Document of The World Bank

FOR OFFICIAL, USE ONLY

Report No: 45064 - MG

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 40.5 MILLION (US$63 MILLION EQUIVALENT)

TO THE

REPUBLIC OF MADAGASCAR

FOR A

JOINT HEALTH SECTOR SUPPORT PROJECT

February 3,2009

Human Development I11 Country Department 1 Africa Region

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I ts contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS (Exchange Rate Effective December 3 1,2008)

Currency Unit = Ariary 1.927Ar = USDl

USD 1.55663 = SDR 1

FISCAL YEAR January 1 - December31

ABBREVIATIONS AND ACRONYMS

.. 11

FOR OFFICIAL USE ONLY

I C s IDA IFR IHP IMF

HMIS I Health Management Information System I sss I Single Source Selection IBRD I International Bank for Reconstruction & I SWAP I Sector Wide Approach

- (Procurement Management Unit)

Individual Consultant Selection UNFPA United Nations Fund for Population Activities International Development Association UNICEF United Nations Children's Fund Interim unaudited Financial Reports USAID US Agency for International Development International Health Partnership USC Use o f Country Systems International Monetary Fund WHO World Health Organization

I Development I C B I International Competitive Bidding I UGPM I Unite' de Gestion de la Passation de Marche'

Vice President: Obiageli Ka t r yn Ezekwesil i Country Director: Ruth Kag ia

Sector Manager: Lynne Sherburne-Benz Task Team Leader: Maryanne Sharp

1 I

This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not be otherwise disclosed without Wor ld Bank authorization.

I . A . B . C . I1 . A . B . C . D . E . F .

M A D A G A S C A R

Joint Heal th Sector Support Project

C O N T E N T S

Page

S T R A T E G I C CONTEXT AND RATIONALE .................................................................. 4

Country and sector issues ..................................................................................................... 4

Higher level objectives to which the project contributes ................................................... 8

Rationale for Bank involvement ........................................................................................... 8

ProJECT D E S C R I P T I O N .................................................................................................... 9

Lending instrument ............................................................................................................... 9

Project objective and Phases ............................ .. .................................................................. 9

Project development objective and key indicators ............................................................. 9

Project components ............................................................................................................... 9

Lessons learned and reflected in the project design ......................................................... 11

Alternatives considered and reasons for rejection ........................................................... 12

I11 . IMPLEMENTATION ......................................................................................................... 13

Partnership arrangements .................................................................................................. 13

Institutional and implementation arrangements .............................................................. 13

Monitor ing and evaluation o f outcomes and results ........................................................ 14

D . Sustainability ........................................................................................................................ 15

Critical risks and possible controversial aspects .............................................................. 15

Loadcredi t conditions and covenants ............................................................................... 18

A P P R A I S A L S U M M A R Y .................................................................................................. 18

Economic and financial analyses ........................................................................................ 18

B . Technical ............................................................................................................................... 20

A . B . C .

E . F . I V . A .

iv

C . Fiduciary ............................................................................................................................... 21

D . Social ..................................................................................................................................... 23

E . Environment ......................................................................................................................... 24

F . Safeguard policies ................................................................................................................ 24

G . Policy Exceptions and Readiness ........................................................................................ 25

Annex 1: Country and Sector Background ............................................................................... 26

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................. 34

Annex 3: Results Framework and Monitoring ......................................................................... 37

Annex 4: Detailed Project Description ...................................................................................... 42

Annex 5: Project Financing ........................................................................................................ 48

Annex 6: Implementation Arrangements .................................................................................. 49

Annex 7: Financial Management and Disbursement Arrangements ..................................... 52

Annex 8: Procurement Arrangements ....................................................................................... 66

Annex 9: Economic and Financial Analysis .............................................................................. 76

Annex 11: Safeguard Policy Issues ............................................................................................. 89

Annex 12: Project Preparation and Supervision ...................................................................... 92

Annex 13: Documents in the Project File .................................................................................. 93

Annex 14: Statement of Loans and Credits ............................................................................... 97

Annex 15: Country at a Glance .................................................................................................. 99

V

MADAGASCAR

Source Local

MG-JOINT HEALTH SECTOR SUPPORT PROJECT

Foreign Total

PROJECT APPRAISAL DOCUMENT

BORRO WER/RECIPIENT International Development Association (IDA) FRANCE: French Agency for Development

AFRICA

0.0 0.0 0.0 39.1 23.9 63.0

17.5 2.0 19.5

AFTH3

Total:

Date: February 3,2009 Country Director: Ruth Kagia Sector ManagerDirector: Lynne D. Sherburne-Benz communicable diseases (P);Health system

Team Leader: Maryanne Sharp Sectors: Health (1 00%) Themes: Child health (P);Other

performance (P);Population and reproductive health (P);Nutrition and food security (S) Environmental screening category: Partial Assessment

Project ID: P106675

[ ]Loan [XI Credit [ ]Grant [ 3 Guarantee [ 3 Other:

56.6 25.9 82.5

For Loans/Credits/Others: Total Bank financing (US$m.): 63.00 ProDosed terms: 40 vears including 10 Years grace

FY Annual Cumulative

I s approval for any policy exception sought f rom the Board? Does the project include any critical risks rated “substantial” or “high”? Ref: PAD III.E. Does the project meet the Regional criteria for readiness for implementation? Ref: PAD I K G. Project development objective Re$ PAD II.C., Technical Annex 3

[XIYes

10 11 12 13 14 15.00 14.00 12.00 12.00 10.00 15.00 29.00 41.00 53.00 63.00

I s approval for any policy exception sought f rom the Board? Does the project include any critical risks rated “substantial” or “high”? Ref: PAD III.E. Does the project meet the Regional criteria for readiness for implementation? Ref: PAD I K G. Project development objective Re$ PAD II.C., Technical Annex 3

[ ]Yes [XINO

[ ]Yes [XINO

[XIYes [ ] N o

The development objective o f the JHSSP i s to contribute to strengthening o f the health system to increase utilization o f health services, particularly among mothers and children.

Project description [one-sentence summary of each component] Ref: PAD II.D., Technical Annex 4 Based on the challenges facing the health sector, the JHSSP will support the following components: (i) strengthening delivery o f health services; (ii) pilot demand side interventions for basic health services; (iii) development and management o f human resources; and (iv) institutional strengthening and monitoring and evaluation.

