Document of The World Bank FOR OFFICIAL USE ONLY Report No: 94188-DJ INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL FINANCING IN THE AMOUNT OF US$7 MILLION FUNDED FROM HEALTH RESULTS INNOVATION TRUST FUND TO THE REPUBLIC OF DJIBOUTI FOR THE IMPROVING HEALTH SECTOR PERFORMANCE PROJECT April 8, 2015 Health, Nutrition and Population Global Practice Middle East and North Africa This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective February 28, 2015) 1 USD = 178 FDJ FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ADDS Djiboutian Agency for Social Development (Agence Djiboutienne pour le Développement Social) CAMME Drug Fund (Centrale d’Achat des Médicaments et Matériels Essentiels) CAS Country Assistance Strategy CAP Purchasing Unit (Cellule d’achat de Performance) CMH Regional Health Centers (Centres medico-hospitaliers) COGES Health Management Committees (Comités de Gestion de Santé) COSAN Health Committee (Comité de santé) CREN Centers for Recovery and Nutrition Education CSC Community Health Centers (Centres de Santé Communautaire) DEPCI Direction des Etudes, Planification et Coopération Internationale DISED National Statistics Office (Direction Statistique de Djibouti) DOTS Directly Observed Treatment Short-course DPS Heath Promotion Directorate (Direction de la Promotion de la Santé) DRHF Directorate of Human and Financial Resources (Direction des Ressources Humaines et Financières) DRS Regional Health Directorates (Direction des Régions Sanitaires) DSME Directorate of Maternal and Infant Health (Direction de Santé Maternelle et Infantile) EEP Eligible Expenditure Payments EIA Environmental Impact Assessment EMP Environmental Management Plan FDI Foreign Direct Investment HRITF Health Results Innovation Trust Fund HSDP Health Sector Development Project IGSS Inspectorate General of Health Services (Inspection Générale des Services de Santé) IFR Interim Financial Report IMCI Integrated Management of Childhood Illnesses INDS National Initiative for Social Development (Initiative Nationale de Développement Social) MBB Marginal Budgeting for Bottlenecks MDG Millennium Development Goal MEFIP Ministry of Economy and Finance, in charge of Industry and Planning MNH Maternal and Neonatal Health MOH Ministry of Health PAPSS Projet d’Amélioration de la Performance du Secteur de la Santé PBF Performance Based Financing ii POM Project Operational Manual PAPFAM Pan Arab Project for Family Health PEV Expanded Programme for Immunization (Programme Elargi de Vaccination) PFS Project Financial Statements PIU Project Implementation Unit PNDS National Health Development Plan (Plan National de Développement de la Santé) PRSP Poverty Reduction Strategy Paper RBF Results-Based Financing SIS Health Information System (Système d’Informations Sanitaires) SOE Statement of Expenditure STI Sexually Transmitted Infections VCT Voluntary Counseling and Testing WHO World Health Organization Regional Vice President: Hafez Ghanem Acting Country Director: Poonam Gupta Senior Global Practice Director: Timothy Evans Practice Manager/Manager: Enis Barış Task Team Leader: Emre Özaltın iii DJIBOUTI HEALTH HRITF PROJECT CONTENTS Project Paper Data Sheet…………………………………………………………………………...v Project Paper I. Introduction……………………………………………………………………….8 II. Background and Rationale for Additional Financing…………………………….9 III. Proposed Changes……………………………………………………………….13 IV. Appraisal Summary……………………………………………………………..16 V. World Bank Grievance Redress…………………………………………………17 Annexes 1. Revised Results Framework and Monitoring Indicators…………………..........18 2. Systematic Operations Risk-rating Tool……………………………………...…21 3. Performance-Based Financing Indicators………………………..…….………..22 4. Additional Financing Budget…………………………………………………....23 5. Quality Assessment Tool Summary……………………………………...……..24 6. Project Results to Date………………………………………………………….25 7. Financial Management……..……………………………………………………27 iv DJIBOUTI HEALTH HRITF PROJECT ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Acting Country Director: Poonam Gupta Sectors: Health (100%) Practice Manager/Senior Global Practice Themes: Health system performance Director: Enis Barış/Timothy Evans (40%), Child health (25%), Population and Team Leader: Emre Özaltın reproductive health (25%), HIV/AIDS Project ID: P152705 (5%), Other communicable dis eases (5%) Expected Effectiveness Date: June 30, 2015 Environmental category: B Lending Instrument: IPF Expected Closing Date: December 31, Additional Financing Type: Scale up 2018 Joint IFC: No Joint Level: Basic Information - Original Project Project ID: P131194 Environmental category: B Project Name: Improving Health Sector Expected Closing Date: December 31, Performance 2018 Joint Level: No Joint IFC: No Lending Instrument: Investment Project Fragility or Capacity Constraints [ ] Financing Financial Intermediary [ ] Series of Projects [ ] AF Project Financing Data [ ] Loan [ ] Credit [ X ] Grant [ ] Guarantee [ ] Other: Proposed terms: AF Financing Plan (US$m) Source Total Amount (US $m) Total Project Cost: 7 Cofinancing: Borrower: Total Bank Financing: 7 IBRD IDA HRITF Grant 7 New Recommitted Client Information v Recipient: Ministry of Finance Responsible Agency: Ministry of Health Contact Person: H.E. Dr Kassim Issak Osman Telephone No.: 253-21356300 Fax No.: Email: AF Estimated Disbursements (Bank FY/US$m) FY 2015 2016 2017 2018 Annual 1 1 2.8 2.2 Cumulative 1 2 4.8 7 Project Development Objective and Description Original project development objective: to improve the utilization of quality health care services for maternal and child health and communicable disease control programs (HIV/AIDS, tuberculosis and malaria). Revised project development objective: to improve the utilization of quality health care services for maternal and child health and communicable disease control programs (HIV/AIDS and tuberculosis). The revised PDO will be applicable to the original IDA Credit as well. Project description: Component 1: Improving health service delivery performance. This component supports the delivery of improvements in: (i) child health services such as immunization, Integrated Management of Childhood Illnesses (IMCI), and treatment of malnutrition; (ii) maternal child health services such as prenatal care, family planning, skilled-attended delivery, and emergency obstetric care; and (iii) prevention and treatment services of HIV/AIDS and other prevalent communicable diseases. (Component 1 of the original Project as well as the additional financing is amended to exclude malaria.) Component 2: Strengthening health system management. This component supports activities aimed at strengthening the management capacity of the Ministry of Health (MOH) and improving the performance of the different health systems in support of health services. Component 3: Strengthening project management and monitoring and evaluation capacity. This component supports the Project Implementation Unit (PIU) in managing project activities and fiduciary functions, including financial management, procurement, and environment. Component 2 exists in the original project but not in the additional financing. For the purposes of the additional financing, and hereafter in this document, Component 1 is referred to as Component A and Component 3 is referred to as Component B. Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [ X ]Yes [ ] No Natural Habitats (OP/BP 4.04) [ ]Yes [ X ] No Forests (OP/BP 4.36) [ ]Yes [ X ] No Pest Management (OP 4.09) [ ]Yes [ X ] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [ X ] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [ X ] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [ X ] No Safety of Dams (OP/BP 4.37) [ ]Yes [ X ] No Projects on International Waterways (OP/BP 7.50) [ ]Yes [ X ] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [ X ] No vi Is approval of any policy waiver sought from the Board (or MD if RETF [ ]Yes [ X ] No operation is RVP approved)? Has this been endorsed by Bank Management? (Only applies to Board [ ]Yes [ ] No approved operations) Does the project require any exception to Bank policy? [ ]Yes [ X ] No Has this been approved by Bank Management? [ ]Yes [ ] No Conditions and Legal Covenants: Financing Agreement Reference Description of Condition/Covenant Date Due Article IV, 4.01 (a) The execution and delivery of this By effectiveness Agreement on behalf of the Recipient have been duly authorized or ratified by all necessary governmental action; Article IV, 4.01 (b) The Project Steering Committee By effectiveness (PSC) has been established with a composition and terms of reference acceptable to the Association. Schedule 2, Section II.B.4 The Recipient shall recruit an external Not later than two (2) months auditor whose qualifications, after Effective Date experience and terms of reference shall be acceptable to the Association. Schedule 2, Section I.F.1(a) The Recipient shall appoint external Not later than one (1) month monitoring and evaluation experts after the Effective Date (“Independent Verifiers�), to act as third-party verifiers of the proper fulfillment of the DLIs set forth in RBF Manual and the respective Participating Health Care Provider Agreement. Schedule 2, Section I.F.1(b) The Recipient shall cause the Every calendar trimester starting Independent Verifiers to carry out, six (6) months after the Effective prior to each Withdrawal, an Date assessment of the level of fulfillment of DLIs set forth in RBF Manual and the respective Participating Health Care Provider Agreement, and provide to the Recipient and the World Bank, an Independent Verification Report containing, inter alia, said assessment on the fulfillment of the pertinent DLIs and a proposal for disbursement under each Withdrawal. vii Schedule 2, Section IV.B.1 No withdrawal shall be made for Before first disbursement and payments made under Category (1) every calendar trimester starting unless six (6) months after the Effective Date (i) the MoH has adopted the RBF Manual in a manner satisfactory to the Association; (ii) the relevant EEP Spending and Assessment Report has been submitted to, and found satisfactory by, the Association in accordance with the Independent Verification Reports; and (iii) any applicable Disbursement- Linked Indicators as set forth in the RBF Manual and the respective Participating Health Care Provider Agreement have been met by the Recipient satisfactory to the World Bank. viii I. Introduction 1. This Project Paper seeks the approval of the MNA RVP of an Additional Financing (AF) Grant in the amount of US$7 million funded from the Multi-Donor Trust Fund for Health Results and Innovation Trust Fund (HRITF). 2. The PAPSS is a five-year Performance-based Financing (PBF) project. The Project was conceived to cover all existing basic health institutions at the primary level in Djibouti-ville, and through a phased approach to cover all institutions at the primary and secondary level in the five regions. The original Project, which became effective on July 11, 2013, is funded from IDA for US$7 million equivalent and has been in the ‘pilot’ phase since June 2014. The proposed AF includes revisions to the Results Framework. The Project’s closing date remains unchanged. 3. All existing primary public health facilities in Djibouti-ville and primary and secondary public health facilities in two regions (Tadjourah and Ali- Sabieh) are contracted through a public purchaser approach and remunerated based on indicators related to delivery of health services (see Annex 3). The contracts are between the Project Implementing Unit (PIU) and the health facility or, in the case of health posts (PS), between the regional hospital (CMH) and the PS.1 After preparing a business plan that is ratified by the PIU, contracted facilities are given an initial investment amount. Thereafter, contracted indicators are verified monthly by the Cellule d’Achat de Performance (CAP) (Performance Purchasing Unit). A system for counter-verification through surveying of a subsample of those receiving care is implemented by local organizations. A trimestral validation study is undertaken by a third-party autonomous agency. Finally, a trimestral quality study is undertaken by a team from the PIU and MoH. Equity is addressed through differential pricing of indicators (with a higher coefficient given for rural and remote areas) and through an indicator which directly remunerates health services delivered to the poor (see Annex 3). 4. In Djibouti-ville, 13 public health centers (CSC) are contracted, while in the two regions 18 health facilities are contracted: 16 health posts (PS) and the two regional hospitals (CMH). This initial phase of the PBF project covers 80 percent of the population of Djibouti (709,523 out of 891,810 in 2014). Tables 1 and 2 summarize select health indicators for Djibouti. Table 1. Population, MCH and Nutrition Indicators by Region Region Ali Djibouti Sabieh Arta Dikhil Obock Tadjourah ville National Population 70,562 43,651 41,389 41,389 73,636 519,663 846,147 Skilled Birth Attendance (%) 75.9 63.7 78.2 60.8 56.5 98.8 87.4 Female Genital Mutilation (%) 70.1 69.2 75.9 94.7 85.3 78.5 78.4 Antenatal care (4+ visits) 10.7 8.4 22.7 17.6 16.6 26.5 22.6 Postnatal care (%) 66.4 60.2 78.2 68.8 50.6 78.7 54.4 Underweight (% children <5) 29.6 35.8 34.7 45.2 41.4 25.4 29.8 1 All contracts will be between the PIU and health facility, including health posts, under the AF. 9 Stunting (% children <5) 35.8 34.2 36.6 44.4 44.6 29.8 33.5 Wasting (% children <5) 22.7 32.8 24.5 30.3 23.2 18.8 21.5 Source: EDSF/PAPFAM 2012 Table 2. Select Health Indicators by urban/rural Indicator Urban Rural National Maternal Mortality Ratio (per 100,000 live births) - - 383 Child Mortality (per 1,000 live births) 69 64 68 Infant Mortality (per 1,000 live births) 59 56 58 Neonatal Mortality (per 1,000 live births) 35 40 36 HIV prevalence (%) - - 1.4 Tuberculosis prevalence (%) - - 1.0 Malaria prevalence (%) - - 0.0 Children under five fully vaccinated (%) 35.0 Average household size 6 5 5.8 Electricity (%) 68.5 7.2 55.9 Chronic condition (%) 3.3 3.9 3.4 Contraceptive prevalence 21.4 10.3 19.0 Source: EDSF/PAPFAM 2012 5. The project’s original development objective was to improve the utilization of quality health care services for maternal and child health and communicable disease control programs (HIV/AIDS, tuberculosis and malaria). However, during the one year between project effectiveness and contract signing, it was decided that malaria was no longer a priority and, as a result, malaria was not a contracted indicator and no data on malaria has been collected to date. The purpose of the AF is to (1) close