwhile, old challenges still remain, i.e. social advocacy and behavior change for prevention, increasing burden of home-based and palliative care, and the increasing social burdenof OVC and PLWHAs. Giventhat technical requirementsofthe HIV responseare getting more complex, the Public Health Order needs to be revised in order to provide adequate regulatory and facilitative mechanisms for protection and enhancement of the health status o f Basotho. 130. The Bank team carried out analytical work on NDSO supply chain management,focusing on structural network design, inventory and demandvariability and cash flow to NDSO. Lack of a coordinated supply chain can lead in either overstocking or under-stocking of products and can be a major financial cost to the system and to service delivery. The project will support a coordinated procurement planning mechanism to monitor the stock of essential HIV commodities, initially focusing the effort on ARV procurements. A logistics committee o'f the key agents commissioned by the MOHSW will review the forecasts, stocks on hand and procurement plans. The project will support: (a) training of NDSO staff on data systems, 50 forecasting and stock monitoring; and (b) TA on nationalization strategy and product segmentation. 131. The project will also support the Project Accounting Unit (PAU) by funding the posts of the Finance Manager, Procurement Manager and Operations Adviser during the first two years. MOHSW will take over financing o f these posts from the third'year. Component 3: Capacity support to the decentralized local response (US$1.3 million equivalent) 132. This component will provide support to build capacity through provision o f technical assistance to government and civil society implementers at district and community levels to plan, coordinate and implement HIV and AIDS and TB activities. This component will buildupon and supplement the successful experience o f the earlier HCTA project which provided capacity building support to larger NGOs but nothing directly to the district level and below. This project's support in particular will improve implementers' ability to provide activities that fall within the defined package of essential services, known as "the Essential HIV and AIDS Services Package (ESP)", which provides a menu o f activities that may be provided at the sub- districtkommunity level. It covers five areas - changes insexual behavior, prevention o f mother- to-child transmission, access to HIV services, OVCs, and support for HIV positive people. Technical assistance for this component will focus on three key substantial areas: (a) to build the skills and capacity o f District and Community Councils to coordinate and implement activities within the Essential HIV and AIDS Services Package (ESP); (b) to develop and strengthen the operational and management capacities o f District and Community AIDS Committees; and (c) to build the skills and operational capacity o f civil society organizations to provide HIV andAIDS and TB interventionsand services at the community level. 133. Following adoption o f the national decentralization policy, the Ministry o f Local Government & Chieftainship (MOLGC) adopted in 2008 "Guidelines for scaling up the fight against HIV and AIDS" through Local Authorities; this later became known as the Gateway initiative. The overall objective o f the Gateway initiative i s to coordinate project approval and monitoring o f all HIV-related activities in the district /community with an emphasis on expanding activities, reducing duplication and ensuring that projects are in line with the ESP, promoting support for neglected areas and groups, and facilitating local project preparation and implementation. This initiative received priority within the decentralization effort generally, given the urgent need to address the HIV epidemic at local levels and the need for the HIV related response to be multi-sectoral. This truly decentralized intervention focused on district and community levels with technical support from GermanDevelopment Cooperation (GTZ). 134. The earlier HIV-related coordinating committees at the district level - the District AIDS Task Forces (DATF) - had proved somewhat ineffective and were formally replaced in 2006 by new bodies, the District AIDS Committees (DAC) (MOLGC Circular Notice No.1 o f 2006 refers). The establishment o f similar community level committees - the Community AIDS 51 Committees (CACs) - was also envisaged inthis Circular. The implementation of the Gateway- related activities dovetails with this project's capacity building for the DACs and CACs, which will be supported under sub-component (b) - see below. Similarly, the project also provides dovetailed support for capacity building for local community groups and NGOs - see sub- component (c) below. Within the constraints of ensuring that project support fills gaps left by other development partners and the government, these three sub-components provide an integrated approachto strengtheningHIV-related capacity at the district and community levels. 135. (a) To build the skills and capacity of District and Community Councils to coordinate and implement activities within the Essential HIV and AIDS Services Package (ESP). The sub- component will continue funding the 26 community Council Support Persons (CCSP), stationed throughout the 128 Community Councils, with some modest expansion to 35 CCSPs. Each CCSP works with four Community Councils on average. CCSPs assist the Councils to implement ESP activities by providing the Councils with skills and support for the selection of key priorities, identifying qualified service providers, contracting, evaluation and reporting. Importantly, with the involvement of the CCSPs, each district - and withinthat each community -hasanapprovedandpublishedplanthatprioritizesHIV-relatedinterventionsactivitiesforthat area. The CSSPs will continue to enhance the implementation and coordination capacities of councils and community level-based initiatives and help build relationships with civil society organizations for HIV and AIDS and TB joint planning and service delivery. Their work includes the planning and implementation of the joint TB and HIV and AIDS interventions in collaboration with the District and Community AIDS Committees, where functional. 136. Following competitive recruitment, the CCSPs have been supported by GTZ since their introduction in July 2008. Interim reviews of their effectiveness have been very positive and a more formal assessment was undertakeninJune-July 2009 for which the final results are not yet available. As part of GTZ's phasing out from Lesotho, German funding for CCSPs ceased in June 2009, together with that for a local consultant who monitors and coordinates their work, supervises them (weekly telephone calls), and arranges quarterly meetings for all CCSPs, etc. It i s planned that this project will take over the funding of CCSP support with effect from July 2009. This will necessitate retroactive financing from this project for the period July to October 2009 approximately, which would cost not more than $100,000 equivalent. It is expectedthat the CCSPs will have finished capacitating colleagues at the community and district levels and therefore completed their work by December 2010. This includes Community Council Secretaries and Chairpersons, District and Community AIDS Committees, NAC Technical Support Officers, CSOs and MOLGC HIV and AIDS staff. The CCSPs will then be phasedout following a well organized exit strategy that takes account of the variability inlocal requirements and sustainability. Funds will be provided to facilitate this phase out, especially for exchanging experience betweenand among districts and communities. An evaluation of the CCSP program will beundertakentowards the end of 2010. 137. The proposed project sub-component will finance: continuing support for 35 CCSPs, their coordinator and funds for quarterly meetings among the CCSPs; experience exchanges between and within districts during CCSP phase out; and a final CCSP program evaluation. The lead implementing agency is the HIV/AIDS Unit of the MOLGC. 52 138. (b) To develop and strengthen the operational and management capacities of District and Community AIDS Committees. This small sub-component will help build the capacities of the DACs and CACs. DACs have recently been created in all districts, but their capacity to operate varies considerably. Similarly, the status and capacity of their associated CACs also varies but in general they are not yet functional. Establishing properly functioning DACs and CACs is ajoint responsibility of the MOLGC andNAC. The focus of this sub-component, which will be coordinated with support from elsewhere that DACs are expected to receive, will be on contributing to building the capacities of the DACs, so that they can begin to genuinely coordinate HIV-relatedactivities at the district level and start working seriously with their CACs. The overall coordination of this sub-component will be facilitated using funds available to NAC from other development partners. Substantively, all activities would be within the framework of the agreed ESP Gateway plan for the district and its communities. An initial training program for all DAC members will be undertaken both in basic process matters (planning, meeting conduct and follow up, record keeping, budgeting, participatory inputs, monitoring, etc) as appropriateto their level, plus an overview of HIV and AIDS content matters based on the ESP and its five potential areas of HIV and AIDS interventions. A particular focus will be on establishing cohesive local programs for partner reduction and HIV prevention among the youth. The medium term objective is to establish the DACs (and CACs) in their HIV oversight and facilitating community development roles which would include a strong monitoring and evaluation element. This latter activity would build on M&E activities started under the earlier HCTA project. The project will also finance one short term local TA to advise on the coordination of the DAC's work with that of the decentralized health system, especially the MOHSW's District Health Management Teams, to ensure that planned district activities are technically sound and that the DHMTs have an established way of contributing to multi-sectoral district HIV and AIDS activities. 139. The proposed project sub-component will finance: one 8-day (split into 4, 2 and 2 day sessions) training workshops for DAC (and CAC) members; and one local 2 month TA consultant. The lead implementing agency will be the HIV/AIDS Unit of the MOLGC in cooperation with the NAC. 140. (c) To build the skills and operational capacity of civil society organizations to provide HIV and AIDS and TB interventions and services at the community level. This sub-component will be implemented through the Lesotho Council of NGOs (LCN). LCN will receive project support for building its own capacity at the national level through Component 1 of this project (see above), while this sub-component focuses on building LCN's capacity to assist district and community civil society organizations (CSOs). Work will start in six of Lesotho's ten districts (Berea, Leribe, Mafeteng, Maseru, Mohaleshoek and Thabatseka) which have a total of 82 Community Councils. It is planned to take up work with at least 250 community groups in 70 Community Council areas in these six districts. Potential community groups and their programs will be selected so that they are consistent with the Gateway planfor that area and especially that they are following the ESP. Priority will be given to three of the five ESP areas - changing sexualbehavior, orphans and vulnerable children; and support for people who are HIV positive. 141. The sub-component will finance a rapid overall needs assessment of local CSOs in each of the six districts on: (a) organizational development requirements; and (b) programmatic area 53 needs. A local TA for one month will conduct the assessment and transport and other supporting costs are included. Based on the results o f this assessment, the content of a series o f practical workshops will be defined which, again, will cover both organizational and programmatic aspects o f developing small local CSO HIV-related sub-projects. Indicatively, these workshops will cover very basic skills in community participation, planning and budgeting, monitoring implementation, and reporting - in addition to the three ESP technical topics mentioned above plus, as relevant, the links between HIV and TB. About 75 workshops are envisaged. Funds to hire an additional program officer to manage this overall initiative are included in component 1 o f this project. It i s expected that the result o f this intervention will be to increase the currently limited pool o f those willing and able to participate in HIV-related projects, increase the quality o f existing interventions and develop further community-level interventions. 142. The proposed project sub-component will finance: 45 technically oriented and 35 organizationally oriented 3-day training workshops for CSO members, and one local 30-day TA consultant. The lead implementing agency will be the L C N incooperation with MOLGC. 54 Annex 5: ProjectCosts LESOTHO: HIV andAIDS TechnicalAssistance Project Project Cost By Component and/or Activity Local Foreign Total US $million US $million US$million Component 1: 0.70 1.oo 1.70 Component 2: 0.70 1.08 1.78 Component 3: 1.13 0.09 1.22 Total Baseline Cost 2.53 2.17 4.70 Physical andprice contingencies' 0.00 TotalBaselineCosts 4.70 Taxes andDuties 0.30 0.30 TotalFinancingRequired 5.00 Physical and price contingencies are minimal on consultant services. Identifiable taxes and duties are US$0.3 million, and the total project cost inclusive of taxes is US$5 million. Therefore, the share of project cost net of taxes is 94%. 