Component 1 : Strengthening Delivery o f Health Services (US$4 1.3 mi l l ion equivalent): The objective o f this component i s to strengthen the delivery and availability o f health services at the primary and f i rst referral levels.

Component 2: Innovative Demand-Side Interventions for Basic Health Services (US$16.9 mi l l ion equivalent): The objective o f this component i s to support pilot testing o f different approaches designed to increase the utilization o f basic health services by stimulating demand.

Component 3: Development and Management o f Human Resources (US$7.4 mi l l ion equivalent): The objective o f this component i s to improve human resource management in the health sector and strengthen capacity o f the Human Resource Department o f the MoH.

Component 4: Institutional Strengthening and Monitoring and Evaluation (US$16.9 mi l l ion equivalent): This component will continue to support a number o f system development and institutional strengthening activities at the central and decentralized levels.

2

Which safeguard policies are triggered, if any? Ref. PAD IK l? , Technical Annex 10 The only safeguard triggered i s OP 4.01 Environmental Assessment, due to potential risks in the ineffective medical waste management in health centers. As such, a Medical Waste Management Plan (MWMP).is required. The project does not trigger any o f the World Bank’s social safeguard’s policies, since land will not be acquired and civ i l works will be limited to rehabilitation o f existing infrastructures. To address potential impacts on the environment and public health effectively, the MoH adopted the National Policy for Medical Waste Management in September 2005. T h i s Policy was approved and disclosed on March 23,2007 in the Infoshop and between March 20 and 26,2007 in-country. The relevant detailed MWMP was provided to the Bank in September 2008 and judged satisfactory.

Significant, non-standard conditions, if any, for: Re$ PAD III. F. Board presentation: None

Loadcredit effectiveness: Adoption o f a revised P I M and a Project Accounting Manual o f Procedure, satisfactory to IDA, to reflect the revised Chart o f accounts, the new models o f Interim non-audited Financial Reports (IFRs) and financial statements, and al l policies and procedures to be applied to the project.

Covenants applicable to project implementation: Financial covenants are the standard ones as stated in the Financing Agreement Schedule 2, Section I1 (B) on Financial Management, Financial Reports and Audits and Section 4.09 o f the General Conditions. In particular, the proceeds o f the credit shall be used (a) exclusively to finance Eligible Expenditures under the Annual Action Plan; and (b) in the case o f Pooled Activities in accordance with such percentages as shall be determined each year. In addition, the existing computerized accounting system will be upgraded to ensure timely production o f al l financial and technical information required by IDA and AFD, to be completed no later than two months after effectiveness. The project financial statements shall be audited on a six monthly basis by independent auditors acceptable to IDA. Independent auditors will be appointed within three months after the effectiveness date. Three additional covenants are included in the project: (i) organization o f at least one Joint Health Sector Review annually; (ii) the adoption o f the national Human Resource Development Plan by December 3 1,201 0; and (iii) the co-financing deadline for effectiveness o f the Co-Financing Agreement o f AFD i s September 30,2009. Finally, no disbursements will be made (i) for bonuses under Component 2.1 until the manual establishing the system for such bonuses, satisfactory to the Association, has been adopted; (ii) for performance based allocations under Component 1.1 until the manual establishing the system o f such allocations, satisfactory to the Association, has been adopted; and (iii) from the components under the Pooled Funding until the Co-financing Agreement o f AFD i s made effective and the Collaboration Agreement has been signed.

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I. STRATEGIC CONTEXT AND RATIONALE

A. C o u n t r y and sector issues

1. Poverty in Madagascar is widespread, with over two-thirds o f the population living below the poverty line, and i s heterogeneous among geographical regions, with the eastern and southern coastal regions with poverty rates o f 80 percent. There are also significant urban-rural differences (52 percent versus 74 percent), although between 2001 and 2005, poverty declined more rapidly in rural areas than in urban areas. The last decade however, has witnessed marked improvements in basic social indicators, albeit from a low base. Today, more children are in school and net primary enrolment rates have increased from 70 percent in 2002 to 85 percent in 2006/07. Child mortality rates have also declined significantly, from 159 deaths per 1,000 l ive births in 1997 to 94 in 2003/2004, and immunization rates significantly improved from 53 percent o f a l l children 12-23 months fully immunized in 2003/2004, to 71.5 percent in 2008'. Chronic malnutrition rates o f children under the age o f three decreased from 43 percent in 1997 to 32 percent in 2007. The prevalence o f HIV/AIDS in the country remains low, but has rapidly increased among high risk groups and there are an estimated 180,000 persons living with HIV in the country. Madagascar's health indicators are better than other African countries at a similar income level, but they s t i l l remain low, particularly amongst the rural population and the urban poor. For example, the maternal mortality ratio in 2004 was s t i l l high at 469 deaths per 100,000 l ive births. Population growth in Madagascar i s 2.7 percent while the fertility rate is 5.2 children per woman, and children under-five make up around 17.5 percent o f the population. Contraceptive prevalence in women aged 15-49 was only 24 percent in 2006. Thus, although there are encouraging developments, there i s s t i l l a long way to go given where Madagascar is today relative to the rest o f the world.

2. Health i s a key goal o f Madagascar's poverty reduction strategy, the Madagascar Action Plan (MAP) 2007-2012. In line with the MAP, the Ministry o f Health and Family Planning (MoH) developed a National Health Sector and Social Protection Development Plan (Plan de De'veloppement du Secteur Sante' et de la Protection Social - PDSSPS) for the period 2007-201 1 , which articulates and translates the M A P commitments into specific strategies and activities and identifies a number o f bottlenecks to increased access and use o f health services, including four key areas o f weakness:

(0 Low levels of health financing and inefficiencies in resource allocation: Madagascar spent around US$6 per capita on health care in 2005, significantly lower than the average o f US$15.4 per capita for sub-Saharan Africa2. Despite increases o f the resource envelope o f the M o H between 2005 and 2008, the current budget in 2008 of around US$144 million, or 1.6 percent o f GDP, i s not sufficient to adequately finance the implementation o f the PDSSPS. Moreover, the budget execution rate, although improving, has remained weak with preliminary estimates at 73.4 percent in 2007. This low utilization o f existing resources does not encourage the Ministry o f Finance and Budget (MFB) to increase the allocation o f domestic resources to the health sector. Furthermore, even when resources are available, they have been allocated in ways that do not necessarily favor the poor, are not sufficiently directed to basic health centers, and the

Enguzte sur la Couverture Vaccinale, February 2008 * excluding South Africa

4

formula for allocating health resources does not take into account demographic or socio- economic differences across the regions. As a result, high impact health interventions, especially those needed to improve maternal and child health, are not targeted to where they are most needed. For instance, the mortality rate among children and infants among the poorest 20 percent o f the population i s more than three times higher than for children among the richest 20 percent.