the funding gap necessary to introduce methodological adjustments and (2) to scale up the PBF component to expand the project to all geographical areas of the country. The AF will be used to update and improve implementation by a) revising the incentives currently used to encourage health facilities to improve performance; b) introducing the quality adjustment component; c) integrating incentives for management at the PIU; d) piloting facility autonomy in managing drug revolving funds to improve the drug supply; and e) improving coaching and accompaniment for health facilities. The AF will additionally formalize links with the World Bank-financed Social Safety Net Project (Cr. H7790) by facilitating subcontracting between health facilities and community peer educators. For the national scale-up, in addition to Djibouti-ville, Ali-Sabieh and Tadjourah, the AF proposes to expand the PBF to include health facilities in Arta, Dikhil and Obock. The closing date of the original project is December 31, 2018; the AF will have the same closing date. II. Background and Rationale for Additional Financing in the amount of US$7 million 6. The modified and scaled-up activities are fully consistent with little substantive departures from the original, approved, project. The activities to be supported through the AF are consistent with the current PDO which remains highly relevant. They are consistent with the country’s Vision 2035, which includes the consolidation of human capital as one of its four pillars and which aims to reduce 10 extreme poverty and build the foundations for shared growth by harnessing the country’s human and economic potential, and the World Bank Group’s Country Partnership Strategy for Djibouti FY2014- 2017 (Report 83874-DJ), directly supporting the first pillar of the strategy: reducing vulnerability. The activities are also fully aligned with MNA’s Health, Nutrition and Population Strategy (2013-18), focusing on fairness and accountability of the health system. The Project is also aligned with MENA’s Regional Strategy, supporting the pillar on ensuring social and economic inclusion. 7. The Project is also aligned with the Poverty Reduction Strategy Paper (PRSP), INDS (Initiative Nationale de Développement Social) and PNDS II (Plan National de Développement de la Santé) by: (i) improving the organization, management, and operation of the health system; (ii) adapting the operation and the quality of health services to the needs of the population; (iii) adapting financing and use of financial resources to the needs of the health system; (iv) developing human resources according to the needs of the health system; and (v) improving the availability, access, and rational use of quality drugs. 8. While the effectiveness date of the original project is July 2013, facilities have only been contracted since June 2014. In addition to the delays, a number of methodological adjustments (either planned and not implemented or requiring introduction) are necessary and constitute the funding gap. With the AF, and given that the RBF Manual is in place and the PBF activities have begun, implementation can be expected to accelerate. The Project Operational Manual and the RBF Manual will be updated to reflect methodological changes associated with the AF. Additionally, the original project ‘pilot’ covers 80 percent of the population and there is no reason why, at this juncture, the remaining population should be excluded. The Project is still in the early phase of implementation, with the pilot in Djibouti-ville, Ali-Sabieh and Tadjoura having started in June 2014 (See Annex 6 for contracted indicators to date and baseline quality scores for each facility). As such, progress towards achievement of the PDO, which remains highly relevant and achievable, has only begun. Implementation progress and achievement of the PDO are rated MS in the latest ISR. All loan covenants have been complied with, with the exception of creation of a steering committee (COPI) to oversee technical aspects of the PBF indicators to be used to disburse funds. This committee was formed on January 29, 2015; compliance with Terms of Reference remain to be verified. 9. The Borrower has requested assistance from the World Bank to scale-up the PBF component of the project nationally. No changes are anticipated in the project’s fiduciary or safeguards arrangements. Fiduciary and procurement performance are moderately satisfactory and satisfactory, respectively. The AF does not trigger additional safeguards policies, change the safeguard categories or raise safeguard-related issues that were not covered in the original project. The Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP) were revised to include the expanded geographical scope of the AF and inclusion of the private sector and have been disclosed in country and on InfoShop. 11 III. Proposed Changes A. Changes to the project’s PDO & Outcomes 10. The project development objective (PDO) will drop reference to malaria; the AF will amend the PDO to the following: “to improve the utilization of quality healthcare services for maternal and child health and communicable disease control programs (HIV/AIDS and tuberculosis)�. The project closing date will remain unchanged. The key project results and indicators have been changed to reflect updated contracted indicators and baseline measurements. 11. The original project covered healthcare providers and their support staff in 29 targeted health facilities. An additional two CSCs have been constructed in Djibouti-ville. The AF will expand the project to 54 facilities (including two additional CSCs in Djibouti-ville that have just been constructed; three CMHs; and 20 PS), plus the nutrition referral center at Balbala 2. This is an increase from an estimated 509 to 689 personnel (Table 3). Table 3. Facilities and Personnel in 3 regions Region FOSA Administrative Support Doctor Nurse Midwife Total Dihkil CMH Dikhil 0 0 1 0 0 1 Dihkil PS Sankal 0 0 1 1 0 2 Dihkil PS Galamo 2 0 1 2 0 5 Dihkil PS Yoboki 0 0 0 1 1 2 Dihkil PS Gorabous 0 0 1 2 0 3 Dihkil PS Kouta Bouya 0 1 1 1 0 3 Dihkil PS As- Eyla 0 0 1 2 0 3 Dihkil PS Mouloud 2 0 0 1 1 4 Obock CMH Obock 3 0 1 3 2 9 Obock PS Assassan 0 0 1 1 1 3 Obock PS Dalay AF 1 1 0 2 1 5 Obock PS Alaillou 0 1 0 2 1 4 Obock PS Khor Angar 0 0 1 1 0 2 Obock PS Waddi 1 0 1 0 0 2 Obock PS Medeho 1 0 1 1 0 3 Arta CMH d’Arta 8 45 9 28 7 97 Arta PS Karta 0 3 0 1 0 4 Arta PS Chebelley 0 2 0 1 0 3 Arta PS Damerjog 2 4 0 3 1 10 Arta PS Douda 0 4 0 1 1 6 Arta PS Wéah 0 4 0 1 1 6 Arta PS PK 51 0 2 0 1 0 3 Total 20 67 20 56 17 180 12 12. The expected increased staff performance should impact the quality and quantity of the following services, calculated for 2014: a) maternal health with a potential target population (at the national level) estimated at 33,8892 pregnant women (or expected pregnancies, of which about 20,0003 in Djibouti-ville); b) infant health with an estimated national target of 101,6664 children aged 0 to 5 years (of which about 59,0005 live in Djibouti-ville); c) HIV prevention and AIDS treatment with an estimated target of 35,5006 (of which an estimated 9,000-10,000 people are living with HIV and about 1,500 people are currently benefiting from antiretroviral drugs); and other transmissible diseases such as tuberculosis, with about 5,150 7 targeted patients. 