55 Annex 6: ImplementationArrangements LESOTHO: HIV andAIDS TechnicalAssistance Project Implementing agencies 143. This multi-sectoral project will be carried out by agencies that are critical to implementing the National HIV and AIDS Strategic Plan. The implementing agencies include the Ministry of Finance and Development Planning (MOFDP) as the Grant signatory on behalf of the Government, and the Ministry of Health and Social Welfare (MOHSW), Ministry of Local Government and Chieftainship (MOLGC), the National AIDS Commission (NAC), and the Lesotho Council of NGOs (LCN, representing civil society) as the implementing agencies with the MOHSW being responsiblefor overall project managementand implementation. 144. Component 1of the project will be mainly implementedby NAC, the MOFDP, and LCN; the MOHSW will be responsible for implementing Component 2. Component 3 will be implemented by the MOLGC and LCN. All the implementing agencies, except the MOLGC, participated inthe implementation of the HCTA. Component Responsibility Component 1 NAC, GFCU, LCN Component 2 MOHSW Component 3 MOLGC, LCN 145. Each of the implementing agenciesis describedbriefly below: The National AIDS Commission (NAC) is a constitutional body established by Act No.8 of 2005 of the Parliament of the Government of Lesotho. It is mandatedto develop and coordinate strategies and programs for controlling and combating HIV and AIDS in Lesotho; to facilitate the implementation, monitoring and evaluation of programs; and to provide policy guidance to organizations implementing aspects of Lesotho's HIV response.24The NAC works in close partnership with a number of stakeholders, includingthe sectoral ministriesand civil society. 146. The Ministry of Health and Social Welfare (MOHSW) is charged with "the responsibility of policy formulation and strategies for the delivery of health and social welfare services, with the ultimate goal of ensuring that every Mosotho has the opportunity for good health and an acceptable quality of life. yy25MOHSW is mandatedto coordinate the HIV response inthe health sector. To facilitate the achievement ofthis vision, MOHSW has opted for a strong decentralized approach, in line with the country's decentralization policies, which includes devolving significant authority/management of administration, coordination, and monitoring and evaluation of health services to the district management teams. Inits latest HMIS Strategic Plan for 2008 - 2012, MOHSW has laid out several strategies to implement its decentralized HMIS approach: a central data warehouse, standard procedures for data management, a district-level multi-sectoral HMIS committee, and agreements with partnersabout which data will be reported on. ~~ "FromwwwnaccovIs(accessedon12September2008) "FromwwwheallhYOVI.! (accessedon12September2008) 56 147. The Ministry of Local Government and Chieftainship (M0LGC)'s mission is to `@ornote, deepen and consolidate a sustainable and effective system of local governance for improved service delivery."26 Within this context, the local government authorities (LGAs) (municipalities, district councils and community councils that report to MOLGC) are supposed to: (i)implement HIV programs for their employees, (ii)include HIV in their annual District Action Plans, and (iii)chair the District AIDS Committees (DACs). LGAs should primarily monitor the implementation o f HIV services provided by other implementers in the district and in this way support the DACs to harmonize the HIV response in the district. MOLGC headquarters is responsible for monitoring the extent o f workplace programs provided for MOLGC employees and elected officials at all local government authorities. 148. The Lesotho Council of Non-Governmental Organizations" (LCN) i s a Council of organized non-governmental organizations (NGOs) established in May 1990 to provide supportive services to the NGO Community. The Council does this through networking, leadership training and development, information dissemination, capacity building, coordination, advocacy and representation when dealing with the Government and the international Community. L C N was provided with support under the HCTA Iproject to build its technical capacity for coordination o f NGO activities and in preparing proposals for funding from international partners. As a result o f this capacity building, L C N was able to successfully be identified as a second Principal Recipient for the GFATM Round 8 grants for Lesotho, and the intended support under this project will contribute towards fulfilling this role. 149. The Global Fund Coordination Unit28(GFCU), under the Ministry of Finance and Development Planning(MOFDP), was established in2004 after the MOFDP was selected by the Country Coordination Mechanism (CCM) to be the Principal Recipient o f GFATM funding. The GFCU i s responsible for coordinating activities and funds under the GFATM Rounds 2, 5, 6, 7 and the recently approved Round 8 proposal. The GFCU manages the implementation o f US$ 114 million from the GFATM under the earlier proposals for HIV/AIDS and TB (of which US$42.3 million29has been disbursed) and will manage implementation o f much o f the Round 8 US$120 million grant. 150. The GFCU was one o f the primary implementing agencies under the HCTA project which helped to raise the GFCU performance rating from the GFATM Secretariat from almost "no-go" to its present rating o f B 1 or "good performance." This project will continue the good relationship that was developed under the HCTA to assist the GFCU in continuing to fulfill its PR functions but on a more strategic level. Coordinatingmechanism 151. To ensure coordination among the implementing agencies, the following arrangements will be put inplace: 26From www.local~ovt.~ov.ls(accessed on 12 September 2008) 27http://www.lecongo.org.Is/home/default.ph~ 28http://www.gfcu.org.ls/about/default.php 29FromMarch2009 Progress Report on Disbursements,available at htt~://www.theglobalfund.or~e~commitmentsdisbursements/?lang=en (accessedon April 22, 2009) 57 152. A Steering Committee, comprising officials o f Director-level or above of the implementing agencies, will be responsible for providing overall policy guidance, ensuring the project to complement the national strategies and programs, helping coordination among implementing agencies, and discussing implementation issues. The Steering Committee will discuss and approve the annual work plan and budget for respective components prepared by the TWGs. 153. Technical Working Groups (TWGs), comprising key technical staff of the implementing agencies, have played an active and effective role in project preparation. The TWGs for respective components o f the project will be retained to ensure the project is implemented in a coordinated manner. The TWGs will prepare the annual work plan and budget for respective components. 154. As N A C is responsible for coordinating the overall implementation o f the National Strategic Plan, NAC will therefore play an overall coordinating role including organizing regular meetings o f steering committee and technical working group, leading implementation coordination, and facilitating the Bankmissions. 155. Since several departmentshnits o f the MOHSW are involved in project implementation, to ensure within agency coordination, the Department of HealthPlanningand Statisticso f the MOHSW will be responsible for coordinating planning and fiduciary matters while the Director General's Office will be incharge o ftechnical issues inthe Ministry. Fiduciary arrangements 156. The Project Accounting Unit (PAU), within the Department o f Health Planning and Statistics, will be responsible for financial management, disbursement, and accounting. A designated account will be managed by the PAU, under authority o f the MOFDP. The P A U i s also responsible for organizing auditing activities and submitting audit reports on time. 157. The Procurement Unit (PU), within the Department o f Health Planning and Statistics, will take onthe responsibilitieso fprocuring goods and services. 158. Both the P A U and PU were established under the health SWAP to handle financial management and procurement respectively not just for the Bank but also for other partners. Partners including GFATM, the Bank, Irish Aid, African Development Bank, and the UN agencies arejointly supporting the P A U and PU and also usingthem to disburse their funds. The HCTA also supported and used the PAU and PU for financial management and procurement. This project, based on procurement and financial management assessments, will continue to take advantage o f the capacity o f this common fiduciary system and disburse its funds through PAU and PUto different implementers of the project. M&E arrangements 159. The M&E o f the project will be operated within the National.HIV Monitoring and Evaluation System, which has been in operation since 2005. It will rely on the existing M&E 58 setup inN A C and different implementing agencies and it will not create separate systemsjust for the project. Annex 3 contains detailed information on M&Earrangements. 59 Annex 7: FinancialManagementand DisbursementArrangements LESOTHO: HIV and AIDS TechnicalAssistance Project 160. The financial management assessment was carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Board on 3 November 2005. The objective o f the assessment was to determine whether the implementingagency (Ministry o f Health and Social Welfare) has acceptable financial management arrangements, which will ensure that: (a) the funds are used only for the intendedpurposes in an efficient and economical way, (b) the preparation o f accurate, reliable and timely periodic financial reports, and (c) safeguard the agencies' assets. 161. The overall conclusion o f the financial management assessment is that the project's financial management arrangements have overall risk rating o f "Moderate". The FM arrangements satisfy the Bank's minimumrequirements under OP/BP 10.02 expectfor the issues mentioned inthe financial management action plan. 162. Country Issues: A Public Expenditure Financial Accountability (PEFA) Framework Assessment for Lesotho was conducted in 2006/07. The assessment found that Lesotho scored well in seven areas (scored above C). These areas include credibility and comprehensiveness of the budget, orderliness and participation in the budget process, the introduction o f a medium term expenditure framework (MTEF) and predictability in the availability o f funds for commitment o f expenditures. O f the remaining 17 areas assessed, Lesotho scored C in six areas. The major areas o f weakness are in the management o f expenditure arrears, oversight o f aggregate fiscal risk from other public sector entities, effectiveness o f internal control and internal audit, accounting, recording and reporting, external audit and donor practices. Capacity remains weak overall. The ability o f the Government to attract and retain qualified financial management staff remains under pressure and Bank-assisted projects have therefore traditionally relied on outside advisors (finance, procurement, and technical) to assist projects in their implementation efforts. Since the assessment was done, progress has been made in a number o f areas, including deepening o f the medium-term expenditure framework (MTEF), drafting o f the Public Financial Management and Accountability Act, launching a project for the design and implementation o f an IFMIS,preparation o f outstanding public accounts up to 2006/07, auditing o f public accounts, and adoption o f new procurement regulations. 163. Risk Assessment and Mitigation: The table overleaf shows the results of the risk assessment from the Risk Rating Summary. This identifies the key risks the project management may face in achieving project objectives and provides a basis for determining how management should address these risks. 60 7Risk Risk RiskMitigatingMeasures Conditionsof Residual Rating incorporatedinto the Project Board or Risk Design Effectiveness Rating (Yes or No) S The governmenthas beenrecruiting No M Low capacity in additionalstaff for the internalaudit internaland external unit and providing training to audit functions. improve the skills of the internal auditors. Capacity for external audit is enhanced by the use of private sector audit firms. Entity Level M The projectfiduciary aspects will No M The entitymay notbe be implementedby iheMinistryof able to meetthe Healthand Social Welfare. financialmanagement FinancialManagementissueswill requirementsdueto behandledby the Project Accounts lack offinancial Unit withinthe Ministry.This unit managementcapacity. is headedby qualifiedand experiencedFinanceManager, and hasexperiencein handlingFM issues of Bank-financedoperations. It is currently involvedinthe implementationofthe HealthSector ProgramPhase11. Project Level M This project will involveone No M The project spendingunit (PAU) and funds will implementationmay not be decentralizedto other involvedispersed beneficiaries.ProjectAccounts Unit spendingunitsand will make paymentsof goods and transfer of fundsto services providedto all project other beneficiaries. beneficiaries.Procurementwill also I be centralizedat the Ministryof Healthand Social Welfare. I Control Risk Budgeting M The annual budgetwill be prepared No M Riskthat realistic basedonthe governmentpolicy annual budget may guidelines and regulations.The not beprepared proceduresfor the preparationof annualbudget and forecast (to be includedinthe interimunaudited financialreports) will be documentedin the Financial ProceduresManual. Accounting M A conventionalaccountingpackage Yes. By M The accounting (FINPRO) will be usedto account effectiveness systemmay not be for projectfunds. The chart of capable ofproducing accountswill be updatedto include project accounts. 