(ii) Inadequate demand for health services and low levels of utilization: only 10 percent o f the population reports an illness annually, and o f this, only 40 percent seeks care from qualified medical personnel. Financial barriers to access are the main reason for the l o w utilization o f health services and are often related not only to the direct cost o f the services, but also to other related expenditures, such as transportation costs and the opportunity cost o f seeking care. Moreover, geographic access to health care facilities is limited in rural areas, and about 10 percent o f those needing care l ive very far from a health facility and are unable to utilize health services when ill. A health mapping exercise done in 2007 showed that only about 58 percent o f the population lives within 5 kilometers o f a primary health center.

(iii) Uneven staffing of health facilities, especially in rural and remote areas: a fundamental problem underlying the uneven production and delivery o f health services in Madagascar is the huge variation in the allocation as wel l as training and competency levels o f medical and paramedical personnel. There are major imbalances in the distribution o f doctors across rural and urban areas, with 28 percent o f doctors serving 75 percent o f the population living in the rural areas and the remaining 72 percent in the urban centers. Moreover, an estimated 40 percent o f al l primary health centers do not have doctors. In addition, the relatively l o w productivity o f medical personnel in the public sector poses a major problem. Besides shirking and absenteeism documented in the 2007 Public Expenditure Tracking Survey and the Absenteeism Survey, l o w productivity o f the medical personnel is also a result o f l o w levels o f remuneration.

(iv) Poorly equipped health centers and low levels of capacity to produce and deliver health services, especially in rural and remote areas: health centers, especially those in the most isolated areas, often lack essential goods and equipments to facilitate diagnosis and treatment. Also, as demonstrated in the 2007 Survey on Bottlenecks in Functioning o f the Supply Chain o f Drugs, there continue to be extensive delays in the distribution o f drugs and medical supplies to the health facilities, taking, on average, up to one and a hal f months, and regions continue to have difficulties in efficiently managing their medical supplies. Managerial and implementation capacity at decentralized levels also continues to be weak. Finally, there are other indications o f l o w quality o f services at public facilities. In 2007, only 65 percent o f public basic health centers had access to water, 31 percent had electricity, and only 56 percent had a means o f transportation.

3. To address these issues, the PDSSPS seeks to strengthen the health system and increase i t s capacity to provide the necessary production, financing, delivery and management support for improved service delivery to reduce neonatal, child and maternal mortality, and control i l lness such as malaria, tuberculosis, sexually transmitted infections (STIs), and HIV/AIDS. A new sector policy was adopted in June 2005, in which emphasis was placed on re-orienting health resource allocations to underserved areas and improving public expenditure management. Accordingly, ongoing efforts are being targeted to strengthen the delivery o f health services, develop and manage human resources in the health sector, introduce innovations in health

5

financing including resource mobilization and resource allocation, and improve demand for, and utilization of, health services. All development partners support the PDSSPS and are financing activities inscribed in the sector plan, albeit through parallel projects. There is, however, a general consensus among the development partners that a transition phase o f sector-specific support and sustained improvement in public resources i s necessary before the Ministry can fully benefit from general budget support. The M o H i s also in the process o f updating its Medium- Term Expenditure Framework (MTEF) for 2009-201 1 and in parallel, the PDSSPS 2007-201 1 will be updated for the period 2009-201 1 based on the MTEF and to take into account lessons learned, further prioritizing activities and results expected based on different financial scenarios.

4. The PDSSPS and the MTEF are the key anchors o f the Sector-Wide Approach (SWAP), the first phase o f which was put in place in early 2007. The SWAP is contributing to increasing country ownership and leadership, fostering coordinated and open policy dialogue, putting greater focus on results, and guiding the allocation o f resources based on priorities. Finally, it is supporting enhancing sector-wide accountability with common fiduciary standards, and strengthening the country’s capacity, systems and institutions. The SWAP is a critical step for Madagascar, especially since it became a member country for the International Health Partnership and related initiatives (IHP+) in May 2008. IHP+ i s a renewed global effort to support countries in achieving their health Millennium Development Goals (MDGs) with scaled up financial, technical and institutional support for activities and mechanisms designed to achieve results on the ground. A key element o f the IHP+ is the development o f results-focused, country-led Compacts that rally al l development partners around one costed national health strategy, one Monitoring and Evaluation (M&E) framework, and one review process, thus improving harmonization, alignment, focus on results and mutual accountability. As such, the S WAp can act as the catalyst for the preparation o f this Compact for Madagascar.

5. The World Bank is supporting the SWAP through the Sustainable Health System Development Project (SHSDP), in the amount o f the US$lO million, which became effective on August 30, 2007. The project was designed to lay the foundations for the SWAP and build the budgetary, implementation and monitoring capacity o f the MoH. The SHSDP seeks to provide support for strengthening the national health system, including financing, delivery and management, so as to improve the access and utilization o f health services, especially in rural and remote areas. Three other Bank-financed projects are also supporting the health sector: the Second Multi-sectoral STI/HIV/AIDS Prevention Project (MSPP II), the Poverty Reduction Support Credit (PRSC) and the Governance and Institutional Development Project (PGDI). The objective o f the MSPP I1 i s to support the Government o f Madagascar’s efforts to promote a multi-sectoral response to the HIV/AIDS crisis and contain the spread o f HIV/AIDS. To do so, the project i s building capacity to carry out the national response to HIV/AIDS and STIs, a key risk factor for and contributor to the spread o f HIV/AIDS. The MSPP I1 also seeks to improve the quality o f l i f e o f persons living with HIV/AIDS through increased access to quality medical care and to non-medical support services. The PRSC Series and the PGDI are supporting improvements in financial management, including budget preparation and execution, implementation o f the new procurement code, improvements in human resource policy and decentralization o f service delivery in the health sector. In particular, the PGDI finances technical assistance to the key sectoral Ministries, including the MoH, on budget and public expenditure management, institutional capacity building, and support to improving governance and transparency in Government operations.