13. The results framework is modified. The reason for the changes to specific indicators can be classified in five broad categories. Changes were made if : (1) baselines were not correctly estimated – the first round of verification has allowed the correct estimation of baselines and the subsequent adjustment of targets; (2) the indicator was not appropriate to the PBF design – a number of indicators in the grant were not part of the contracted DLIs and not measured to date (and some not possible to measure using Djibouti HIS); (3) the indicator included services sought at the tertiary level and not covered by the project; and (4) where population denominators could not credibly be estimated. B. Proposed Methodological Changes i. Revising the incentives currently used to encourage health facilities to improve performance.8 The AF proposes to increase the number of PBF indicators purchased at facilities from 13 to 20 and to increase the amounts paid for each indicator (see Annex 3 for revised indicators and fees). In all PBF approaches the fee setting has to be reviewed frequently early on; the proposed indicators and pricing will again be reviewed after 6 months and it is expected that further equity adjustments based on geography will be introduced. ii. Implementing the quarterly quality checklists and applying the results to the performance payments. Purchasing quantity conditional on quality is a core element of PBF approaches which is not yet integrated in Djibouti (it pays only for the quantity). Additionally, quality verification 2 DISED. The percentage of pregnant women or expected pregnancies was estimated in 2009 to be 3.8 percent of the total Djiboutian population. 3 Using 3.8% estimate on 2014 population of Djibouti-ville (519,669 persons). 4 DISED, General Population Census. 2009. 5 Idem, 2009. 6 Estimated numbers provided by the National Program against HIV/AIDS - Programme National de Lutte contre le VIH/SIDA, le Paludisme, et la Tuberculose . 7 Projection of the number of tuberculosis cases to be discovered in 2013 established by the National Program against Tuberculosis - Programme National de Lutte contre le VIH/SIDA, le Paludisme, la Tuberculose. 8 The initial fee-setting, financial risk forecasting was conservative, meaning that fees were set low and targets high to accommodate higher than expected performance. Baselines were not known very well, while different sources provided conflicting information on these baselines. Initial experience show low baselines and very slow increase in performance only. Increased performance in PBF approaches depends on a host of interlinked factors, chief among which are budget available to pay for performance, the level of autonomy of health facilities, the separation of functions (credible verification), high quality data systems and strong coaching and technical assistance. This is why the financial risk forecasting has been revised and fee-sets are considerably higher than those offered at the onset. 13 mechanisms will be revised (quality verification in regions done by the regional hospitals) and added to the performance score and payments as originally intended. iii. Performance contracting for the project implementation and the purchasing units.9 The PIU and the CAP functions are currently staffed by a mix of consultants and civil servants (who have a variety of tasks and responsibilities outside the project). To strengthen the PIU and CAP functions, while reinforcing the stewardship of the MOH, performance contracting will be implemented for the PIU/CAP by signing a contract between the COPI and the PIU/CAP and a monthly verification of the PIU/CAPs performance on an agreed upon set of indicators tied to incentive payments. iv. Piloting pharmaceutical management autonomy in six CSCs. To ensure the availability of medicines in health facilities10 a study is proposed in six (6) CSC in Djibouti-ville, giving them autonomy of financial management of medicines by depositing revolving funds directly into their PBF accounts and using the index tool to ensure use of funds for drug reserves, investments, savings, and for motivation bonuses. v. Strengthening technical assistance and coaching from the MOH. Field observations show that knowledge on the PBF approach is very patchy even among those that have been trained, let alone by those that have not been trained. The AF proposes to write new guidelines for TA & coaching which will be implemented during the monthly verification and trimestral quality assessment visits. vi. Instituting links with the World Bank-financed Social Safety Net Project.11 The AF proposes to support health facilities, through the index tool, to subcontract with community peer educators12 to use part of their revenues as an incentive to individuals or community-based organizations to improve access and use of services especially for the most vulnerable populations. C. Additional proposed methodological modifications vii. Contracting health posts directly through the purchasing unit. Currently, the regional hospitals are sub-contracting their health posts. This should not be their function and health posts ought to be contracted directly by the purchasing unit (CAP). Direct contractualization and fund management autonomy for facilities is a key component of PBF methodology, as specified in the RBF manual. 9 In well-designed public or quasi-public purchaser approaches that cover an entire country (examples: Rwanda; Burundi; Congo- Brazzaville) or significant parts of a country (examples: DRC; Nigeria; Burkina Faso), the Ministry of Health, which has vital functions in the PBF approach, is subject to internal contracting and performance frameworks. 10 While the central medical stores (CAMME) now has adequate supplies, health facilities continue to suffer stockouts creating a high risk for the project. Currently, the MoH collects funds earned by health facilities through their ‘community pharmacies’ and restocks them based on these earnings. 11 Under this program, eligible households in a number of urban clusters receive nutrition services oriented towards pregnant women and children under two. Interventions include behavior change communication, sensitization sessions, growth monitoring sessions for children, targeted supplements for children 6-24 mo and healthy pregnancy practices including pre/post natal care and facility delivery. 12 Peer educators (role model mothers) are volunteers and facilitators trained to deliver nutrition services, who originate from the communities or local associations of targeted areas. 