61 monitorandmanage the project. Internal Control S Policies andProceduresto be Yes. By M Risk is that some employedare documentedinthe effectiveness. internalcontrol FinancialProceduresManuals proceduresmay not be (withinthe POM). This manualwill observedby the beupdatedto be in line with FM projectstaff. arrangementsofthe proposed project. FundsFlow L Fundsflow arrangements are simple No L The projectfunds may with centralized procurementand betransferred from paymentsfor all projectactivitiesat DesignatedAccount the Ministryof Healthand Social to other beneficiaries Welfare. Auditing M The projectwill be auditedby the Yes. By M Audit reports not Auditor Generalannually.The audit effectiveness submittedto Bank terms ofreferencewill beprepared within six months in consultationwith the Bank. time as required by Bank audit requirements dueto delays inappointment ofthe projectexternal auditors. Overall Risk M Inview ofthe generalcountry M financialmanagementissues and the issuespeculiarto the project, the overall financialmanagement risk ratingfor the projectis Moderate. 164. The supervisionmissions have beenreviewing the financial management arrangements o f the on-going HRSP I1Project and closed HCTA Project interms o f being capable of recording correctly all transactions and balances, supporting the preparation o f regular and reliable financial statements, safeguarding the entity's assets, and are subject to auditing arrangements acceptable to the Bank. The financial management issues raised in audit reports and management letters have been discussed with P A U accounting staff. MOHSW has been working to ensure readiness and compliance with financial management requirements. Therefore, the overall FM rating inthe ISRshas beensatisfactory. 165. Strength: FM aspects o f the project will be implemented by the Project Accounts Unit (PAU) established under the MOHSW Department o f Planning. P A U has experience inhandling FM issues of IDA-financed projects. The PAU was involved in implementation o f the closed HIV and AIDS Capacity Building and TA Project (first phase) and is currently handling the HSRP I1fiduciary issues. 62 166. Weakness: Due to the involvement of several implementing agencies in the project (MOFDP, MOLGC, NAC, and Lesotho Council of NGOs), implementation of some activities may delay the disbursementrate of the project. 167. ImplementationEntity:MOHSW will have overall responsibility for implementation of all the project components. Currently, the PAU is responsible for fiduciary aspects of projects financed by the World Bank (closed HCTA and ongoing HSRP II), Development Bank, African andother donors. 168. Budget: The annual budget will be preparedbased on the government policy guidelines and regulations. The Procedures for preparation of annual budget and cash forecast (to be included in interim unaudited financial reports) will be documented in the Financial Procedures Manuals to be updated by project effectiveness. The manual will provide guidelines for budgeting, procedures for preparing and approving annual budgets. The formats for annual budget should be included in the appendices. The manual should also define procedures for keeping expenditures within the budget. 169. Accounting: The project's accounting records will be maintained using the cash basis of accounting. The project will comply with International Public Sector Accounting Standards (under the Cash Basis of Accounting), as promulgated by the International Federation of Accountants (IFAC). 170. The project accounting system will be based on conventional accounting system, using the "FINPRO", well established accounting software, which is capable of producing financial reports required to monitor and manage the project. The chart of accounts will be updated to be able to identify project activities anddisbursement categories by effectiveness. InternalControland InternalAuditing 171. Staffing: The overall responsibility for project FM rests with the Finance Manager who i s the head of PAU. PAU financial management capacity comprises a qualified and experienced Finance Manager and six accounting staff. Recruitment of additional two accounting staff is underway to strengthen the unit FM capacity. The Finance Manager has FM experience of operations financed by the World Bank, African Development Bank, EU, IrishAid and other donors. She has been involved in the implementation o f Health Sector Reform (phases Iand 11) and the closed HIV and AIDS Capacity Building and Technical Assistance Project. The post of Finance Manager will be financed from Grant proceeds during the first two years. MOHSW will take over financing of this post from the third year. 172. Internal Controls: The accounting systems, policies and proceduresto be employed by PAU for accounting and managing the project funds are documented inthe Financial Procedures Manual. It describes the accounting system, internal control procedures, basis of accounting, standards to be followed, authorization procedures, financial reporting process, budgeting procedures, financial forecasting procedures, and contract management. However, these manuals were updatedin2001 and there is a need of further revisionand update to bring the manual up to the current FM requirements and practices. The manuals will be updated by project effectiveness. 63 173. Internal audit: There is no internal audit function envisaged for the project. However, the internal audit unit based at the Ministry o f Finance and Development Planning has responsibility for internal audit functions across the entire government o f the Kingdom o f Lesotho. There is a general perception that the internal audit unit has little impact on the World Bank-financed projects in the country. These internal audit arrangements are adequate taking into account the size o f the project and the proposed funds flow and staffing arrangements. There will therefore be need to provide support through financial management supervision missions and review and follow up on issues related to interim unaudited financial reports and audit reports. The government will ensure that adequate FM arrangements are maintained through implementation o f the project. The Bank FMS will review project FM arrangements during implementation support mission. These will include review o f IFRs and transaction reviews on a sample basis. 174. Financial Reporting: PAU will produce on regular basis required financial reports to monitor and effectively manage the project. Interim unaudited financial reports (IFRs) will be produced on a quarterly basis and submitted to the Bank within 45 days after the end o f calendar quarter. The contents of these reports should consist o f financial reports, including sources and uses o f funds reports by disbursementcategories, and project components and activities. 175. P A U will also produce annual project financial statements, which will comprise of: a. A Statement of Sources and Uses of Funds / Cash Receipts and Payments which recognizes all cash receipts, cash payments and cash balances controlled by the entity for this project; and separately identifies payments by thirdparties on behalfofthe agency. b. The Accounting Policies Adopted and Explanatory Notes. The explanatory notes should be presented in a systematic manner with items on Statement o f Cash Receipts and Payments being cross referenced to any related information in the notes. Examples o f this information include a summary o f fixed assets by category o f assets. c. A Management Assertion that IDA funds have been expended in accordance with the intendedpurposes as specified inthe relevant World Bank legal agreement. FundsFlow and DisbursementArrangements 176. Funds Flow: Funds will flow from IDA to a separate Designated Account to be opened by GoL and managed by PAU. Funds in the Designated Account will be used to finance the activities o f the project components under all components. 177. Bankingarrangements:PAU will maintain two separate bank accounts for the purposes o f the implementation o fthe project: 0 Designated Account: To be opened at Central Bank o f Lesotho and denominated in U S dollars. Disbursements from the IDA Grant will be deposited in this account to finance activities under the relevant project components; 0 Project Account: To be opened at a commercial bank and denominated in local currency, i.e. Maloti. Transfers from the Designated Account (for payment o f transactions in local currency) will be deposited on this account in accordance with project objectives. Funds 64 will be transferred from Designated Account to this bank account based on needs of fiinds to pay invoices (in local currency) received by PAU. The balance in this account should be kept to a minimumat the end o f each month. 178. Disbursement arrangements:Disbursement o f the IDA funds will be done based on quarterly interim unaudited financial reports (IFRs). These reports will include a statement o f sources and uses o f funds, an updated six-month forecast, Designated Account Activity statement and statements o f eligible expenditure under contracts subject to and not subject to prior review. 179. An initial advance will be made into the Designated Account upon the effectiveness o f the Financing Agreement and at the request of GoL. The advances will be the estimated cash requirements to meet the project expenditure for first 6 months o f the project life, as indicated in the initial six-month cash flow forecast. After every subsequent quarter, P A U will submit the IFRs. And, the cash requests at the reporting date will be the amount required for the forecast period as shown in the approved IFRs less the balances in the Designated Account and Project Account at the end o fthe quarter. 180. The option of disbursing the funds through direct payments from IDA for payments above the threshold indicated in the Disbursement Letter will be available. Withdrawal applications for such payments will be accompanied by relevant supporting documents such as copies o f the contract, contractors' invoices and appropriate certifications. Options for use o f special commitments and reimbursements will also be available. The Disbursement Handbook for World Bank Clients issued in May 2006 provides guidance on disbursement arrangement for financing provided or administered by the Bank. The Bank will issue the Disbursement Letter that will specify additional instructions for withdrawal o fthe proceeds o f the Grant. 181. The table below shows the allocationo fthe proceeds o fthe Grant. Category Amount of Grant Percentageof allocated expenditureto be (US dollars) financed (including taxes) Goods, works, consultant's services, training, and 5,000,000 100% I Total operatingcosts I 5,000,000 I I 182. Disbursement to other beneficiaries: The project funds will finance activities to be implementedby several implementing agencies, namely MOFDP, MOLGC,NAC, and Lesotho Council o f NGOs. However, bank accounts will be only maintained by PAU under Department o f Planning at MOHSW. And, payments related to all activities o f the project will be centralized at this unit. Each beneficiary agency will submit the necessary supporting documentation to the unit for processing o f payments by the PAU directly to the providers of goods, works and services financed by the Grant. 65 183. External Audit: The project financial statements will be audited by the Office of the Auditor General in accordance with International Standards on Auditing promulgated by the International Organization o f the Supreme Audit Institutions (INTOSAI) and the audit report together with the Auditor General's management letter and management response, will be submittedto IDA within six months after the financial year-end, i.e., September 30 eachyear. 184. The auditors will be required to express a single opinion on the project financial statements. In addition, a detailed management letter containing the auditor's assessment o f the internal controls, accounting system and compliance with financial covenants in the IDA Financing Agreement, suggestions for improvement, and management's response to the auditor's management letter will be prepared and submittedto management for follow-up actions 185. The figure below identifies the audit reports that will be required to be submitted by the project implementing agencies and the due date for submission. 1I Audit Report Due date 1 Project-specific financial statements I130thSeptember of each following year II 186. Project Governance and Accountability: The project will have adequate financial management in place to ensure that funds are used for the purposes intended and to prevent material errors and fraud. The FM o f the project will be handled by qualified and experienced Financial Manager. The Bank will review adequacy o f project financial management during the implementation review mission and the government o f the Kingdom o f Lesotho will have to ensure that adequate financial management i s maintained through the implementation o f the project. The project will be audited annually by the Auditor General. 187. Conditions Effectiveness: (i)Update Chart of Accounts to be able to identify project activities and disbursements categories; (ii) Update Financial Procedures Manual (within the POM) to be used by PAU; and (iii) terms o freference prepared inconsultation with the Bank. Audit 188. Action Plan: The action plan below indicates the financial management actions to be taken by project effectiveness: Action Responsibility Completion date Update Chart o f Accounts to be able to identify project activities and disbursements PAU Effectiveness categories Update Financial Procedures Manual (withinthe POM) to be usedby PAU P A U Effectiveness Audit terms ofreference prepared P A U and IDA Effectiveness 66 189. Supervision Plan: Financial managementsupervision will be carried out by the Financial Management Specialist (FMS) once a year in line with the moderate risk rating. The FMS will also: Review reports; and Review the Audit Reports and Management Letters from the external auditors and follow-up on material accountability issues by engaging with the TTL, Client, and/or Auditors. 