6

6. The World Bank i s collaborating closely with development partners in their respective support to the M o H to ensure implementation o f effective strategies for the development o f the health sector. The complementarity o f the respective contributions o f development partners in addressing the main public health issues and in institutional strengthening i s exemplary, for example, with respect to the Expanded Program o f Vaccination (Global Alliance for Vaccination Initiative - GAVI, UNICEF, the World Bank), the malaria control program (USAIDPresident’s Malaria Initiative, Global Fund to fight AIDS, Tuberculosis and Malaria - GFATM, the World Bank), the family planning program (USAID, UNFPA, the World Bank), and finally, support to improving o f the national health management and information system (European Union-EU and the World Bank). The proposed Joint Health Sector Support Project (JHSSP) will build upon the implementation experiences o f the various partners in Madagascar; for example, the introduction o f the minimum package o f basic health services to mothers and children, initially developed and costed in partnership with UNICEF.

7. Experience from Bank projects in the sector, including the SHSDP and the former Second Health Sector Support Project (CRESAN II), has highlighted certain bottlenecks in health service delivery but also demonstrated advances in certain areas o f the health system. With respect to financial management and reporting, disbursement o f project funds are made in advance and based on bi-annual estimates presented in a financial management report as opposed to payments contingent on the presentation o f statements o f expenditures for disbursements. The internal audit capacity o f the M o H has been developed with the creation o f an internal audit body that has undertaken a number o f audits o f regional hospitals, developed actions plans for improvements in financial management, and overseen implementation o f these plans. With continued technical assistance, it should be able undertake high-quality, comprehensive financial and technical audits o f the PDSSPS acceptable to al l SWAP partners (thus eliminating the need for audits carried out by each individual agency). With respect to procurement, two o f the weaknesses identified during implementation o f the SHSDP have been addressed. Firstly, the unit responsible for procurement within the M o H has been institutionalized in conformity with the recommendations o f an international audit, and receives funding from a dedicated budget line. Secondly, the central and the regional procurement units have been trained to use the newly adopted Procurement Code, as well as on the various procurement requirements o f the development partners. Furthermore, the MoH, with the support o f key health partners, such as UNICEF and WHO, i s also in the process o f putting in place an integrated procurement and logistics system for health and nutrition commodities.

8. The M o H has made significant progress on participatory annual work plan and budget planning in the last few years. The planning process has been decentralized whereby work plans are prepared from the bottom-up, consolidated and validated at each level, and integrated at the central level into a national annual work plan. In addition, budgets are prepared at the district, regional and central levels based on each level’s work plan. The overall budget is then adjusted based on the final envelope received from the MFB. Regions have also received assistance from the MFB for putting in place the appropriate financial software. As a result, although budget management i s s t i l l weak, especially at the regional and district levels, annual programming o f activities, budget planning, and monitoring at the local levels continue to show marked improvements. In an effort to facilitate inter-regional exchanges o f experience and lessons learned, the M o H i s putting place different mechanisms, such as creating coaching teams to support the regions and districts in public finance reforms, utilizing the “learning by doing”

7

methodology in conducting internal audits at the regional levels, and holding staff meetings in well-performing regions so that the best performers can serve as examples and role models. Finally, the practical design o f the bi-annual Joint Health Sector Reviews, with joint field missions to learn from experiences on the ground, and open and honest dialogue on constraints, bottlenecks and potential solutions, not only serves as an innovative and learning forum but fosters a certain measure o f healthy competition among the regions and districts.

9. These contributions are important but more needs to be done to support and strengthen the national health system to deliver better results o n the ground. Thus, the proposed JHSSP will seek to consolidate results achieved under the SHSDP and intensify support to overall health system strengthening to improve utilization o f health services.

B. Rationale for Bank involvement

10. The rationale for the Bank’s continued involvement in the health sector i s strong. First, consolidation and scaling-up o f support for basic health services i s essential for Madagascar to make progress in achieving the MDGs. The proposed JHSSP supports innovative results-based financing mechanisms for clear opportunities to ‘boost’ progress on pro-poor and potentially high impact activities, including the immunization o f children, control o f malaria, and population and family planning, which will contribute to the MDGs. Secondly, the current financial support provided by the SHSDP will be exhausted by end January 2009. The proposed JHSSP will be required to sustain the momentum o f the SWAP, consolidate results under the SHSDP, and provide the Government with more predictable financing through the end o f 2013. Finally, the Bank can play a catalytic role in leveraging additional resources for the health sector, such as through the IHP+ initiatives, within an agreed MTEF. The Bank is a key agency in a consortium o f development partners, including the African Development Bank (AfDB), AFD, the EU, French Cooperation, JICA, UNICEF, UNFPA, USAID and WHO. Moreover, the Bank plays an important role in bringing together the Government, c iv i l society, and development partners around a common vision o f effective service delivery and improved governance and accountability through better public expenditure management.

11. The proposed project is included in the Madagascar Country Assistance Strategy (CAS) for 2007-1 1 on page 32. Key CAS goals supported include “improving services to people” (Pillar I1 o f the CAS) and “achieving better outcomes in education and health”. In health, the focus i s to help the Government make further progress on reducing neo-natal, child and maternal mortality by offering access to reproductive services, reducing malnutrition, improving the availability o f clean water and sanitation services, and keeping HIV/AIDS and STI rates under control. The approach o f the proposed project - alignment with the government plan as enunciated in the MAP, harmonization and coordination with other development partners, and integrated sector- wide approach to health - i s consistent with the CAS principles and approach. Finally, the JHSSP i s aligned with the World Bank health, nutrition and population strategy and the sectoral strategic priorities as laid out in the Africa Action Plan.