14 viii. Improve the separation of functions in the MOH by recruiting verifiers on a contractual basis instead of using MOH staff. Currently the MOH combines quantity and quality verification and uses a team of central MOH staff to execute this each quarter. This will be changed with verification being the responsibility of an expanded CAP. The CAP will function autonomously within the PIU with functions within the PIU. ix. A new procurement method for procurement of Goods and Non-consulting Services, under Framework Agreements in accordance with procedures which have been found acceptable to the World Bank is allowed under the additional financing and applies, under amendment, to the original project. x. Independent Verification. External monitoring and evaluation experts (“Independent Verifiers�) will be appointed to act as third-party verifiers of the proper fulfillment of the DLIs set forth in RBF Manual and the respective Participating Health Care Provider Agreement. The Independent Verifiers will provide regular reports (“(EEP Spending and Assessment Report�) containing, inter alia, said assessment on the fulfillment of the pertinent DLIs and a proposal for disbursement under each Withdrawal. D. Costs by Component 14. The AF will focus funding on service delivery (component 1) and strengthening project management and M&E (components 2 and 3) (Table 6). The reallocations in Table 6 do not change the amounts in the disbursement categories of the original project. Full financing for AF is in Annex 4. Table 6. Costs by component (US$ million) Original Cost Additional Component Original Cost Total (revised) Financing Improving health service delivery 1 4.000 3.975 4.875 8.850 performance Strengthening health system 2 1.000 0.800 - 0.800 management Strengthening project management 3 and monitoring and evaluation 2.000 2.225 2.125 4.350 capacity Total 7 7 7 14 IV. Appraisal Summary 15. Priorities for additional funding from PAPSS. The program’s development goal is altered to remove reference to malaria. The original project closing date remains unchanged. The goals of additional financing are: 1) to cover the financing gap to fund and monitor the implementation of project activities underway and include activities not yet funded by PAPSS but which are nevertheless listed 15 as priority in the project, including: i) ensuring inclusion of the quality and the applicable reimbursement mechanisms (which was not included so far); ii) review project indicators and cost of retribution, iii) support the establishment of the institutions required for project governance (Community, Regional, National), iv) incentivize the central level by putting the PIU under a performance contract, v) develop a functional link between the PBF and social safety nets being implemented by ADDS; vi) ensure the capacity building of stakeholders in the implementation of the PBF; and vii) complete a methodological review of the project and make adjustments; and 2) to extend the PBF to all regions in Djibouti. 16. The economic analysis remains relevant and the project remains economically justified. In the original project, 57 percent of funding went directly to facilities and communities, 29 percent for administrative fees and 14 percent for investment; with the additional financing, the total budget allocates 69 percent directly to facilities and communities, 25 percent for administrative fees and 6 percent for investment. Furthermore, the yearly per capita spending is increased to US$3.16. 17. The additional financing retains the Environmental Assessment category of the original project, i.e. category ‘B’ according to the World Bank’s environmental assessment policy (OP 4.01). For the additional financing, the Borrower has updated the environmental impact assessment and the medical waste management plan and environmental management plan that were prepared during the original project. These are provided in the updated environmental assessment, which was published in country and disclosed at the Infoshop on November 17, 2014. 18. Social safeguards policies remain non-triggered under the additional financing project. As the parent project, the proposed activities will not require involuntary land acquisition resulting in: a) Involuntary resettlement of people and/or loss of (or access to) assets, means of livelihoods or resources; and b) The involuntary restriction of access to legally designated parks and protected areas resulting in adverse impacts on the livelihoods of the displaced persons 19. There are no exceptions or waivers of Bank policy being sought. V. World Bank Grievance Redress 20. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. 16 Annex 1: Results Framework and Monitoring Project Development Objectives . PDO Statement The project development objective is to improve the utilization of quality healthcare services for maternal and child health and communicable disease control programs (HIV/AIDS and tuberculosis). Project Development Objective Indicators Target Values Data Responsibili Source/ ty Status Unit of Indicator Name Core Baseline YR1 YR2 YR3 YR4 YR5 Frequency Methodolo Data Measure gy Collection Monthly Number of women (independent MOH/ PBF Revised receiving prenatal Number 6,100 6,710 12,419 15,798 19,287 22,886 verification MOH HIS visits 2-4 every 3 months) Monthly Percentage of (independent children fully MOH/ PBF Revised Percentage 32.0 33.5 37.8 42.8 47.8 51.5 verification MOH immunized before HIS every 3 their first birthday months) Facility Average facility Every 3 Revised Percentage 29.0 35.0 40.0 45.0 50.0 60.0 Quality MOH quality* months Assessment Revised Number of HIV Number 63 150 200 250 275 300 Monthly MOH/ PBF MOH 17 positive pregnant (independent HIS women receiving verification antiretroviral every 3 therapy according months) to protocol Dropped Percentage of positive MOH/HIS/ pulmonary TB Percentage 35.00 60.00 Yearly PNLT MOH cases detected 40 43 48 55 WHO (case detection rate) Dropped Percentage of pulmonary TB MOH/HIS/ patients cured Percentage 80.00 82 83 84 84 85.00 Yearly PNLT MOH (Pulmonary TB WHO cure rate) . Intermediate Results Indicators Data Responsibili Target Values Source/ ty Unit of End Methodolo Data Status Indicator Name Core Baseline YR1 YR2 YR3 YR4 Frequency Measure Target gy Collection Number of women Monthly giving birth in a (independent MOH/ PBF Revised contracted facility Number 1,026 1,245 3,356 5,844 7,305 7,775 verification MOH HIS assisted by every 3 qualified personnel months) Number of new Monthly MOH/ PBF Revised Number 0.15 0.18 0.29 0.39 0.46 0.52 MOH curative care visits (independent HIS 18 (nurse) per person verification per year in the every 3 public system months) Percentage of Monthly pregnant women (independent receiving at least MOH/ PBF Revised Percentage 20.0 25 30 35 40 45 verification MOH two doses of HIS every 3 tetanus toxoid months) (TT2) Number of WCBA visiting the public Monthly system to obtain (independent MOH/ PBF Revised modern family Number 7,304 10,000 15,000 20,000 25,000 35,000 verification MOH HIS planning (oral every 3 contraceptives and months) injections) Pregnant/lactating women, adolescent Monthly girls and/or (independent MOH/ PBF Revised children under age Number 7,117 10,000 20,000 30,000 40,000 50,000 verification MOH HIS five-reached by every 3 basic nutrition months) services (number) People receiving Monthly tuberculosis (independent No treatment in MOH/ PBF Number 300 325 375 425 475 500 verification MOH Change accordance with HIS every 3 the WHO- months) recommended 19 “Directly Observed Treatment Strategy� (DOTS) (number) Monthly (independent No Direct project 160,00 215,00 300,00 MOH/ PBF Number 0 50,000 100,000 verification MOH Change beneficiaries 0 0 0 HIS every 3 months) Monthly Direct project Percentage (independent No Sub-Type 100,00 160,00 210,00 MOH/ PBF beneficiaries Suppleme 0 20,000 45,000 verification MOH Change 0 0 0 HIS which are Female ntal every 3 months) Dropped Children between the age of 6 and 59 Number months receiving Sub-Type 