67 Annex 8: ProcurementArrangements LESOTHO: HIV and AIDS TechnicalAssistance Project A. General 190. Procurement for the proposed project will be carried out in accordance with the World Bank's "Guidelines: Procurementunder IBRDLoans and IDA Credits" datedMay 2004, revised October 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 and revised October 2006 (Consultant Guidelines), and the provisions stipulated in the project Financing Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, estimatedcosts, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity. 191. Procurement of Works: Works to be procured under the HIV and AIDS Capacity Building and Technical Assistance Project include construction of two prefabricated offices for the LCNto replacealready existing portable structures. 192. Procurementof works will be done using the Bank's StandardBidding Documents (SBD) for all ICB activities. Works contracts estimated to cost US$3,000,000 equivalent or more per contract will be procured through ICB. As National SBD's are inthe process of being developed, the Government of the Kingdom of Lesotho (GoL) will use the Bank's SBD for both ICB and NCB, as appropriate. Works contracts estimated to cost more than equivalent US$lOO,OOO but less than US$3,000,000 will be procured through NCB. Small works estimated to cost less than US$lOO,OOO or equivalent per contract may be procured using the shopping method by requesting at least three written quotations from qualified contractors with contracts awarded on lump sumbasis. Direct Contracting may be used when competition is not advantageous with the Bank's prior review and approval. The prior review threshold for works contracts would be US$3,000,000 equivalent per contract. Pre-qualification of contractors i s not envisaged under this project as only minor works are expectedto be carriedout. 193. Procurement of Goods: Not all the goods to be procured under this project have been fully defined. However, the goods to be procured may include equipment, motor vehicles and data monitoring equipment. The procurement of goods will be done using the Bank's SBDs for all procurement under ICB. As National SBDs are in the process of being developed, the GoL will use the Bank's SBDs for both ICB and NCB as appropriate. Goods estimated to cost US$500,000 equivalent or more per contract would be procured through ICB procedures. Goods estimatedto cost less than US$500,000 equivalent per contract would be procured through NCB procedures. Goods contracts estimated to cost less than US$50,000 equivalent per contract may be procured using the shopping procurement method. UN Agencies and direct contracting may also be considered with the Bank's prior review and approval. The prior review threshold for goods would be for contracts estimated at US$500,000 or equivalent per contract. 68 194. Selection of Consultants (Firms): Consulting services to be financed will include, among others: sector studies and policy formulation, technical assistance inproject management, reviews, formulation o f an inclusive health law and various individual consultants inwith diverse expertise. All firm consulting contracts estimated to cost US$lOO,OOO equivalent or more will be awarded through Quality and Cost-Based Selection (QCBS) and/or Quality-Based Selection (QBS). Contracts estimated to cost less than US$lOO,OOO equivalent may be contracted through selection based on the Consultants' Qualification (CQS) or Selection under a Fixed Budget (FBS). Consulting firms carrying out standard or routine assignments such as financial audits estimated to cost less than US$l00,000 or equivalent per contract may be selected on the basis o f Least Cost (LCS). Single Source Selection (SSS) may be used where competition i s not advantageous and it can bejustified after consultation with and prior approval by the Bank. 195. Selection of IndividualConsultants(IC) would be on the basis o ftheir qualifications in accordance with the provisions o f Section V o f the Consultant Guidelines. 196. Support to implementation o f certain interventions such as HIV/AIDS education and prevention, home based care, etc. may be contracted to specialized service providers, such as NGOs or communities. Community Participation in procurement will be as described under section 3.17 o f the procurement guidelines. Contracting o f NGOs will be done through a competitive process using an appropriate selection method as described above. Services for highly`specialized investigations, research and training shall be carried out through research institutions and Universities, subject to the Bank's prior approval and inclusion in the procurement plan. Activities to be carried out with the participation o f NGOs and Communities will be described in the operations manual within the components under which these activities will be implemented. The operations manual will describe such issues as eligibility for participation o f NGOs, guidelines for community participation in procurement, etc. The operations manual will be reviewed and approved by the Bank. If needed, the manual will be revised at least yearly for relevance and to capture best practices. 197. Short lists for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants inaccordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. 198. Prior Review: Consultancy services estimated to cost US$200,000 equivalent or above per contract for firms will be subject to prior review by the Bank. Consultant services estimated to cost US$lOO,OOO equivalent or above for individual consultants will be subject to prior review by the Bank. All single source selection o f consultants will be subject to prior review by the Bank. 199. Operating Costs: Operating costs shall consist o f operation and maintenance costs for vehicles, office supplies, communication charges, utility charges, travel costs and expenses, per diem, office rental, among others. 200. Training: All training costs, workshops and seminar and associated costs will be based on the agreed training plan that will be prepared by the MOHSW on behalf o f the GoL and approved by the Bank and will include thejustification o f the training identified and the capacity 69 gap, the intended trainees, the name o f the training provider, the duration and cost o f training along with any other relevant details. After the training, the beneficiaries will be requested to submit a brief report indicating what skills have been acquired and how these skills will contribute to enhancing performance and how they contribute to the project objectives. The training plan will be prepared and submitted once a year and updated as required. 201. The procurement procedures and SBDs to be used for Bank-funded procurement will be presented inthe revised Procurement Manual in line with the guidelines o f the World Bank. The procurement manual includes the component descriptions, institutional arrangements, regulatory framework for procurement, approval systems, activities to be financed, procurement and selection methods, thresholds, prior review and post reviews arrangements and provisions, filing and data management and the procurement plan for the first 18 months for all project components. B. Assessment of the agency's capacityto implementprocurement 202. A Procurement Capacity Assessment for the MOHSW was carried out. The assessment reviewed the capacity and experience o f the implementing agency and the organizational structure to carry out procurement under the proposed HIV and AIDS Technical Assistance Project. The assessment also considered the qualifications and experience o f the staff that are charged with carrying out procurement in the implementing agencies and the governance systems inwhich the procurement will be carried out. 203. Management o f the procurement o f goods and equipment, civil works and consulting services under the HIV and AIDS Technical Assistance Project will be the responsibility o f the Procurement Unit (PU) which is answerable to the Director o f Planning in the MOHSW. The MOHSW has successfully implemented the Lesotho Health Sector Reform Phase I1 project (HSRP Phase 11) and the HIV/AIDS Capacity Building and Technical Assistance Project (HCTA). 204. Staff in the P U are reasonably qualified and experienced and adequate to reasonably carry out procurement for the project. The systems under the P U are already in place and have been used to carry out procurement under HCTA and the HSRP Phase 11. A limited number o f the staff within the PU have experience in carrying out procurement under Bank-financed projects. Procurement for the previous projects has been carried out using the Bank's Procurement and Consultants Guidelines. The Guidelines have been adapted by the P U to suit the local conditions in Lesotho to carry out all post review procurement activities based on the procurement regulations and procurement manual o f the GoL. The GoL has agreed to use the Bank's Procurement Guidelines for both post review and prior review contracts as the GoL is still inthe process o f developing its own National SBD. 205. Under the proposed project, the PUo fthe MOHSW will be responsible for implementing all procurement activities for the three Components. An initial 18-monthprocurement plan for all contracts to be financed i s available. 70 206. Main procurement risks: The procurement capacity within the MOHSW P U is reasonably adequate. A qualified and experienced Procurement Manager i s charged with carrying out procurement at the MOHSW and i s supported by 2 professional staff who are university graduates and 9 support staff, 2 o f whom are reasonably qualified and competent to carry out procurement having carried out procurement functions on projects'under which they previously worked. The remaining 7 staff are less qualified. 207. The PU has existing systems inplace to carry out the procurement function with internal quality assurance systems and controls that guide procurement implementation. 208. Some risks have been identified as follows: (a) Procurement systems have been developed but require to be documented inthe Procurement Manual. The Procurement Manual should provide Guidelines for implementing procurement in the ministry based on the procurement cycle. The manual should also capture and operationalize the provisions o f the procurement law and the provisions o f the procurement manual from the PPAD. The manual should include brief descriptions o f the roles and responsibilities o f the various stakeholders such as the Procurement Unit, Tender Panel and Evaluation Committees. It should also include information on Procurement Planning and selection o f the Tender Committee members and evaluation committees. (b) The MOHSW P U should address the problems o f efficiency incarrying out procurement. PU needs to more proactively engage and work with other departments so that these departmentscan provide timely procurement inputs such as TORS, bid specifications and avail themselves to the P U for timely evaluation o f bids. Critical to improving efficiency i s the need to recognize and include the participation o f the Technical Specialists in procurement including in procurement planningand implementation. (c) The MOHSW should also address the existing shortage o f experienced procurement staff. The establishment o f positions for procurement staff inthe institutional structure o f the MOHSW does not include procurement staff at middleand senior management. Most procurement staff are at junior positions o f the MOHSW. The PPAD has facilitated the enrollment o f these staff to undertake training in purchasing and supplies through the Chartered Institute o f Purchasing and Supplies (CIPS). The skills acquired through CIPS may not assist the staff to become sufficiently proficient in procurement. They will not be trained to carry out complex and high value works, goods and services usingcompetitive procurement. (d) The MOHSW must address the existing shortage o f office equipment such as computers, printers and access to transport, particularly for inspections and seeking quotations. Overall risk assessment rating for this project is Moderate. 209. Risk mitigation action plan: The following actions are suggested to mitigate the procurement risk and facilitate the implementation o f the program. 71 Risk I Mitigation/Action I By Whom IConditionality 1) ProcurementUnit ofthe MOHSW a) A ProcurementManual evise as appropriatethe existing 'rocurement BY (withinthe POM) was *ocurementmanualfor the MOHSW. vIanager effectiveness. preparedunder the HCTA I ubmitto the Bank for its review andNo vIOHSW project andapprovedby the Bank in2007. lbjection.Manualshouldinclude: institutional arrangements provisionsofthe procurementlaw and the procurementmanualfrom PPAD briefdescriptionof the roles and responsibilitiesof various stakeholder: suchas the ProcurementUnit, Tender PanelandEvaluationCommittees. informationon ProcurementPlanning andselectionofthe Tender Committec members andevaluation committees. outline internalcontrols andquality assurancesystems define when andhow staffand consultantswill be usedinthe procurementcycle identify applicableprocurement thresholds, procurementand selection, prior andpostreview limits b) Inefficientprocessingof The MOHSW PUshouldmoreproactive1 ?rocurement Ongoing procurement :ngageandwork with other departments. Manager Ither departmentsshouldprovidetimely MOHSW nputsfor procurementsuch as TOR, specifications and availthemselvesto imely participate in carryingout evaluatic )fbids, etc. 2) Sector Specialistsand Departmentsofthe MOHSW a) Lack of documented ProcurementManualto include roles and Directorof As notedabove roles andtimely responsibilitiesoftechnical specialistsand Planning for participation of sector timingand duration of inputs from technical MHSW Procurement Technicalspecialists in specialists inthe procurementcycle as in Manualby ' procurementcycle preparationofTOR and in evaluations. effectiveness activities. b) Shortage ofoffice MOHSW must address the shortageof Directorof Withinthe first equipmentandtransport office equipmentsuch as computers, Planning 6 monthsof printers andaccess to transport particularly MOHSW project for inspectionsand seekingquotations for implementation the PU 72 I Risk I MitigationIAction I Bv Whom I ConditionalitvI c) Non-institutionalization MOHSWmust implement staff recruitment MOHSW ofprofessionalmiddle and basedonthe new staff establishment senior levelprocurement structure which now provides for staff in regular staff procurementprofessionalsat middleand establishment ofthe senior management level MOHSW 210. Deviations or unacceptable provisions from the procurement law o f the GoL in line with paragraph 3.3 "National Competitive bidding" o f the Bank's Procurement Guidelines the following provisions o f the national procurement law constitute major deviations or unacceptable provisions which the Bank will require that the GoL waive the application o f these provisions. The provisions will be reflectedinthe FinancingAgreement and are outlined below. 