C. Higher level objectives to which the project contributes

12. The JHSSP i s designed to support the implementation o f major parts o f the Government’s PDSSPS, which places an emphasis on maternal and child health with a key objective o f

8

strengthening al l aspects o f health systems, including the production, financing, delivery, stewardship and governance o f health services. The achievement o f the goals o f the PDSSPS will, inter alia, include reduction in maternal, child and neo-natal mortality, fertility rate, and chronic malnutrition in children under the age o f five. The fiduciary dimensions and focus o f the JHSSP on strengthening public budgeting, financial management and procurement also fit with broader efforts in this direction and is supported by other Bank projects, especially the fifth PRSC. Activities under the JHSSP also emphasize transparency and predictability in budgeting and sectoral planning, thus in keeping with higher-level objectives in governance and public sector, and public expenditure management reform. The successful implementation o f JHSSP is expected to yield a number o f other development benefits as well, including coordinated and open policy dialogue, allocation o f resources based on priorities, sector-wide accountability with common fiduciary standards, and stronger country capacity and institutions.

11. PROJECT DESCRIPTION

A. Lending instrument

13. The total cost o f the proposed JHSSP i s US$82.5 mi l l ion equivalent. IDA’s contribution to the JHSSP will be financed through a sector investment credit o f an amount equivalent to US$63 million, implemented over a four-year period from June 2009 to June 2013, with a closing date o f December 31, 2013. A portion o f IDA’s support will be pooled with financing from AFD in a common account (US$19.5 mi l l ion equivalent). This amount includes a contribution o f Euros 2 mi l l ion from KfW, who has entered into a silent partnership with AFD.

B. Project objective and Phases

NIA

C. Project development objective and key indicators

14. The development objective o f the JHSSP is to contribute to strengthening o f the health system to increase utilization o f health services, particularly among mothers and children. To do so, the proposed JHSSP i s employing a two-pronged strategy: to provide financial and technical support to priority activities as identified in the PDSSPS, such as maternal and chi ld health interventions; and to continue to strengthen the health system’s ability to use resources more effectively, which in turn, should result in better results on the ground. Achievement o f the development objective will be monitored by the following key performance indicators: (i) percentage o f births attended by skilled health staff; (ii) percentage o f women aged 15-49 using modern methods o f contraceptives; and (iii) percentage o f children under one immunized for DPT3lPenta. In addition, a series o f indicators will be used to monitor progress o f each component. For each indicator, the M o H has recorded the baseline value, confirmed the frequency o f monitoring and the institutions responsible for doing so, and set targets for achievement by 2013. These are summarized in detail in Annex 3.

D. Project components

15. The proposed JHSSP will directly support the sector by improving the supply o f health services, stimulating the use o f services, and strengthening the health system framework within

9

which these interventions are implemented through the following components: (i) strengthening delivery o f health services; (ii) innovative demand-side interventions for basic health services; (iii) development and management o f human resources; and (iv) institutional strengthening and monitoring and evaluation. Indicative allocations by component will be made for the project period; however, the actual allocations will be adjusted based on the Government’s Annual Action Plan, as prepared by the MoH. The detailed project description by component i s in Annex 4. The IDA credit would finance 100 percent o f eligible expenditures under Components 1.2,2.1 and 4.2 while the AFD grant would finance 100 percent o f eligible expenditures under Components 2.2 and 4.3 as described in Annex 4. IDA and AFD would joint ly finance, at the respective percentages to be determined each year, 100 percent o f eligible expenditures under al l other project Components.

16. Component 1: Strengthening Delivery of Health Services (US$41.3 million equivalent): The objective o f this component is to strengthen the delivery and availability o f health services at the primary and f i rs t referral levels. To this end, this component will support the strengthening o f the capacity o f the regions, districts and health centers to better organize, manage and deliver health goods and services to all, especially those living in rural and remote areas, but with continuing technical support and stewardship from the center. Efficient logistics and sustained availability o f pharmaceuticals, medical and laboratory equipment and supplies, critical for effective delivery o f basic health services, will also be supported by this component. Component activities will include: (1.1) allocations to regions, districts and health centers in part to cover fixed costs and in part based on achievement o f an agreed upon set o f results; (1.2) contracting- out o f basic health service delivery; and (1.3) support to the functionality o f health facilities, such as strengthening the distribution and management o f the pharmaceutical logistical supply chain, rehabilitation o f warehouses, and provision o f equipment, medical supplies and medicines. Sub-components 1.1 and 1.2 would be financed by the pooled funds and sub-component 1.3 by 100 percent IDA financing. The expected result o f this component would be the improvement o f delivery o f basic health services at al l levels.

17. Component 2: Innovative Demand-Side Interventions for Basic Health Services (US$16.9 million equivalent): The objective o f this component i s to support the pi lot testing o f different approaches designed to tackle financial and geographical barriers to access and introduce cost-effective interventions for mothers and children. One o f the ways to do this will be to expand coverage by encouraging health providers through performance bonuses to reach a higher number o f children and mothers (increasing supply) with a free-of-charge (which should increase demand) minimum package o f basic health interventions. A manual o f procedures governing the administration and monitoring o f the bonuses i s under preparation for each pi lot region. The expected result i s therefore increased use o f basic health services especially those related to mother and chi ld health. The component will finance technical assistance, training, goods and equipment to support activities aimed at (2.1) improving access and utilization o f basic health services; and (2.2) expanding enrollment in a social health insurance scheme for the formal sector. Sub-component 2.1 would be financed by 100 percent IDA and sub-component 2.2, 100 percent AFD financing.

18. Component 3: Development and Management of Human Resources (US$7.4 million equivalent): The objective o f this component i s to improve human resource management in the health sector and strengthen capacity o f the Human Resource Department o f the MoH. To this

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end, this component will support the finalization and implementation o f the national Human Resource Development Plan as well as career plans for medical personnel. In addition, innovative and performance-based mechanisms will be developed and implemented to provide incentives to rural-based personnel and promote enhanced performance o f such personnel. This component will also support selective training o f health personnel on priority areas o f health service delivery, and in management for results. This component will therefore finance technical assistance, training, small rehabilitation o f existing health centers, goods, medical supplies, medicines and equipment. T h i s component would be entirely financed by the pooled funds. The expected results o f this component would be a more equitable distribution o f qualified medical and paramedical personnel in specified rural regions.