50000 60000 70000 78000 85000 90000 Yearly MOH Vitamin A Breakdow supplementation n (number) Dropped People with access to a basic package of health, nutrition, 18500 20050 Number 155000 165000 175000 195000 Yearly MOH or reproductive 0 0 health services (number) Dropped Percentage of child nutritional growth RBF Percentage 5.00 40.00 Yearly MOH monitoring visits database (well-baby clinic 10 15 23 30 20 visits) Dropped Percentage of HIV test results MOH/HISP received by all Percentage 70.00 75 78 83 85 87.00 Yearly MOH LSS persons tested for HIV Dropped Percentage of suspected malaria cases that are Percentage 11.00 10 8 7 5 5.00 Yearly MOH tested and confirmed Dropped Percentage of established and functioning Percentage 15.00 90 95 100 100 100.00 Yearly MOH COGESs in CSCs and CMHs Dropped Percentage of women receiving two postnatal care 15 25 35 40 MOH/HIS, visits (PoNC1 and Percentage 9.00 45.00 Yearly MOH DSME PoNC2) between 8th and 42nd day after delivery 21 Annex 2: Systematic Operations Risk-rating Tool Risk category Rating 1. Political and Governance M 2. Macroeconomic M 3. Sector Strategies and Policies M 4. Technical Design of Project or Program S 5. Institutional Capacity for Implementation and Sustainability S 6. Fiduciary M 7. Environment and Social M 8. Stakeholders M 9. Other OVERALL M 22 Annex 3: PBF Indicators Indicator CSC CMH PS 1 New curative care visit (seen by nurse) $ 0.49 $ 0.57 $ 0.61 2 New curative care visit for a poor/vulnerable patient $ 2.00 $ 2.30 2.40 3 New curative care visit (seen by doctor) $ 1.00 $ 1.15 - 4 Children fully vaccinated $ 7.50 $ 8.75 $ 9.25 5 Nutrition consultation $ 0.80 $ 0.90 $ 0.95 6 Admission day - $ 2.85 $3.05* 7 Admission day at nutrition center $ 7.50 $ 8.65 - 8 Admission day for poor/vulnerable patient - $ 2.85 - 9 Pregnant women receiving tetanus toxoid (2-4) $ 3.00 $ 3.50 $ 3.70 10 Postnatal visit (first) $ 5.00 $ 5.75 $ 6.00 11 ANC1 (before 4 months) $ 5.00 $ 5.75 $ 6.00 12 ANC (2-4) $ 4.90 $ 5.70 $ 6.10 13 Facility delivery $ 20.00 $ 23.50 $ 25.00 14 Referral of complicated cases to hospital $ 15.00 $ 17.50 $ 18.50 15 Family planning : pills or injectables $ 4.00 $ 4.70 $ 5.00 16 Family planning : implants or IUDs $ 4.90 $ 5.70 $ 6.10 17 HIV test results received by person tested $ 1.50 $ 1.73 $ 1.84 18 HIV positive pregnant women receiving antiretroviral therapy $ 20.00 $ 23.50 $ 25.00 19 Positive pulmonary TB cases detected $ 15.00 $ 17.25 $ 18.50 20 Pulmonary TB patients cured $ 39.50 $ 46.00 $ 49.00 $7,000 (without delivery) ; Quality Investment (one-time payment) $15,000 $5,000 21 $9,000 (with delivery) *The admission days in the PS reflect overnight observations for a maximum duration of 72 hours . 23 Annex 4: Additional Financing Budget Budget 2015 Budget 2016 Budget 2017 Budget 2018 Total Human Resources PIU $ 27,000 $ 27,000 $ 27,000 $ 27,000 $ 108,000 CAP $ 207,595 $ 207,595 $ 207,595 $ 207,595 $ 830,378 TA - - - - - Investments in Quality Investments: PIU/CAP $ 42,000 $0 $0 $0 $ 42,000 Investments MSP - - - - - Subsidizing health Facilities Indicators, quality, and indigence $ 526,964 $ 387,283 $ 2,055,331 $ 1,599,421 $ 4,569,000 Starting investment $ 306,000 $0 $0 $0 $ 306,000 Quality Assurance CMH $ 46,638 $ 46,638 $ 46,638 $ 46,638 186,550 PIU/CAP $ 35,000 $ 35,000 $ 35,000 $ 35,000 140,000 Counter verification: ABC & AVI ABC $ 62,343 $ 62,343 $ 62,343 $ 62,343 $ 249,372 AVI $0 $0 $0 $0 $0 Operational costs PIU/CAP Operating costs PIU/CAP $ 103,319 $ 103,319 $ 103,319 $ 103,319 $ 413,275 Training, studies, research Training $ 77,713 $ 77,713 $0 $0 $ 155,425 TOTAL: 1,434,571 946,890 2,537,225 2,081,315 7,000,000 24 Annex 5: Quality Assessment Tool Summary Domain Points Weight General Organization 23 9.4% M&E and HIS 23 9.4% Hygiene, environment & sanitation 20 8.1% Outpatient 32 13.0% Maternity 16 6.5% Family Planning 11 4.5% Prenatal care 14 5.7% Vaccination & follow up children 0-5 13 5.3% HIV 24 9.8% TB 15 6.1% Lab 7.6 3.1% Basic surgery 5.4 2.2% Pharmacy & Equipment 21.5 8.8% Financial Management 20 8.1% 245.5 100.0% 25 Annex 6: Project Results to Date Contracted Indicators by facility (June – October, 2014) Facility CMH Farah- Ibrahim- Khor- Balbara Balbala Waleh- Ali- CMH CMH Indicator Ambouli Arnaud Angella had Balala Bourhan 1 2 Daba Dolaraleh Hayabeleh PK12 Sabieh Tadjourah Warabley Total New consultation 3305 3392 6979 5843 3491 2777 4509 3621 1946 887 3939 5026 6710 3179 2989 58593 Children fully vaccinated 116 157 333 120 162 157 315 340 134 14 233 405 214 134 62 2896 Child nutritional growth monitoring visit 210 361 300 160 289 54 211 330 259 148 282 722 286 157 430 4199 Pregnant women receiving second dose of tetanus toxoid 94 211 207 146 92 137 200 146 81 15 261 169 145 70 50 2024 Women receiving two postnatal care visits between 8th and 42nd day after delivery 4 50 9 45 41 22 40 32 9 5 38 41 51 1 5 393 Pregnant women receiving a prenatal visit before the end of the first trimester of pregnancy 126 83 229 81 72 99 88 129 59 8 114 86 119 27 45 1365 Women giving birth in a facility assisted by qualified personnel - - - - - - - - - 1 301 366 198 111 - 977 Modern birth control (new and repeat cases) 320 488 472 193 203 256 292 169 188 12 336 321 252 124 28 3654 HIV test 313 347 1033 255 298 534 804 532 0 26 685 880 198 204 0 6109 HIV positive pregnant women receiving antiretroviral therapy 5 9 10 2 3 6 3 8 0 0 3 8 1 2 0 60 Positive pulmonary TB cases detected 34 56 46 15 34 24 29 29 0 0 27 35 19 12 0 360 Pulmonary TB patients cured 13 24 37 14 15 10 24 48 0 0 47 3 11 5 0 251 Source: RBF HIS 26 Baseline quality scores by facility Region Health Facility Quality Score (Baseline Assessment) CMH de Ali Sabieh 40.93% Goubetto 25.60% Holl Holl 26.40% Ali Sabieh Das Bio 20.90% Ali Addé 22.60% Guestir 14.00% Assamo 24.00% Ali Sabieh Regional average 24.92% CMH Tadjoura 39.25% Day 15.80% Sagalou 17.40% Ripta 13.80% Adai-Lou 20.00% Tadjoura Adoyla 12.20% Assa Guela 32.00% Dorra 20.90% Balho 17.50% Guirorri 13.60% Randa 20.20% Tadjoura Regional average 20.24% CSC Ambouli 35.77% CSC Arhiba 38.68% CSC Balbara1 38.86% CSC Balbara2 39.70% CSC Eingela 45.61% Djibouti Ville CSC Fara Had 52.04% CSC Hayabley 51.20% CSC Ibrahim Balala 45.48% CSC Khor Boulahan 48.17% CSC PK12 51.80% CSC Warabaley 20.94% CSC Walhedaba 35.14% CSC average 41.95% Global Average 29.04% Source: RBF HIS 27 Annex 7: Financial Management Financial Management Assessment 1. The Financial Management (FM) team of the Bank reviewed the financial management arrangement at the Ministry of Health, based on the result of the assessment, the FM risk, as a component of the fiduciary risk is rated as Moderate. The MOH will need to maintain the current FM arrangements under the ongoing Health Project in order to maintain the risk level at moderate. 2. The proposed project will be implemented according to World Bank guidelines, using the implementation framework of the ongoing Health Project, procurement, and disbursement arrangements, and using the human resources of Project Implementing Unit (PIU). 3. A new procurement method for procurement of Goods and Non-consulting Services, under Framework Agreements in accordance with procedures which have been found acceptable to the World Bank is allowed under the additional financing and applies, under amendment, to the original project. 