211. The provisions o f the Bank's Procurement and Consultant Guidelines dated May 2004 as revised in October 2006 shall apply for procurement under National Competitive Procedures (NCB) in the following cases: (a) foreign bidders shall be allowed to participate in N C B procedures without restrictions o f any kindin accordance with provisions o f paragraph 1.6 o f the Procurement Guidelines; (b) in line with the provisions o f paragraph 2.55 o f the Procurement Guidelines, no domestic preference shall be given for domestic bidders and for domestically manufactured goods; (c) if and when needed, prequalification will be applied to conform with the provisions o f paragraph 2.9 o f the Bank's Guidelines Procurement Guidelines on prequalification and as further elaborated in the provisions o f the Bank's ,Standard Bid Documents to be acceptable; (d) if a bid security is not required, provisions of the bid documents shall be modified to allow for use o f a "bid securing declaration" as contained in the Bank's Standard Bid Documents. Furthermore, when Bid security i s required, it shall include provision o f bid bond from insurance firms as provided for in paragraph 2.13 o f the Bank's Procurement Guidelines and Standard BidDocuments. 212. Procurement Plan: A procurement plan for goods, works and consultancy service contracts for the first 18 months of implementation o f the HIV and AIDS Technical Assistance Project has been prepared and finalized during negotiations. The plan includes relevant information on all goods, works and consulting services under the project, as well as those for the MOHSW. It includes prior review thresholds and the timing of each milestone in the procurement process. The procurement plan will be updated as need arises and in any case at least yearly. It will be reviewed by IDA during supervision missions. In line with the Procurement Guidelines paragraph 1.16 and Consultants Guidelines paragraph 1.24, only activities in the approved procurement plan will be implemented and be eligible for funding out o f the proceeds o f the Grant. The procurement plan requirements will be packaged in such a manner as to encourage the use o fmore competitive procurement and selectionmethods. 213. ProcurementMonitoring and Supervision:The Bank will carry out procurement prior reviews and issue "no objections" for all ICB-related procurement. Monitoring and evaluation o f procurement performance would be carried out during IDA implementation review missions (proposed frequency o f procurement supervision missions i s at least once every six months) and through annual ex-post procurement audits. Post review of contracts awarded below the prior- reviewthreshold levels will be carried out selectively by IDA during supervision missions and/or 73 by an independent procurement auditor. At a minimum, one out o f five contracts will be subject to post review. In addition, post-reviews o f in-country training will be conducted from time to time to review the selection o f institutions/facilitators and course contentdtrainees, justifications thereof and costs incurred. 214. Annual independent physical verification o f contract implementation will be carried out inorder to: 0 verify that the procurement and contracting procedures and processes followed for the projects were in accordance with the Financing Agreement; 0 verify technical compliance, physical completion and price competitiveness o f each contract inthe selected representative sample; review and comment on contract administration and management issues as dealt with by participating agencies; review capacity of participating agencies inhandling procurement efficiently; and, 0 identify improvements in the procurement process in light o f any identified deficiencies. 215, Contract award and disclosure requirements for ICB procurement shall be consistent with Paragraph 2.60 o f the Guidelines: Procurement under IBRD Loans and IDA Credits, May 2004, and revised October, 2006. Within two weeks of receiving the Bank's '!no objection" to the recommendationo f contract award, the Borrower shall publishinUNDB online and indgMarket the results identifyingthe bidand lot numbers and the following information: 0 name o f each bidder who submitteda bid; 0 bidprices as read out at bid opening; 0 name and evaluated prices o f each bid that was evaluated; 0 name o f bidders whose bids were rejected and the reasons for their rejection; and, 0 name of the winning bidder and the price it offered, as well as the duration and summary scope o fthe contract awarded. 216. Contract award and disclosure requirements for Direct Contracting procurement shall be consistent will Paragraph 3.7 o f the Guidelines: Procurement under IBRD Loans and IDA Credits, May 2004, and revised October, 2006. After the contract signature, the Borrower shall publish inUNDB online and indgMarket the: 0 name o f the contractor; 0 price; 0 duration; and, summary scope o fthe contract. 217. This publication may be done quarterly and inthe format of a summarized table covering the previous period. 218. Contract award and disclosure requirements for Consultancies shall be consistent with Paragraph 2.28 of the Guidelines: Selection and Employment o f Consultants by World Bank Borrowers, May 2004, as revised October, 2006. After the award o f contract, the Borrower shall publishinUNDB online and indgMarket the: 0 names o f all consultants who submittedproposals; 74 technical points assigned to each consultant; 0 evaluated prices o f each consultant; 0 final point ranking o fthe consultants; and 0 name o f the winning consultant and the price, duration, and summary scope o f the contract. 219. The same information shall be sent to all consultants who have submittedproposals. 220. Contract award and disclosure requirements for Selection Based on the Consultants' Qualifications (CQS) shall be consistent with Paragraph 3.8 o f the Guidelines: Selection and Employment of Consultants by World Bank Borrowers, May 2004, as revised October, 2006. The Borrower shall publish inUNDBonline and indgMarket the: name o f the consultant to which the contract was awarded; 0 the price; 0 duration; and, scope of the contract. 221. This publication may be done quarterly and inthe format o f a summarized table covering the previous period. 75 z rn 0 e b 0 E 0 8 VY u m z - 8 0 E! * I 8 m 8> # 0 m 0 - m 0 VI !& - Y a 8 8 8 8 8 - -- - w > g o o 8 - 8 h a 4 " z" z" z" VI VI 0 2 m 0 3 IE 8 m 0 m 0 2i 6 4 B Y + a .-ri:8 0 B 0 0" LA z Y Y 0 00 L ? E < c E 0 : I i jI c 8l- II r B 9E v M ec C 8 : 8 za e P ? e C e 5 :; 0 z f9. v) - C n x8 n a L 8 & & gi 1 9. eE E U L f9. C E 8 cc 8 L iLs 0 I i c:i I B G s BCI 8 2 2 0 N Y Y Y m O Go Y G6 8ET c C i 3 C C sE1 e C m W b a 1 C C r 'i 1 7 I 1 i i I I I i ! : .i , 1 I , I I .j i , ij '/ I , I 1,I II I I I I u I 1 60M .-.-e E dh 6 P c) U a -T I 1 2e!M .-.-e EB Y GB - e Y cc _. c c C cc s5 Uh c, 51 a t: E .-3e 'Ec. c 'ca'52 e n Annex 9: Economicand FinancialAnalysis LESOTHO: HIV and AIDS TechnicalAssistance Project 222. This Annex provides the economic, financial, and social analysis o f the Lesotho HIV/AIDS Project. Upon the request o f the government, and given the many players in the HIV/AIDS arena, the new project focuses rather narrowly on capacity-building to implement activities to fight HIVIAIDS. However, this analysis casts a broader gaze on the HIV/AIDS arena with the intention to further flesh out the needs for specific capacity-building. Section Iidentifies the key drivers o f the epidemic. Section I1analyzes the sources and uses o f funds to fight HIV/AIDS inthe country. Section I11examines the poverty impact o f HIV/AIDS epidemic. Section IV estimates the financing gap and discusses issues associated with fiscal space. Finally, SectionV identifies areas where efficiencies can be gained. Key Drivers of the Epidemic 223. Lesotho has the third highest HIV prevalence in the world, after Swaziland and Botswana. The seroprevalence survey, done under the 2004 Lesotho Demographic and Health survey (DHS), shows that 23.5 percent of the 15-49 years old Basotho population i s infected. This translates to about 270,000 infected people by end-2007. The epidemic i s generalized, though prevalence tends to be higher among women (26.4 percent) than men (19.3 percent. It i s also higher in urban areas (29.1 percent) compared to rural areas (21.9 percent). Because urban areas in Lesotho are mostly in lowlands, interms o f ecological zone, the lowlands have a higher rate o f infection (25.0 percent) than the rest o f the other zones (21 to 22 percent). Notable also i s the fact that about 73 percent o f HIV infection occurs among the economically productive population group (20-49 years old). Indeed, those currently working have a higher infection rate (30.3 percent) than those not currently working or unemployed (19.9 percent). Finally, infection rates tend to be higher in upper-income quintiles (23-25 percent), compared to the poorest quintile (19 percent), indicating mobility, urbanization, and employment as risk factors in HIV infection inthe country. 224. HIVprevalence is closely associated with risky sexual behaviors - Table 1,culled from the 2004 Lesotho DHS, shows that HIV prevalence is closely associated with risky sexual behaviors, sexually transmitted infections (STIs), and alcohol use. HIV prevalence tends to be higher among women with highrisk sexual intercourse, which refers to sexual intercourse with a partner who i s neither a spouse nor who lived with the respondent. Among this group, those with at least 2 sexual partners in the past 12 months had HIV prevalence o f 38.9 percent. HIV prevalence i s also clearly higher among women who had STI or STI symptoms in the past 12 months (43.9 percent prevalence against 27.6 percent among women who had no STI or STI symptoms). HIV prevalence is notably higher among either women or menwho drank alcohol in the past 3 months. Among men, those who are away from home also tended to acquire HIV infection. Finally, in 41 percent o f the infected couples, only one of the two partners i s HIV infected (Corn0 and de Walque, 2007), i.e., discordant couples. Therefore, there are still opportunities for prevention within couples. 86 Table 1. HIVPrevalenceby SexualBehavioramongAdult Men and Women (15-49) and Other Characteristics Relatedto HIVRisk,2004 Use of alcohol Drankalcohol inthepast 3 months 33.9 26.8 29.4 I Awav Never drank alcohol 27.3 18.7 25.1 from home for more than 1month Never away n.a. 18.0 n.a. Away for less than 1month n.a. 19.2 n.a. Away for more than 1month n.a. 21.0 n.a. 225. As in other Southern African countries, the principal mode of HIV transmission in Lesotho is heterosexual contact, principally through multiple concurrent partnerships. Close to a third (30.4 percent) of men aged 15-49 had 2 or more partners inthe previous 12 months, while 11.O percent of the adult women did, based on 2004 DHS data. Among these adult men, the mean number of sexual partnersina lifetime is 6.5, but among adult women, the number is much lower at 1.1. This supports the common observation that while adult women, in general, may be faithful, adult men - especially migrant workers in mines, agricultural plantations, etc. outside the country - are involved in concurrent sexual partnerships. Indeed, inthe past decade, it was estimated that as much as 60 percent of the total workforce was employed in South African mines where Basotho men develop sexual partnerships while away from their spouses. A more recent study shows that a third of the surveyed couples (35 out of 92) reported at least one concurrent relationship inthe past 12 months (Khobotlo, et al., 2008). 226. Knowledge that `tfaithfulness prevents HIV is widespreadfor both adult women and " men, but a high percentage still report having multiple sex partners - Figures 1 and 2 show the discrepancy between knowledge and practice with respect to "faithfulness" (having only one partner) as a means to prevent HIV infection. While 82.4 percent of adult women know that having only one uninfected partner prevents HIV, 11 percent of them persisted in having 2 or more sex partnersthe previous year. Curiously, multiple sexual partnershipamong women seem to be more prevalent in the poorest two quintiles (about 14 percent) than in the upper quintiles (about 10 percent), hinting at the possibility that multiple sexual partnership may be an income- augmenting activity or an informal safety net. Among adult men, knowledge of "faithfulness" as an HIV-prevention measure is lower (76 percent against 82 percent in adult women), but engagement inmultiple sexual partnership i s thrice higher (30.4 percent), pointing to the needfor 87 more education among adult men on this issue. Prevalence o f multiple partnerships among men is the same across household quintiles. Figure 1. Percentof Adult Women Who KnowHavingOnly One UninfectedPartner Prevents HIV and Those Who Had2 or More Partnersthe Past 12 Months, by Quintile,2004 Lowest 2nd 3rd 4th Richest All Source: Lesotho DHS,2004 Figure2. Percent of Adult Men Who Know HavingOnly One UninfectedPartner Prevents HIV and Those Who Had2 or More Partnersthe Past 12 Months, by Quintile,2004 Lowest 2nd 3rd 4th Richest All Source: Lesotho DHS, 2004 227. "Paid sex" is not common in Lesotho - Paid or commercial sex i s rather uncommon in the country. According to the 2004 DHS, only 1.7 percent o f men 15-49 years old paid for sexual intercourse inthe past 12 months. Paying for sex i s mostly an urban phenomenon engaged inby meninthe poorest andrichest quintiles. 