19. Component 4: Institutional Strengthening and Monitoring and Evaluation (US$16.9 million equivalent): This component will continue to support a number o f system development and institutional strengthening activities at the central and decentralized levels, including the following sub-components: (4.1) improving technical and management capacity and district levels in areas such as public expenditure management and governance, procurement, financial management, internal auditing, and project oversight, which will complement and increase efficiency o f the continuing support provided through PGDI; (4.2) strengthening the national Health Management Information System (HMIS) and improving capacity in data collection, management, dissemination and use o f data for decision-making at al l levels o f the system; (4.3) strengthening epidemiological surveillance system; and (4.4) support to project supervision and execution. Sub-components 4.1 and 4.4 would be financed by the pooled funds, while sub- component 4.2 would be financed by 100 percent IDA financing and sub-component 4.3, by 100 percent'AFD financing. The expected result o f this component would be the improvement o f planning, budgeting, management, implementation, and monitoring capacity at al l levels.

E. Lessons learned and reflected in the project design

20. The design o f the JHSSP draws upon a number o f lessons learned from international experience and from implementation o f a series o f health and STI/HIV/AIDS prevention projects in Madagascar. The following are the most important lessons that have been taken into account whilst developing the JHSSP:

2 1. Alignment with Government's vision and priorities. The M o H has developed an integrated and common health sector strategy in the form o f the PDSSPS, which i s based on the Government's vision as articulated in the MAP. The development o f this strategy along with the revised MTEF was the f i rst step in towards a comprehensive and harmonized SWAp. The activities o f the proposed JHSSP are therefore based on the strategies and results expected outlined in both the PDSSPS and the MTEF 2007-201 1 and as such, clearly reflect the needs and priorities o f the MoH. This serves to strengthen Government ownership o f the JHSSP and guarantee i t s commitment to implementation, as wel l as ensures that it contributes to the achievement o f the objectives o f the PDSSPS.

22. Maintaining support to decentralized levels of the health system is critical. Under previous Bank support, the implementation capacity o f key technical M o H departments has improved as a result o f technical assistance and capacity building in planning, financial management and procurement. However, a number o f weaknesses remain, especially at the

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decentralized levels. Thus, technical assistance to these levels has been integrated into the project including al l elements o f budget planning and execution, data analysis and use for decision- making, supply chain management and distribution, and medical waste management. In addition, external technical advisors andor consultants recruited will be required to not only provide technical support on specific issues, but will also be paired up with Government counterparts whom they will train on the issue-at-hand to build the technical capacity o f the MoH.

23. Keep maximum flexibility to allow for response to urgent needs. The evaluation and implementation completion report o f the CRESAN I1 showed the importance o f the flexibility o f project design to allow for a rapid response to national emergency needs during implementation. Given that public health context is constantly evolving and Madagascar i s subject to frequent cyclones and public health outbreaks, the proposed JHSSP is being designed in such a way to allow the Ministry some flexibility to redirect resources to address urgent needs while protecting priority activities. While maintaining flexibility, however, performance indicators should reflect implementation progress as well as interventions actually financed to avoid any disconnect with achievement o f the project development objective.

24. Reduce the transaction costs for the Government. A key goal o f a SWAP in health i s to reduce the burden and transactions costs for Government. As such, the proposed JHSSP implementation modalities are expected to improve allocative efficiency by reducing transaction costs at all levels o f the health pyramid, through common implementation, procurement, and disbursement plans as well as common simplified procedures. Moreover, the JHSSP will provide support to the H M I S to encourage one single M&E system, integrating the multiple tools currently used by development partners, similar to the “Three Ones” for the national HIV/AIDS prevention program. The creation o f an integrated and comprehensive health sector M&E system will be essential for project management, decision-making and monitoring results.

F. Alternatives considered and reasons for rejection

25. There i s general consensus among development partners that a sector investment credit for financing the support to the health sector continues to be preferred to general budget support as the primary vehicle for financing. There i s widespread recognition that the challenges in health are too specific and the sector i s too fragmented to fully benefit from pure budget support. The World Bank’s Independent Evaluation Group (which completed a country assistance evaluation in July 2006 o f IDA’s involvement in Madagascar for 1995-2005) also recommended limiting the role o f budget support until there is a sustained improvement in collecting and managing public resources. Limiting support to the health sector through budget support under the PRSCs was rejected because o f the relative fragility o f the macro environment which would expose the sector to economy-wide shocks outside the control o f the Government. Although in recent years the Government has improved management o f these external shocks (such as cyclones and o i l price increases), priority sectors cannot yet be insulated as necessary from such negative events. Based on this assessment, it was deemed critical to ear-mark funds for the health sector under the JHSSP. The use o f an Adaptable Program Loan was also considered given the phased programmatic approach. However, the development partners group did not want to condition subsequent phases o f investment. Thus a sector investment credit was considered to be the best option under the current circumstances.

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111. IMPLEMENTATION

A. Partnership arrangements

26. In line with the 2005 Paris Declaration on Aid Effectiveness, there is broad-based consensus between Government and development partners on the SWAP and on the PDSSPS. All donors are providing support to the PDSSPS but with many s t i l l providing parallel financing through specific projects. Furthermore, bi-annual Joint Health Sector Reviews will continue to be led by M o H with the participation o f al l stakeholders and development partners as wel l as representatives from c iv i l society, private sector and other relevant ministries. The Joint Health Sector Reviews have three components: (i) joint preparation o f critical questions in a number o f thematic areas; (ii) a joint field visit to a number o f different regions to better understand the problems in the field and undertake discussions with stakeholders at the regional, district and community levels on the critical questions; and (iii) a plenary session o f two days to consolidate the field work and prepare a prioritized action plan for the following six-month period. These Reviews have been successful in giving voice to the al l levels o f health service providers and facilitating a constructive dialogue around bottlenecks and capacity constraints to service delivery. The Reviews will continue to provide a mechanism for monitoring progress on implementation o f the PDSSPS and serve as one o f the country’s health sector coordination mechanisms.

27. A document outlining the Guiding Principles for a SWAP laying out the coordination, financing and monitoring principles governing the implementation o f the PDSSPS was signed by the M o H and development partners during the third Joint Health Sector Review in December 2008. These Guiding Principles serve as the foundation for the development o f a country Compact, a critical milestone o f IHP+, and which i s expected to be prepared in 2009. With respect to the pooled financing under the proposed project, a separate Collaboration Agreement outlines the organizational, institutional and coordination arrangements for implementation, the roles and responsibilities o f each partner pooling their resources as wel l as and arrangements for adding new partners during implementation, and will be signed initially by the Government, AFD and the World Bank. The goal is that participating donors will gradually expand the share o f their support that i s pooled and that other donors will switch from parallel to pooled funding as existing projects close. AFD will administer i t s own financing.