4. The project activities will be mainstreamed through current PIU activities. The PIU has been performing well and has acquired solid capacity in fiduciary procedures applicable to Bank-financed projects. The Financial Management rating for the ongoing Health Project is Moderately Satisfactory. 5. In view of the risks identified and the weaknesses observed, the overall financial management risk is deemed to be Moderate. The following are the risks identified: (i) delays in the submission of quarterly certified Interim Un-audited Financial Reports (IFRs); (ii) delays in the recruitment of the internal auditor; and (iii) overall complexity of the project. Financial Management and Disbursement Arrangements 1. Staffing: The current PIU has a dedicated financial team to handle the FM aspects of the ongoing Health Project; this team will be utilized to implement the activities of the additional financing. The team is comprised of the Head of the Administrative and Financial in charge of the overall FM aspects and is assisted by an accountant, a procurement specialist and a monitoring and evaluation specialist. The PIU is headed by a project coordinator in charge of overall implementation of the project. The FM team has substantial experience in implementing Bank financed projects. 2. Internal control: Project commitments will be subject to the local procurement procedures through the National Procurement Committee, for any amount exceeding the threshold fixed by the local regulations. This Committee will then be involved in monitoring all procurements steps. Payment of eligible expenses will be done based on instructions signed by the Ministry of Health, the Ministry of Finance (External Finance Department-EFD) and the Ministry of Budget (Debt Department). The PIU is responsible for monitoring the eligibility of all expenses. 3. The PIU has a Project Operational Manual (POM) which includes all implementation procedures of the ongoing project. The POM contains a financial management chapter describing all financial and accounting procedures in addition to roles and responsibilities of all staff members within the PIU. The operation manual is being adopted by the PIU and is acceptable to the Bank. 28 4. For the RBF component, a specific manual has been prepared and cleared by the Bank. The disbursement provisions of the RBF manual are used as a condition to disburse funds related to the first category; for the purpose of the additional financing, an RBF manual will be prepared and adopted by the project. This RBF manual will be used to disburse funds related to category 1 based on Disbursement Linked Indicators (DLI) in addition to the submission of a Spending and Assessment Report that is found satisfactory by the Bank in accordance with the Independent Verification Reports. The RBF manual will be cleared by the Bank. . 5. Budgeting: The consolidated budget of the entity is prepared after inputs from the various departments. Reconciliation with the previous year is established to better monitor differences. 6. The process of preparing the annual budget is completed before the start of the fiscal year so not to block the operations of the agency and allow commitments of budgeted expenditures. 7. The PIU will prepare a budget plan and disbursements plan for each fiscal year related to the project and will submit these plans for World Bank’s approval. 8. Project accounting system: The transactions will be registered in the accounting system by the accountant under the control of the Financial Officer. The project Financial Officer is responsible for preparing the Interim Un-audited Financial Reports (IFRs) before their transmission to the PIU coordinator for approval. Periodical reconciliation between accounting statements and IFRs is also done by the Financial Officer. 9. The PIU will follow the same accounting principles adopted for the ongoing Health Project which will cover all sources and uses of project funds, including payments made and expenses incurred. All transactions related to the project will be entered into the accrual accounting system. 10. Disbursements made from the project Designated Accounts (DA) will also be entered into the project accounting system. IFRs summarizing the commitments, receipts, and expenditures made under the project will be produced on a quarterly basis; the project chart of accounts will be in compliance with the classification of expenditures and sources of funds indicated in the project cost tables and the general budget breakdown in addition to the POM. The chart of accounts should allow for data entry to facilitate the financial monitoring of project expenditures by component, sub-component and category. 11. Project reporting: The project financial reporting includes quarterly IFRs and yearly Project Financial Statements (PFS). IFRs should include data on the financial situation of the project, including: 1) Statement of Cash Receipts and Payments by category and component. 2) Accounting policies and explanatory notes including a footnote disclosure on schedules: (i) “the list of all signed Contracts per category� showing Contract amounts committed, paid, and unpaid under each contract, (ii) Reconciliation Statement for the balance of the Project’s Designated Account, (iii) Statement of Cash payments made using Statements of Expenditures (SOE) basis, (iv) a budget analysis statement indicating forecasts and discrepancies relative to the actual budget, and (v) a comprehensive list of all fixed assets. 12. External monitoring and evaluation experts (“Independent Verifiers�) will be appointed to act as third-party verifiers of the proper fulfillment of the DLIs set forth in RBF Manual and the respective 29 Participating Health Care Provider Agreement. The Independent Verifiers will provide regular reports (“EEP Spending and Assessment Report�) containing, inter alia, said assessment on the fulfillment of the pertinent DLIs and a proposal for disbursement under each Withdrawal. 13. The IFRs should be certified by the external auditor and should be produced by the PIU every quarter and send to the World Bank within 45 days from the end of each quarter. PFS should be produced on an annual basis. The PFS should include (a) a cash flow statement; (b) a closing statement of financial position; (c) a statement of ongoing commitments; and (d) an analysis of payments and withdrawals from the project’s account; (e) a statement of cash receipts and payments by category and component; (f) reconciliation statement for the balance of the Project’s Designated Account; (g) statement of cash payments made using Statements of Expenditures (SOE) basis. 14. Audit of the project financial statements: An annual external audit of the project accounts will cover all aspects of the project, all uses of funds and all the committed expenditures of the project. It will also cover the financial transactions, internal control and financial management systems and will include a comprehensive review of SOEs. 15. An external auditor will be appointed within two months of effectiveness according to Terms of Reference acceptable to the Bank and should conduct the audit in accordance with international auditing standards. The auditor should produce: (i) an annual audit report including his opinion on the project's annual financial statements; (ii) a management letter on the project internal controls; and (iii) a limited review opinion on the IFRs. The annual reports will be submitted to the World Bank within six months from the closure of each fiscal year and the limited review opinion will be submitted to the World Bank with the IFRs. 16. Flow of funds: Two separate Designated Accounts (DA) in US Dollars will be opened at the Central Bank of Djibouti, one for each category. Advances from the Project account will be disbursed to the designated accounts to be used for the project expenditures. 