228, Male circumcision is not associated with lower rate of HIV infection in Lesotho, but this may be because traditional "circumcision" is actually just scarification - Ecological studies worldwide have shown that high rate o f male circumcision i s associated with lower rate o f HIV infection (Table 2). Randomized control trials in Kenya, Uganda, and South Africa (cited below) also strongly indicate the high protective effect o f male circumcision. However, the 88 results of the Lesotho DHS 2004 do not confirm this global finding. Indeed, "uncircumcised" men tend to have a lower rate of HIV infection (15.2 percent) than "circumcised" men (22.8 percent). This baffling result runs counter to the finding of ecological studies and randomized control trials on the protective effect of male circumcision, but this could be explained by the fact that "male circumcision" as popularly understoodinLesotho-and as most likely reported in the DHS - refers to the traditional scarification in "coming-of-age" ceremonies, and not to the medically sanctionedform of male circumcision. Rate of Male Antenatal HIV Prevalence Rate (%) Circumcision High (>SO%) Mauritania (0.6), Senegal (0.8), Gambia (1.2), Niger (1.2), Madagascar (1.7), Benin(1.9), Mali (1.9), Eritrea (2.7), Djibouti (2.9), Ghana(3. l), Guinea (3.2), Angola (3.9), Togo (4.1), BurkinaFaso (4.2), DR Congo (4.2), Kenya (6.0), Cameroon (11.S) Low (<20%) Zambia (16.5), Namibia (21.3), Zimbabwe (24.6), Botswana (37.3), Swaziland (38.8) 229. Male circumcision has to be made top priority as an HIV prevention intervention - A growing body of studies suggests that countries with high rates of M C are unlikely to have generalized HIV epidemics. A large-scale randomized controlled trial in Kisumu, Kenya and Rakai, Uganda have concluded that M C significantly reduces the risk of HIV acquisition in young men by as much as 60 percent (Bailey, et al., 2007; Gray, et al., 2007). In both studies, HIV incidence was much lower inthe intervention group (menwho went through circumcision) than inthe control group (menwho remained uncircumcised). Importantly, MC did not involve behavioral disinhibition, Le., the circumcised men did not exhibit more risky sexual behavior after M C relative to the uncircumcised men. 230. The cost-effectiveness of male circumcision has been conJirmed in Swaziland, Lesotho, SouthAfrica, and Zambia - Recent analysis by Bollinger, et al. (2008) shows the cost of M C per infection averted to be US$437 for Lesotho for the period 2008-2015 (Table 3), which goes down to US$256 ifthe program horizonis extended to 202030.These are well within the cost per infection averted figures for STI treatment programs (US$271-5 14), VCT programs (US$393- 482), high-end PMTCT programs (as muchas US$2,198), and school-based education programs (US$7,288-13,326). The Lesotho cost savings achieved in terms of future ARV treatment costs avoided total US$33.7.9 million, if reckoned interms of a 5-year ART, or about US$6.7 million a year. 231. While knowledge of condoms as an HIV prophylaxis i s widespread, condom use is still low, even in high-risk sexual intercourse. Less than half of the adult men (48.6 percent) and women (41.9 percent) who engaged in risky sexual intercourse in the past 12 months used a condom (Figures 3 and 4). More importantly, use of condom in higher-risk sexual intercourse is 30The cost per infection averted inthe male circumcision study in Orange Farm, GautengProvince, South Afiica is even lower at US$l81 (Kahn, Marseille, and Auvert, 2007). 89 strongly associated with socioeconomic status, and condom use in risky sex is woefully low among the poorest (only 18.2 percent for adult men and 20.2 percent for adult women). Not surprisingly, condom use among adult men engaging in "paid sex" is higher at 58 percent, compared to only 47 percent in all high-risk sexual intercourse. This confirms the observation that African mentendto use condoms more frequently among prostitutes and other paidpartners, compared to trusting, intimate relationships. From a regional perspective, Lesotho's male condom use rate is low (Figure 5) comparedto other Southern African countries, so there is vast room for the promotionof the use of condoms even inintimate, trusting relationships. Items Lesotho Swaziland Zambia Cost of comprehensiveM C services per 54 49 47 procedure (US$) M C target, 2015-2020, % of eligible 50 50 57 population Average annual cost of M C program, 2008- 2.0 1.1 12.1 2015 (US$ million) Cumulative cost of M C program, 2008-2015 16.1 8.8 96.8 (US$ million) MCs per infection averted '' 2008-2015 7.6 8.4 12.9 2008-2020 7.0 6.5 10.6 Cost Der infection averted (US$) '' 2008-2015 437 417 618 2008-2020 309 256 408 Cost savings achieved interms of future ARV treatment costs avoided (US$ million) . 5-year ART 33.7 19.9 132.9 8-year ART 41.5 24.5 161.7 Figure3. Percentof Adult Men Who Know Condom as HIVProphylaxisand Useda Condom in Higher-RiskIntercoursein the Past 12 Months,by Quintile, 2004 I I I I I 1 Lowest 2nd 3rd 4th Highest All Source: Lesotho DHS,2004 90 Figure4. Percent of Adult Women Who Know Condom as HIVProphylaxisand Useda Condom in Higher-RiskIntercourseinthe Past 12 Months, by Quintile,2004 Lowest 2nd 3rd 4th Highest All IQKnowledge of condom Source: LesothoDHS,2004 Figure5. Percent Rateof Condom Use31in SouthernAfrican Countries, by Male and Female, mid- 2000s Namibia S. Africa Zimbabwe Lesotho Zambia Source: World DevelopmentIndicators2008 232. The vulnerability of married women engaging in extra-marital sex without using a condom must be addressed -Married women who have extra-marital relationships are less likely to use a condom than non-married women, according to the multiple regression model of Corn0 and de Walque (2007). Note that as depicted in an earlier figure, about 11 percent of adult Basotho women reported having extra-marital sex in the last 12 months. According to de Walque (2006), this rate is far higher than in other African countries. It could be that these women's husbands are migrant workers, and see the need to engage in extra-marital sex while their husbands are away. Such relationships, of course, quickly turn into trusting, intimate relationships where partners do not see the need for a condom, as has been observed in other African countries. This is an important source of women's vulnerability that should be addressed in prevention efforts through information, sexual negotiation, de-stigmatization of women purchasing condoms over the counter, promotion of female condoms, and generally easier access to condoms by women. 3 1This figure reports condomuse overall; the previousfigures report condom use for high-risk sex, hence the difference. 91 233. Urban young women are particularly prone to HIV infection, and this problem needs urgent attention - Young women 15-24 years of age are 2.5 times more infected than meninthe same age group (Figure 6). Urban young women show 4.6 times higher infection rate than urban young men. Rural young women are more than twice infected than rural young men. Finally, urban young women are nearly twice as infected as rural young women, while both urban and rural young men show almost the same low rates of infection. The severe vulnerability of young women to HIV infection should be a national emergency, Many factors can explain the youth's extreme vulnerability to HIV infection. e Early sexual debut and late marriage -Bongaarts (2006) has conjectured that early sexual initiation and late marriage in African countries provide a long period of sexual experimentation and multiple partnerships that often results in young women getting infected with HIV even before they enter marriage. In Lesotho, 15 percent of young Basotho women and 27 percent of young men had their sexual debut at age 15. About half of the men and women had their sexual debut at age 18. And yet the median age at first marriage for menis as late as 25 (19 for women). e Comprehensive knowledge of HIV/AIDS - Only a quarter of young women (25.8 percent) have comprehensive knowledge of HIV/AIDS. Among young men, this percentage is even lower at 18.4percent. e Involvement in high-risk sex, including multiple sexual partnerships and intergenerational sex -A very highproportion of young women (42 percent) and men(89 percent) had higher-risk intercourse the previous 12 months of the DHS survey. More worrisome, only half of these women in (50 percent) and less than half of the men (48 percent) used a condom during the high-risk sexual act. Some 7.2 percent of young women admitted they had higher risk intercourse with a man 10+ years older than them. e Low condom use - While about two-thirds young women (63 percent) and men (66 percent) know a condom source, use of condom is considerably lower. For instance, only about a quarter (24.5 percent) of young women and men used a condom at first sexual intercourse, and condom use at this initiation is particularly low among youth in the poorest two quintiles (6-8 percent). The percentage who used a condom at last sexual intercourse i s higher (55.7 percent among young women, 50.3 percent among young men), butthese ratesare lower thanthe rateswho professto know a condom source. 234. Education has a strong protective effect against HIV infection - Education is negatively associated with HIV infectionand strongly predicts preventive behaviors (Corn0 and de Walque, 2007). The implication of this finding should be clear: more extensive and systematic incorporation of HIV/AIDS education in the curriculum. The challenge is how to do this in Lesotho where most high schools are owned and operated by the Catholic Church, which has beenreluctant inincorporating health-oriented sex education content inlearning. 92 Figure 6. HIVPrevalence Among Young BasothoMen and Women Aged 15-24,2004 All Urban Rural Source: Lesotho DHS, 2004 235. Because of the HIV epidemic, the burden of tuberculosis has increased, but case-finding and treatment has not kept pace - Lesotho has the fifth highest incidence of TB inthe world at 635 cases per 100,000 people. The number of people with TB has increased more than four-fold since 1990, fueled by the HIV epidemic. TB is the main killer of those with HIV/AIDS. Indeed, over 80 percent of TB patients inthe country are co-infected with HIV. People with HIV are up to 50 times more likely to develop TB ina given year than HIV-negative people. Unfortunately, for every 100 TB cases inLesotho, less than 60 are currently being treated. Muchmore needs to be done inthis area. Sources and Uses of HIV/AIDS Funding 236. Compared to other countries in southern Africa, Lesotho is at the lower-end of spending in the fight against HIV/AIDS - The recently completed National AIDS Spending Assessment (NASA) showed that Lesotho incurred US$50.9 million in expenditures in the fight against HIV/AIDS in 2007, a hefty 82.4 percent increase from the 2006 spending of US$27.9 million, and slightly more than the 2005 spending of US$40.5 million (Figure 7). In per capita terms, HIV/AIDS spending averaged US$20.23 over the three-year period, and reached a high of US$25.44 in 2007 (Figure 8). Lesotho's HIV/AIDS spending per PLWHA averaged US$149 over the three-year period (Figure 9), also much lower than its southern African counterparts. Indeed, Lesotho's HIV/AIDS spending levels (in per capita and per PLWHA terms) is much closer to Zambia's spending levels. 93 Figure7. HIVIAIDS Expendituresin Southern African Countries, in US$ Million, 2003-2007 0222 @ 207.9 0229.5 0-1ss:8 d @ 50.9 I I I I I I 2003 2004 2005 2006 2007 Source: NASAs of various countries Figure8. HIV/AIDS ExpendituresPer Capitain SouthernAfrican Countries, in US$, 2003-2007 0 120.77 A 65.25 * _ 25.44 I I I t I 1 2003 2004 2005 2006 2007 I- - - - Botswana +Lesotho * Namibia X-Swaziland 8- Zambia I Source: NASAs of various countries Figure9. HIV/AIDS ExpendituresPerPersonLivingwith HIV/AIDS (PLWHA) in Selected Southern African Countries, inUS$, 2003-2007 0 764.86 fl4.74 188.44 1 1 2003 2004 2005 2006 2007 ----e---- Botswana -Lesotho 4 Namibia+Swaziland = Zambia Source: NASAs of various countries 94 237. The impact of Lesotho's HIV/AIDS spending on the economy and on the fiscus is still small - total spending on HIV/AIDS inthe country accounted for about 3 percent in 2005 and about 2 percent in 2006, still a small proportion and within the rates obtaining in nearby countries (Figure 10). Figure 10. HIV/AIDS Expendituresas Percent of GDP in SouthernAfrican Countries, 2003-2007 3 2.5 Botswana Lesotho Namibia Swaziland Zambia Source: NASAs of various countries 238. The country is highly reliant on external and governmentfunds toJght HIV/AIDS - Full data for 2005/06 show that about two-thirds (64.0 percent) of the HIV/AIDS funds were accounted for by international partners, a third (33.0 percent) by public funds, and a small percentage (3.1 percent) by private funds. Sources 2005/06 2006/07 Amount % Amount YO Public funds 84.9 33.0 80.5 42.6 Private funds 7.9 3.1 5.1 2.7 International funds 164.7 64.0 103.4 54.7 Total 257.4 100.0 189.0 100.0 239. Theproportion spent by Lesotho onprogram support and management is high and out of line with other countries in the region - In terms o f actual uses of HIV/AIDS funding, 25.8 percent went to management and support; 30.5 percent to treatment and care; 30.7 percent to impact mitigation; and only 12.9 percent to prevention (Table 5). Notably, the proportion spent on program support and management is high: comparison of seven Southern African countries that have conducted NASAs shows that Lesotho spends 21.3 percent on program support and 29.9 percent on other related costs, the highest proportions in the sub-region (Figure 11). This indicates a need for the country to avoid duplicate vertical systems particularly at the district level and improve efficient use of resources. 