B. Institutional and implementation arrangements

28. The M o H will be responsible for the overall oversight o f PDSSPS as wel l as o f project activities. The Ministry’s Management Team will continue to function as the Steering Committee for oversight o f implementation o f project activities and monitoring o f progress in achieving development objectives. A project coordination team (Cellule de Gestion de Programme - CGP), reporting directly to the Secretary General, will be responsible for the day- to-day coordination o f project activities. This CGP i s made up o f experienced professionals who have been responsible for oversight o f Bank-financed health projects over the last ten years. This team has already demonstrated i t s capacity both to manage IDA’S financial management and procurement procedures and to innovate effectively at al l levels o f the health care system to improve the accessibility and quality o f health services.

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29. In close collaboration with the Directorate o f Finance (DF) and the Directorate o f Planning and Studies (DEP) within MoH, the CGP will be responsible for annual project planning and budgeting. The CGP will also be responsible for project management including: (i) coordination and communication with all agencies involved in the implementation o f the Project, including al l M o H technical departments at the central and decentralized levels, on the basis o f the Annual Action Plans; (ii) consolidation o f district-level work plans and budgets; (iii) maintenance o f records and separate accounts for al l transactions related to the CGP; (iv) preparation, consolidation and production o f the project financial statements and other financial information; (v) management o f the three designated accounts; (vi) overseeing procurement; and (vii) M&E o f the various activities supported under the project. The CGP i s currently headed by a National Coordinator nominated by MoH, and existing staff include specialists in accounting, procurement and M&E. An in-depth capacity assessment o f the CGP and M o H undertaken during appraisal confirms that the CGP i s adequately staffed and that appropriate resources have been earmarked to meet project implementation needs.

30. The MoH, through i t s Secretary General, will: (i) ensure consistency o f project activities with the Government’s policy and strategy; (ii) approve the annual action plan and budget; and (iii) follow-up on project performance and implementation progress. The implementation o f project activities will be entrusted to technical departments o f M o H and regional and district operating units, which will receive timely payments from the CGP based upon submission o f satisfactory quarterly budgeted action plans. The regional and district operating units will manage disbursements from their own bank accounts. Under the supervision o f the regional financial officer(s), they will maintain records and accounts for al l transactions related to them, and prepare financial reports and other basic information on project management and monitoring as required by the CGP. The district operating uni ts are also responsible for the accounting and payment o f al l transactions o f the health centers under their authority.

31. A portion o f the financing for this project will be placed in a pooled account with the remaining amounts in separate designated accounts. All project activities will be included in a common action plan, procurement plan and disbursement plan. A harmonized Project Implementation Manuel (PIM) and Project Accounting Manual o f Procedures will ensure that Government only has to use one set o f procedures for al l donors participating in this project. The IDA credit would finance 100 percent o f expenditures under Components 1.2, 2.1 and 4.2 while the AFD grant would finance 100 percent o f expenditures under Components 2.2 and 4.3 as described in Annex 4. IDA and AFD would.jointly finance, at the respective percentages to be determined each year, 100 percent o f eligible expenditures under al l other project Components.

C. Monitoring and evaluation o f outcomes and results

32. The five-year PDSSPS includes a Results Framework which focuses on monitoring resources, processes and outputs directly related to actions and activities implemented by the MoH. Another set o f outcome indicators i s used for broad sector monitoring. JHSSP indicators have been selected on the basis that they are regularly monitored through the HMIS, which will track the specific inputs and results o f project activities. M&E o f the project will be undertaken by the CGP and the Directorate o f Monitoring and Evaluation who will be joint ly responsible for organizing the collection, analysis, presentation and dissemination o f these indicators, with technical support o f the development partners. Data collection will take place using existing

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reporting mechanisms. The MoH’s Management Team oversees the monitoring o f progress on the sector’s Results Framework and i s responsible for data analysis for decision-making, health policy analysis, and health policy and management training.

33. Under the SHSDP, technical assistance i s being provided to the Directorate o f Monitoring and Evaluation and as a result, the M&E guide and the audit guidelines are now available. Each health center now has a monthly ‘tracking table’ that records physical and financial activities. Indicators are monitored in the monthly activity report which tracks progress on results indicators. Data i s also collected on human resources and equipment on an annual basis, financial f low data on a monthly basis, and services produced and delivered on a monthly basis. At the decentralized levels o f the MoH, the on-going SHSDP is providing assistance in enhancing the data collection capabilities, strengthening the institutional capacity o f the HMIS, and ensuring the appropriate dissemination o f data.

D. Sustainability

34. Although the Government will continue to rely on external assistance for health sector financing in the foreseeable future, it will also need to take concrete steps to improve the financing o f recurrent expenditures within the national budget. To improve the budget execution rate, the M o H must increase its capacity to produce, finance, deliver and manage services. To this end, the project will build the capacity o f the central level in financial management, and clarify role and responsibilities o f the decentralized levels as well as strengthen regional and district level capacities in planning, programming and budgeting to support enhanced budgetary execution and improved prioritization and rationalization o f activities. Putting in place a SWAP i s expected to increase ownership and leadership, reduce the fragmentation o f financing provided to the sector, improve technical and allocative efficiency o f public expenditures, and thus contribute to the sustainability o f investments. Finally, Madagascar joined the IHP+ in M a y 2008, the f i rs t milestone o f which i s the development o f a country Compact that will rally al l development partners, and therefore increase alignment, predictability o f aid and mutual accountability.

E. Critical r i s k s and possible controversial aspects

35. mitigation measures are outlined in Table 1.

There are no anticipated controversial aspects to the proposed project. The r isks and risk

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Table 1 RI Risks

To Project Development Objective: Weak public expenditure management within the sector: Poor public expenditure management i s a critical constraint to efficient utilization o f existing resources at all levels o f the health system. Even if more financial resources becomes available, if the public expenditure management i s not improved, including the flow and use o f resources by the regions, districts and health centers, results on the ground wi l l continue to be slow.

Poor auditing capacity: Audits may not be conducted in compliance with international auditing standards due to: (i) weak capacity o f the accounting profession in Madagascar; and (ii) inadequate number o f skilled and experienced auditors at the “Chambre des Comptes” in particular.

sector development strategy may lack adequate focus on the most crit ical priorities resulting in a fragmentation o f sector strategy activities and dilution o f results on the ground.