17. For Category 1 of the Project, based on the independent purchasing and verification firm’s review of the Health Information System (SIS) quarterly report and after receiving funds from the World Bank, the PIU will proceed with disbursement of the funds to sub-designated accounts opened by the health facilities, regions and programs on the basis of specific criteria to be included in the RBF manual and the submission of a Spending and Assessment Report (refer to the disbursement section for more details) . At the level of the health facilities, the new regulation would define the persons responsible for authorizing payments based on the double signature of the health facility and the public accountant (MEFIP). In order to facilitate the management of funds and disbursement procedures for eligible expenses, a sub-designated account in DJF for each regional health facility will be opened at a commercial bank in Djibouti acceptable to the World Bank. The regional health facility will file the original supporting documents. 18. Flow of information: The PIU will be responsible for preparing periodic reports on project implementation progress and on both physical and financial achievements. These reports will be based on project activity progress (by component and expenditure category), including technical and physical information reported on a quarterly basis. 19. The PIU will maintain the project bookkeeping, and will produce annual PFSs and quarterly IFRs. Disbursement 20. The grant funds will be disbursed according to World Bank guidelines to finance project activities. Project funds will be disbursed using advances to a designated account, direct payments, special 30 commitments, and reimbursements for eligible expenditures accompanied by supporting documents or, for statements of expenditure for sums less than the predefined thresholds for each expenditure category, following the applicable procedures and the Bank's Disbursement Handbook. 21. The Bank will honor eligible expenditures for services rendered and goods delivered by the project closing date. A four-month grace period will be granted to allow for the payment of any eligible expenditure incurred before the project closing date. 22. Designated Accounts (DA). To facilitate fund and disbursement management for eligible expenditures, two separate designated accounts (DA) in US Dollars will be opened at the Central Bank of Djibouti: one designated account for each category will be opened. Advances from the project account will be transferred to the designated accounts to be used for the specific project expenditures. Payments of eligible expenses will be made through the designated accounts based on the instructions signed by the MOH, Ministry of Budget (MOB) and the MEFIP. 23. The ceiling of the designated accounts will be US$450,000 for the first category and US$200,000 for the second category. The PIU will be responsible for submitting monthly replenishment applications with appropriate supporting documentation. 24. Statements of expenditures (SOEs). Necessary supporting documents will be sent to the World Bank in connection with contracts that are above the prior review threshold, except for expenditures under contracts with an estimated value of (a) US$150,000 or more for goods and non-consulting services, (b) US$100,000 or more for consulting firms and (c) US$50,000 or more for individual consultants. In addition, all operating costs, training, workshops, study tours and audit fees, will be claimed on the basis of SOEs. The documentation supporting expenditures will be retained at the PIU and will be readily accessible for review by the external auditors and periodic Bank supervision missions. All disbursements will be subject to the conditions of the Financing Agreement and disbursement procedures as defined in the Disbursement Letter. Allocation of the Grant’s Proceeds: Category Amount Allocated (US$) Percentage of Expenditures to be Financed (Inclusive of Taxes) (1) EEPs to the participating 4,875,000 100% of amounts spent and Health Care Providers, under Part reported under the EEP spending A of the Project and assessment reports for each withdrawal. (2) Goods, non-consulting 2,125,000 100% services, consultants’ services, audit, Training and Incremental Operating Costs under Part B of the Project Total 7,000,000 Withdrawals Conditions for Category 1: Withdrawals from category 1 of the project will be made based on the following conditions as set in the grant agreement: (i) the MoH has adopted the RBF Manual in a manner satisfactory to the Association; 31 (ii) the relevant EEP Spending and Assessment Report has been submitted to, and found satisfactory by, the Association in accordance with the Independent Verification Reports; and (ii) any applicable Disbursement-Linked Indicators as set forth in the RBF Manual and the respective Participating Health Care Provider Agreement have been met by the Recipient satisfactory to the World Bank. 25. Withdrawals shall be made in amounts not exceeding the total of the ceilings per each respective DLI as provided in RBF Manual, subject to submission to the Association of evidence satisfactory to the Association and as defined in the RBF Manual that the DLIs have been achieved. 26. E-Disbursement. The Bank has introduced e-Disbursement for all projects in Djibouti. Under e- Disbursement, all transactions will be conducted and associated supporting documents and SOEs scanned and transmitted online through the World Bank’s Client connection system. The use of e- Disbursement functionality will streamline online payment processing to: (a) avoid common mistakes in filling out WAs; (b) reduce the time and cost of sending WAs to the Bank; and (c) expedite the Bank processing of disbursement requests. Governance and anti-corruption 27. Fraud and corruption may affect the Project resources, thus impacting negatively the Project outcomes. The World Bank FMS worked closely with Project’s Task Team Leader (TTL) as well as project’s consultants and developed with the team an integrated understanding of possible vulnerabilities and agreed on actions to mitigate the risks. The above proposed fiduciary arrangements, including POM with a detailed FM chapter, internal auditor assignment, reporting and auditing and review arrangements are expected to address the risk of fraud and corruption that are likely to have a material impact on the Project outcomes. Supervision Plan: 28. The financial management of the Project will be supervised by the Bank in conjunction with its overall supervision of the Project and conducted at least three times a year. Supporting Documentation and Record Keeping: 29. All supporting documentation was obtained to support the conclusions recorded in the FM Assessment. 32