95 Table 5. Uses of Fundsfor HIV/AIDS Services. inMillion Maloti. 200906 and 2006/07 Programs II 2005/06 2006/07 Amount I % II Amount 1 % II Management coordination and support Program management and strengthening 38.32 14.9 44.87 23.7 Humanresources 6.2 1 2.4 10.74 5.7 Research 0.03 Negl. 0.20 0.1 Prevention programs 38.53 15.0 19.24 10.2 Treatment and care 73.95 28.7 62.43 33.0 Orphans and vulnerable children 59.27 23.0 25.38 13.4 I Social protection and social services 31.49 12.2 20.90 11.1 Total I 257.43 I 100.0 I 189.04 I 100.0 I Source: Lesotho National AIDS Spending Assessment 2007 Figure 11. Percent ofHIV/AIDS ExpendituresDevotedto ProgramManagementand Other Related Costsin Selected African Countries, mid-2000s 50 40 30 20 10 0 Lesotho 06 Malawi 05 Swaziland 06 Namibia 07 Zambia 06 Mozambique05 Botswana07 Source: NASAs of various countries 240. Spending on prevention and social impact mitigation needs to be increased - The relatively modest and declining proportions o f expenditures going to prevention (about 13 percent) and impact mitigation (about 30 percent) are a cause o f concern, given the continuing large service deficits in these areas. As will be described in the next two Sections, major prevention programs remain underfunded (e.g., medically safe and effective male circumcision, and integration of reproductive, maternal, and child health services) while vast numbers o f orphans and vulnerable children continue to be outside the reach o f social support programs. In addition, high-impact key preventive interventions such as HIV/AIDS testing and counseling, prevention of mother-to-child transmission o f HIV/AIDS, and tuberculosis control need to be ramped up through a more intensive link with community health programs. Clearly, capacity- building in the new project should focus on the provision o f these services that are currently under-provided. 96 241. Expenditure management leaves much to be desired - Figure 12 shows the shares o f planned versus actual expenditures of HIV/AIDS services by major programs. Notably, actual spending for treatment and impact mitigation exceeded planned expenditure by a wide margin, while prevention tended to be underspent, i.e., 20.6 percent was planned to be spent for prevention but only 12.9 percent was actually spent. This problem needs to be addressed so that prevention services can continue apace. Figure 12. Percent Share of PlannedVersus Actual expenditure^^^ of HIV/AIDS Services, by Major Programs, mid-2000s Mgt. coordination& support Prevention Treatment and care Impactmitigation Source: LesothoNASA Analysis of the Poverty Impact of HIV/AIDS 242. The impact of HIV/AIDS on poverty and growth is considerable - The recent report, "Sharing Growth by Reducing Inequality and Vulnerability: A Poverty, Gender, and Social Assessment for Lesotho" (World Bank, 2008) indicated that about 37 percent o f households lived below US$l/day in 2002/03 and about half lived inpoverty, mainly due to highinequality which persists in both urban and rural areas. Much o f the poverty occurs because of insecure livelihoods (often worsened by droughts), lack o f skills to compete inthe local andregional labor market, and the impact of diseases (principally HIV/AIDS and TB). Ingeneral, the health status o f the population has not improved over time. The HIV/AIDS epidemic is estimated to lower growth by about 7 percent over the medium term simply through lower labor force participation and slower physical and human capital accumulation. 243. Orphansand vulnerable children (OVC) have been hit hardest by the HIWAIDSepidemic -TheLesothoDHS2004revealsthat 26percent ofBasotho childrenareorphans, i.e., either or bothparents dead. The poorest quintile o f households also has the highestproportion of orphans (29.7 percent) and the richest quintile, the lowest proportion (20.7 percent) (Figure 13). Thus, unless cared for, the situation o f the poorest orphans could further deteriorate. Most of the orphans are in the school-age group (26.1 percent in ages 5-9 and 35.2 percent in ages 10-14). There are now about 200,000 OVCs, o f which only 60,000 are likely to be receiving conditional 32Plannedexpendituresrefer to 2006/07 inthe NationalHIVIAIDS StrategicPlan. Actual Expendituresrefer to 2005/06 and 2006/07 expendituresderivedfrom the NationalAIDS spendingAssessment. 97 cash transfers (CCT) of Maloti 120/month/householdfrom the EU-funded CCT program under preparation. This means that only 30 percent of the OVCs will be receiving this financial support (plus food rations from the World Food Program) when it starts implementation in April 2009, leaving 60 percent of the OVCs uncovered. Clearly, more resources need to be devoted to this population group to redress poverty and inequity arising from HIV/AIDS. Inaddition, the Social Welfare Department o f the MOHSW needs to be strengthened dramatically as it i s currently ill- prepared to embark on a large-scale impact mitigation program for people living with HIV/AIDS. Figure13. Percentof DeJure ChildrenUnder 18 by SurvivalStatus of Parentsand Children's LivingArrangement, by Quintile, 2004 I Lowest 2nd 3rd 4th Richest All I I I Source: Lesotho DHS, 2004 Financing Gap and Fiscal Space Issues 244. Despite recent large inflow of resources, a signifkant financing gap exists in HIV/AIDS - Comparison of the financial requirements to fight HIV/AIDS as contained in the Strategic Plan versus actual HIV/AIDS expenditures as revealed in the NASA shows that a significant financing gap exists. In 2006/07, requirements were estimated at Maloti 476.7 million, but spending only reached Maloti 189.0 million, or a gap o f Maloti 287.7 million. For 2007/08, the gap has narrowed somewhat as spending reached Maloti 346.5 million, versus requirements of Maloti 511.6 million, for an gap of Maloti 165.1 million. Note, however, that the gap i s cumulative since the unavailability of financing for a particular year only means that certain activities in the Strategic Plan have to be deferred until resources are available. Moreover, the Strategic Plan shows a consistent uptrend in resource requirements: Maloti 612.1 million in 2008/09, Maloti 656.5 million in2009/10, and Maloti 743.5 million in2010/11. 245. Lesotho currently spends 2.5percent of its GDP on HIV/AIDS -While this rate i s slightly higher than those obtaining innearby countries (2.2 percent in Zambia, 2.1 percent inBotswana, 1.9 percent in Swaziland, and 1.7 percent in Namibia), there are no indications that Lesotho is overspending on HIV/AIDS given the magnitude of the epidemic. However, the unfunded resource requirements of the Strategic Plan are large, and filling this gap means that HIV/AIDS spending could be expectedto garner a larger share of GDP over the mediumterm. 98 Figure 14. FundingRequirements,ActualExpenditures, and ExpectedResourcesfor HJY/AIDS Services,in Million Maloti, 200906 to 2010/11 2005106 2006107 2007108 2008109 2009110 2010111 Expenditures ClExpected resourcesI Sources: NAC HIVIAIDS Strategic Plan and Lesotho NASA 246. Lesotho could consider only a couple of avenues for creatingJisca1 spacefor scaled up HIV/AIDS spending - In a review done by the Poverty Reduction and Economic Management (PREM, 2006) Group o f the World Bank, several factors can potentially improve fiscal space (as percent o f GDP), as gleaned from the global analysis o f public expenditure reviews (PERs) (Table 6). However, a review below o f the specific fiscal and economic conditions in Lesotho show that the country can only realistically consider two o f these, namely efficiency improvement and enhanced governance. Table 6. How FiscalSpace could be Created Factors that Improve PREMNorms Fiscal SDace Improved PERs have identified areas o f rationalizationthat would release 3 expenditure percent o f GDP inresources for reallocation efficiencv Improvedrevenue Estimates o f revenue effort suggest that an additional 4 percent o f effort GDP could be raisedthrough domestic revenue measures Increased external Negotiationswith development partners may elicit indications o f grant aid an additional 3 percent o f GDP ingrant aid New borrowings Macroeconomic and debt management suggests that new borrowing over the period should be limitedto 2 percent o f GDP Source: PREM, 2006 Increased revenue collection - Lesotho's ratio o f tax revenueto GDP (44.3 percent inthe mid-2000s) is already the highest among SACU countries (Figure 15). Thus, there may be limited scope for increased revenue collection, especially inlight o f the government's . desire to lower corporate taxation as a means o f enticing foreign investors. Increased aid - Among SACU countries, Lesotho already has the highest aid per capita, aid as a percentage o f gross national income, and aid as a percentage o f gross capital formation. Moreover, Lesotho i s a small country which does not attract many donors. The current global economic crisis may also result inoverall downturn o f aid resources. 99 Increased government borrowing - Lesotho's ratio o f external debt to GNI i s high (35.8 percent) even compared to other middle-income countries (Table 7). The same i s true for the present value o f its debt as a percentage o f GNI and exports. Thus, there is little room for external borrowing. Improved expenditure efficiency - Based on the above cursory review, reallocating expenditures, enhanced governance, and overall improved efficiency o f spending seem to be the few avenues left to create fiscal space inLesotho. Figure 15. Tax Revenuesas Percent of GDP in SACU Countries,2000 and mid-2000 44.3 Lesotho Namibia S. Africa Swaziland I Source: World DevelopmentIndicators2008 1 Countries Aid Per Capita Aid as % of Aid as % of Gross Aid as % of (US$) Gross Nat'l Cap. Imports Income Formation 2000 2006 2000 2006 2000 2006 2000 2006 Botswana 18 II 35 0.5 II 0.7 1.4 I1 2.4 1.0 1I 1.4 Source: World Development Indicators2008 I Table 8. Selected Indicatorsof ExternalDebt in SACU Countries, 1995 and 2006 MICs 36.3 26.8 16.7 13.4 n.a. n.a. 100 Areas Where Further Efficiencies can be Gained 247. In light o f the examination of fiscal space possibilities, a review o f the current service financing trends in Lesotho shows that the following actions would increase allocative and operational efficiency: 0 Rationalizing the HIV/AIDS allocation towards more service orientation, in line with the spending patterns o f other Southern African countries. w Increasing the allocation for prevention activities which i s quite low. This could be done by focusing on high-impact interventions, including (a) a more cohesive prevention program on partner reduction, (b) medically indicated male circumcision, (c) HIV/AIDS education for the youth in line with the finding that education has a powerful protective effect on HIV infection, and (d) more intensive integration o f HIV services with traditional public health interventions such as family planning and maternal and child health. 0 Examining existing voluntary counseling and testing (VCT), ARV treatment, and TB treatment patterns with the end inview o f improving effectiveness and efficiency. (a) Given the significant investments on VCT, especially on "Know Your Status" campaigns, an impact evaluation i s needed to tease out issues related to dis-inhibition behavior, Le., the tendency o f those tested negative for HIV to return to their risky sexual behavior. (b) No cost-effectiveness analysis has been done on ARV treatment inLesotho. Similar exercises inother countries (e.g., Botswana) have yielded positive lessons that ledto changes inthe clinical guideline (especially on patient monitoring), use o f alternative human-resource arrangements in light o f the shortage o f health workers, purchasing of ARV drugs, and alternative delivery mechanisms for ARV through partnerships with private providers. The implications o f the recent policy decision to change the CD4 treatment initiation criterion are particularly important to analyze for its fiscal implications. (c) A balanced response to the HIV/tuberculosis co-epidemic should be reflected at central, district, and community levels. The fast- emerging problem o f MDRand XDR tuberculosis should be confronted. Prioritizing and designing the components and activities o f the proposed project so that they can improve efficiency, service coverage, and sustainability o f the national response to the epidemic. Towards this end, standard costing parameters should be formulated on the proposed programs. 101 Annex 10: SafeguardPolicyIssues LESOTHO: HIV andAIDS TechnicalAssistance Project 248. The project will not entail any major civil works as its main objective is technical assistance in the form of capacity building for government and civil society organizations to implement the National HIV and AIDS Strategy. There will be minor civil works or infrastructure development undertaken during the project. This will involve construction of prefabricated offices on premises already owned by the Lesotho Council of NGOs. Accordingly, there will be no land acquisition and no involuntary resettlement as a result of the project. The project triggers OPBP 4.01 as result of potential increaseinhealth care waste to be generated as a result of increasedaccess to health care services. ISafeguardPoliciesTriggered I Yes I No I TBD 1 EnvironmentalAssessment (OP/BP 4.01) X ~ NaturalHabitats(OP/BP4.04) X PestManagement(OP 4.091 X Forests(OP/BP 4.36) X PhysicalCulturalResources (OP/BP 4.11) X IndigenousPeoples (OP/BP4.10) X InvoluntaryResettlement(OP/BP4.12) X Safety of Dams (OP/BP 4.37) X ProjectsinDisputedAreas (OP/BP 7.60) X Projectson InternationalWaterways (OP/BP 7.50) X Safety of Dams(OP/BP 4.37) X Projectson InternationalWaterways (OP/BP 7.50) X ' Proiectsin DisDutedAreas (OP/BP 7.601 X 249. A National Health Care Waste Management Plan has been preparedthat will guide the management of medical waste during the implementation of the project. The Plan outlines the national policy, legal, and administrative frameworks for health care waste management. The Plan further provides health care waste management strategies for government owned hospitals and clinics, church owned hospitals and clinics as well as privately owned clinics and practitioners. Guidelines for handling of different streams of waste (segregation), storage, transportation and different disposal methods/technologies are presented in the National Health Care ManagementPlan. 250. The National Health Care Waste Management Plan was disclosed in-country on March 09,2009 and at the Bank's InfoShop on February 23,2009. 102 Annex 11:ProjectPreparationand Supervision LESOTHO: HIV andAIDS TechnicalAssistance Project Planned Actual PCN review December 01,2008 December05,2008 Initial PID to PIC January 20,2009 April 14,2009 Initial ISDS to PIC January 20,2009 January 14,2009 Appraisal April 8, 2009 March 12-20,2009 Negotiations June 11,2009 June 11,2009 BoardRVP approval August 27,2009 Planneddate of effectiveness November 26,2009 Planneddate of mid-termreview January 28,2012 Plannedclosing date January 31,2015 Key institutionsresponsiblefor preparationof the project: Lesotho NationalAIDS Commission (NAC) MinistryofHealthand Social Welfare (MOHSW) Lesotho Council ofNGOs (LCN) Ministry ofLocalGovernment andChieftainship (MOLGC) Global FundCoordination Unit (GFCU), Ministry of Finance Bankstaff and consultantswho worked onthe project included: Name Title Unit Feng Zhao Senior Health SpecialistITask Team Leader AFTHE Christopher Walker Lead Health Specialist AFTHE Kanako Yamashita-Allen Consultant AFTHE Peter Okwero Senior Health Specialist AFTHE Marelize Gorgens Monitoring and Evaluation Specialist HDNGA Cassandra de Souza Operations Analyst AFTHE Lungiswa Thandiwe Gxaba Senior Environmental Specialist AFTEN Wedex Ilunga Procurement Specialist AFTPC Gayle Martin Senior Economist (Health) AFTHE Marjorie Mpundu Counsel LEGAF Suzanne Morris Senior FinanceOfficer LOAFC Joao Tinga Financial ManagementAnalyst AFTFM Joel Spicer Senior Health Specialist AFTHE Oscar Picazo Senior Economist AFTHl Lori Geurts Senior Program Assistant AFTED Rosario Aristorenas ProgramAssistant AFTED 103 Bankfunds expendedto dateonproject preparation: 1. Bankresources: US$193,000 Total: US$193,000 Estimated Approval and Supervision costs: 1. Remaining costs to approval: US$ 68,500 2. Estimated annual supervision cost: US$lOO,OOO 104 Annex 12: Documents in the ProjectFile LESOTHO: HIV andAIDS TechnicalAssistance Project 1. Sharing Growth by Reducing Inequality and Vulnerability: A Poverty, Gender, and Social Assessment, Report No. 46297-L, World Bank PREM, December 2008. 2. HIV and AIDS Capacity Building and Technical Assistance Project (HCTA) (Gr. H113- LSO) Project Appraisal Document, Aide-Memoires, and Implementation Completion and ResultsReport 3. Dupas P., "Relative Risks and the market for sex: Teenagers, Sugar Daddies and HIV in Kenya," 2006 4. Global Fund HIV and AIDS Bi-Annual Progress Report, Round 2 Phase 11, Jan.-Jun. 2007, Bi-Annual Progress Report for Round 5 Global Fund Support in Lesotho, Reporting Period Nov. 2006-Apr. 2007 5. Government of Lesotho, "Guidelines to prevent Mother to Child Transmission of HIV," June 2004 6. Lesotho: New Planto ReduceHIV Infections inChildren" (April 2007) 7. Sustaining Treatment for AIDS in Lesotho, Presentationby Dr Ramatlapeng, Minister of Health and Social Welfare, Lesotho, 2007 8. Male Circumcision for HIV Prevention inYoung MeninKisumu, Kenya: A Randomized Controlled Trial. The Lancet, Vol. 369, Feb. 24, 2007 9. Male Circumcision for Prevention in Men in Rakai, Uganda: A Randomized Trial. The Lancet. Vol. 369. Feb.24,2007 10. Male Circumcision: Evidence and Implications. HIV/AIDS M&E - Getting Results.The World Bank.2006. 11. Cost of Male Circumcision and Implications for Cost-Effectiveness of Circumcision as an HIV Intervention. PowerPoint Slide Presentation, Health Policy Initiative, USAID, June 2007 12. Cost-Effectiveness of Male Circumcision for HIV Prevention in a South African Setting. PLoS Medicine. Vol. 3, no. 12,2007 13. Background Paper on HIV and AIDS, 9th Roundtable Conference on sustainable Economic Growth and Poverty Reduction, Maseru, Lesotho, November 2006. 14. Late Marriage and the HIV Epidemic in Sub-Saharan Africa. Working Paper No. 216. Population Council. 2006. 105 15. Combatting the AIDS Pandemic in Lesotho and Understanding Beliefs and Behaviors: The Determinants of HIV Infection and Related Sexual Behaviors. World Bank Draft Report. 2007 16. Behavioral Surveillance Survey 2002. IMPACT Project. 17. Gender and Multiple Concurrent Sexual Partnerships in Lesotho. Preliminary Report. NationalAIDS commission, UNAIDS, and Family Health International. 2008. 18. Ministry of Health and Social Welfare and ORC Macro (2005). Lesotho Demographic andHealthSurvey2004. Maseru, Lesotho and Calverton, Maryland. 19. Ministry of Health and Social Welfare (n.d.). Capacity Building Plan for the Child Welfare Unitofthe Department of Social Welfare. Maseru, Lesotho. 20. National AIDS Commission (2005). National HIV and AIDS Strategic Plan (2006- 2011). Maseru, Lesotho. 21. Fiscal Policy for Growth and Development: An InterimReport. World Bank.2006. 22. Lesotho National AIDS Spending Assessment, 2005/06 - 2006/07, Joint UnitedNations Program on HIV/AIDS (UNAIDS) 2008. . 23. World Bank (2008). World Development Indicators. 24. World Bank (2008). Sharing Growth by Reducing Inequality and Vulnerability: A Poverty, Gender and Social Assessment for Lesotho. Draft Report. 106 Annex 13: Statementof Loansand Credits LESOTHO: HIV andAIDS TechnicalAssistance Project Differencebetween expected and actual Original Amount in US$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd P108143 2009 LS-WaterSector Imp. Proj (SecondPhase) 0.00 25.00 0.00 0.00 0.00 25.79 0.00 0.00 PO75566 2007 LS-Integr Tramp SIL (FY07) 0.00 23.50 0.00 0.00 0.00 10.05 6.95 0.00 PO88544 2007 LS-Priv Sec Competitiveness 0.00 8.10 0.00 0.00 0.00 6.69 1.so 0.00 PO76658 2006 LS-HealthSec ReformPhase2 APL 0.00 6.50 0.00 0.00 0.00 2.48 2.09 0.00 (FY06) PO56418 2005 LS-Water Sec ImprovementsAPL (FY05) 0.00 14.10 0.00 0.00 0.00 7.71 7.04 5.57 Total: 0.00 77.20 0.00 0.00 0.00 52.72 17.88 5.57 LESOTHO STATEMENTOF IFC's Heldand DisbursedPortfolio InMillions ofU S Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. Total pendingcommitment: 0.00 0.00 0.00 0.00 107 Annex 14: Country at a Glance LESOTHO: HIV and AIDS TechnicalAssistance Project Sub- Lower- POVERTY and SOCIAL Saharan middle- Lesotho Afrlca Income Developmntdianond' 2007 Population,mid-year(millions) 2.0 800 3,437 GNI per capita (Atlas method,US$) 1030 952 1887 Life expectancy GNI (Atlas method,US$ billions) 2.1 762 6,485 Average annual growth, 2001-07 T Population (%) 0.8 2.5 11 Laborforce (%) 0.5 2.6 15 GNI Gross per wmaw M oet recent estlmate (latest year available, 2001-07) capita enrollment Poverty (% ofpopulationbelownationalpovertyline) Urban population (%of totalpopulation) 25 36 42 Lifeexpectancyat birth (pars) 43 51 69 Infant mortality (per 1,0001ivebirths) x)2 94 41 Child malnutrition(%ofchildren under5) n 27 25 Access to an improvedwater source (%ofpopulation) 78 58 08 Access to improvedwater source Llteracy(%ofpopulation age a+) 82 59 89 Gross primaryenrollment (%of school-age population) 114 94 in ,*-* Y Lesotho Male 115 99 1P x)9 - Female 114 Lower-middleincomeg m p 88 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1907 1997 2006 2007 Economlcratios' GDP (US$ billions) 0.44 10 15 16 Gross capitalformation/GDP 39.8 54.0 24.3 27.9 Exportsof goods and SeNiCeSlGDP ni 24.3 50.8 54.9 Trade Gross domestic savlngslGDP -615 -26.8 -22.0 -24.1 Gross nationalsavingsiGDP 415 24.5 28.7 412 Currentaccount balancelGDP 16 -29.4 4.4 u.3 Interestpayments/GDP 13 2.0 0.6 Total debtlGDP 59.4 65.8 44.0 Total debt servicelexports 3.9 6.9 4.0 Present valueof debtlGDP 29.3 A Present valueof debt/exports 36.8 Indebtedness 1907-97 1997-07 2006 2007 2007-11 (average annualgruwih) GDP 6.5 2.7 7.2 4.9 5.4 x x m xLesotho GDP per capita 4.9 15 6.4 4.3 5.3 - Exportsof goods and services 9.9 8 . 9 7.7 14.6 9.5 Lower-m'ddle-incomeg m p STRUCTURE o f the ECONOMY I 1987 1997 2 0 0 6 2 0 0 7 ( % o f G D P ) G r o w t h o f c a p i t a l a n d G D P ( % ] Agriculture 23.0 15.3 183 11.9 T lndust ry 28.9 42.4 43 2 46.9 2 0 M anufacturing 14.8 18.3 I79 19.2 0 Services 48.1 42.3 40 5 4 1.2 -20 Household final consumption expenditure 0 7 . 5 m5.6 95 6 98.0 General gov't final consumption expenditure . I O 24.1 21.2 27 2 26.1 Imports 0 1 goods and services 112.4 735.1 97 8 736.9 "-- GCF -0DP 1 9 8 7 - 9 7 1997.07 2 0 0 6 2 0 0 7 (average annualgro wlh) G r o w t h 0 1 e x p o r t s and I m p o r t s (%) A gricuiture 1.1 -3.0 -23 0 -1.9 industry 8.9 4.7 9 8 5.5 M anufacturing 8.3 5.4 110 2.7 Services 7.4 2.1 183 5.3 Household final consumption expenditure 3.2 8.0 4 3 7.8 General gov't final consumption expenditure 5.8 2.9 127 0.5 Gross capital formation 9.3 -4.8 -7 3 20.5 Imports o f goods and services 4.8 m.7 3 4 a.3 Note.2007 data are prelimineryestimates. This tabiewas producedfrom the Development Economics LDB database. *Thediamonds showfourkeyindicators in thecountry(in boid)compared withits income-groupaverage.11 data are missing,the diamond will be incomplete 108 Lesotho P R I C E S a n d G O V E R N M E N T F I N A N C E 1987 1997 2 0 0 6 2 0 0 7 D o m e s t i c p r i c e s I n f l a t i o n (Oh) 1 (%change) Co nsumer prices 117 7.3 6 1 8 0 lo' .'I Implicit GDP deflator 157 -1.9 4 2 6 2 Go v e r n m enf flnsnce (96 of GDP, includes current grants) Current revenue 318 46.5 58 4 60 7 02 03 04 05 06 Current budget balance 2 3 16.8 193 20 9 Overallsurolus/deficit -18 8 -1.6 P.3 m 3 GDPdeliator -CPI T R A D E 1987 I 9 9 7 2 0 0 6 2 0 0 7 (US$ millions) E x p o r t a n d I m p o r t levels ( U S $ mill.) Totalexports (fob) 44 196 699 803 Clothing and othergoods !,OD0 3 15 20 Dl M achineryand otherequipment 91 164 I500 M anufactures 40 181 567 577 Total imports (cif) 488 1,073 1,457 1,705 I O 0 0 Food 363 424 Fuel and energy 60 a3 500 Capital goods 164 191 0 Export price index (200O=x)O) 59 75 89 90 01 02 03 04 05 OB 07 Import price index (20OO=x)O) 87 m7 86 88 @Exports mlmportli Terms of trade (20OO=x)O) 68 70 m4 m2 B A L A N C E o f P A Y M E N T S 1987 1997 2 0 0 6 2 0 0 7 (US$ millions) C u r r e n t a c c o u n t balance t o G D P (Oh) Exports of goods andservices 48 249 759 879 Imports of goods and sewices 489 1,076 1,462 1,7M Resource balance -441 -827 -703 -831 10 Net income 336 324 380 477 0 Net current transfers 10 202 389 627 Current account balance 7 . I O -301 66 273 Financing items (net) -2 390 P 5 52 -20 Changes in net reserves -5 -89 - 9 1 -265 Memo: Reserves including gold (US$ m///ions) 60 584 627 1,006 Conversion rate (DEC, /ocaYUS$) 2.o 4.6 8 8 7 0 E X T E R N A L D E B T a n d R E S O U R C E F L O W S 1987 1997 2 0 0 6 2 0 0 7 (US$ mi//ions) C o m p o a l t i o n o f 2 0 0 6 debt ( U S $ mill.) Total debt outstanding and disbursed 259 873 670 IBRD 0 58 9 4 IDA 81 163 275 293 E 65 F 2 2 Total debt service ti 48 47 IBRD 0 6 4 4 IDA 1 3 7 8 B 275 Compositionofnet resource flows Official grants 47 39 44 Official creditors 29 23 -1 D 263 Private creditors Q 22 -8 Foreign direct investment (net inflows) 6 268 78 Portfolio equity (net inflows) 0 0 0 C 36 I World Bank program Commitments 0 18 4 Disbursements - 20 11 73 A IBRD E. Bilateral Principalrepayments 4 9 m B .IDA D. Other multilateral F . Private C - I M F G. Short-term Net flows 16 2 3 Interest payments 5 3 3 Net transfers 11 -1 1 Note This table was producedfrom the Development Economics LDB database 9/24/08 109 110 MAP SECTION IBRD 33434 LESOTHO SELECTED CITIES AND TOWNS MAIN ROADS LESOTHO DISTRICT CAPITALS RAILROADS NATIONAL CAPITAL DISTRICT BOUNDARIES RIVERS INTERNATIONAL BOUNDARIES 27°E 28°E 29°E SOUTH AFRICA To Caledon Fouriesburg Libono Mont-aux- Sources (3,282 m) Butha-Buthe To B U T H A - Senekal Leribe B U T H E Maputsoe To Clocolan Peka L E R I B E 29°S 29°S Pitseng Mapoteng Njesuthi M O K H.O T L OMakheka N G (3,446 m) To Teyateyaneng Ladybrand B E R E A MtnsMokoeng (3,461 m) Mokhotlong MASERU Thaba- Machache Phafane Mazenwood (2,885 m) Malutige Thabana (3,250m) Mohokare Ntlenyana 3,482 m) Roma Oran Mtns. Thaba-Tseka Seqoqo (3,394 m) erg Ranko M A S E R U Mantsonyane T H A B A - T S E K A Matsieng Mashai DrakensbHimeville To To Thaba Dewetsdorp M A F E T E N G Putsoa (3,095 m) Mafeteng Semonkong Sehlabathebe Tsoloane Q A C H A' S N E K 30°S To 30°S Zastron M O H A L E ' S Orange Sekake Qacha's H O E K Nek To Matatiele Mohale's Hoek To To Matatiele Zastron Mekaling Mount Moorosi Q U T H I N G Quthing To SOUTH AFRICA Sterkspruit Sinxondo This map was produced by the Map Design Unit of The World Bank. The boundaries, 0 10 20 30 40 50 Kilometers colors, denominations and any other information shown on this map do not imply, on the part of The World Bank 0 10 20 30 Miles Group, any judgment on the legal status of any territory, or any endorsement or a c c e p t a n c e o f s u c h 27°E 28°E 29°E boundaries. SEPTEMBER 2004