Increased transaction costs for Government: Different sources of financing each with different procedures and reporting mechanisms wi l l place a high burden on and increase transactions actions for the Government and the MoH, which in turn could slow implementation and disbursement.

ks and Risk Mitigation Measures Risk mitigation measures

This risk i s mitigated both through the institutional capacity building component o f the proposed project and through parallel projects aimed at public finance management reforms and improvement in governance, such as the PGDI. Close collaboration with the public sector management group and PREM wi l l also facilitate this work. Stronger coordination with the MFB wi l l be facilitated through technical assistance provided by PGDI. Wh i le sector and national fiduciary systems are being strengthened, the fiduciary aspects o f this project wil l be entrusted to the CGP within the MoH. The CGP has a sound financial management system and good experience in managing donor funds. The 17 financial management officers recruited under SHSDP wi l l continue to provide support to the regional operating units. A country action plan has been prepared by the authorities to strengthen the accounting profession. An Institutional Development Fund grant i s currently under preparation for the implementation o f these actions. In the meantime, the audit o f the project accounts wi l l be carried out by an international accounting firm or by an international accounting firm associated with local auditing f m s , with effective participation o f the former in the fieldwork. The selected auditing fm wil l be invited to perform the audit jointly with the Auditor General. The PDSSPS i s being revised to take into account lessons learned and further prioritize activities and results expected based on different financial scenarios as outlined by the sectoral MTEF 2009-2013. The PDSSPS and the MTEF have served as key inputs into the design o f project activities. In addition, IHP+ and the development o f a country Compact require a strongly prioritized sector plan in l ine with a four-year MTEF, focused on a few select results. As Madagascar i s an IHP+ focus country, there are stronger incentives for the country to prioritize to attract additional donor funding. The bulk o f the financing for the JHSSP wi l l be placed in a pooled account with nominal amounts in separate designated accounts. A l l JHSSP activities are included in a common action plan, procurement plan and disbursement plan and a harmonized P IM wi l l ensure that Government has to use one set o f procedures for utilization o f funds, although since each donor i s administering i t s own financing, certain policies and procedures o f each donor may be used.

Risk rating whi t igat ion

Moderate

Moderate

Low

Moderate

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Table I cont '6 Risks

To component results: Weak implementation capacity: The implementation arrangements remain the same as for the SHSDP. The function o f the project coordination team has been further integrated into the M o H with the unit functioning mainly as a facilitator in overseeing the day-to-day management o f technical activities, implemented by the respective technical departments. However, implementation capacity at the regional, district and health center levels remains weak. Frequent turnover in already scarce health personnel: Turn-over at a l l levels o f the health system and in particular, in rural remote areas, wil l impact the quality o f health services provided.

Financial Management: There i s a risk o f misclassification o f expenditures and non- compliance with agreed changes in procedures. The computerized system in place may not satisfy the requirements o f other donors in financial and technical information.

a new code, there continues to be weaknesses in country procurement systems and in institutional capacities.

To component results: Social and environmental safeguards: MOH has been actively engaged in trying to resolve the problems related to management o f medical waste, although capacity remains weak in terms o f implementation o f activities. The Service d'Appui aux Gknies Sanitaires (SAGS) has been an integral player in the development o f the policy as wel l as information, education and communication activities and training conducted at various levels. However, much more work needs to be done on ensuring that the norms outlined in the pol icy are applied to each type o f health center.

Overall Risk Rating

Risks and Risk Mitigation Measures Risk mitigation measures

Implementation capacity o f key technical departments and o f each o f the decentralized levels i s being strengthening through long-term technical assistance, coaching and training and is slowly improving. The provision o f performance-based allocations wil l provide motivation t o improve implementation and results on the ground. The excellent implementation track record thus far o f the CGP along with continued high quality technical and strong pol i t ical support f i om the highest level are key elements for mitigating this risk.

The development o f career plans for medical and paramedical staff, w i th the first wave focused on staff in rural areas, is expected t o contribute t o reducing this risk. In addition, the proposed project wil l pi lot and scale up a package o f incentives and other innovative mechanisms to retain staff in rural areas. The Project Accounting Manual o f Procedures i s being updated to include the new Chart o f accounts and reflect agreed changes in procedures to be applied. The computerized accounting system used by SHSDP i s being customized and updated to meet user needs and satisfy donor requirements in financial and technical information. Capacity continues to be built in the procurement unit o f the M o H through a long-term technical assistance and through transfer o f knowledge and competencies o f the experienced procurement staff o f the CGP. The procurement arrangements for the JHSSP are the same as for the SHSDP which have proven successful. The performance o f the Min is t ry wil l continue to be evaluated regularly.

The National Policy on Medica l Waste Management was adopted in September 2005. It was approved and disclosed on March 23,2007 in the Infoshop and in the country between March 20 and 26,2007.

The Government has recently updated the Medical Waste Management Plan (MWMP) and reinforced i t s commitment by the inclusion o f the necessary budget for medical waste management for rehabilitated and equipped health centers in the 2009 State budget and in years thereafter.

Support to strengthening the medical waste management capacity o f the M o H at a l l levels i s being built into the Institutional Strengthening Component o f the proposed project.

Risk rating whitigation

M o d era t e

Moderate

L o w

L o w

Moderate

Moderate

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F. Loadcredit conditions and covenants

36. Conditions and covenants pertaining to the IDA credit include the following:

(a) Conditions of Effectiveness: Adoption o f a revised P I M and a Project Accounting Manual o f Procedures, satisfactory to IDA, to reflect the revised Chart o f accounts, the new models o f Interim unaudited Financial Reports (IFRs) and financial statements, and al l policies and procedures to be applied to the project. In addition, there are the standard legal conditions that apply to the effectiveness o f credit agreements.

(3) Financial Covenants: Financial covenants are the standard ones as stated in the Financing Agreement Schedule 2, Section I1 (B) on Financial Management, Financial Reports and Audits and Section 4.09 o f the General Conditions. In particular, the proceeds o f the credit shall be used (a) exclusively to finance Eligible Expenditures under the Annual Action Plan; and (b) in the case o f Pooled Activities in accordance with such percentages as shall be determined each year. In addition, the existing computerized accounting system will be upgraded to ensure timely production o f a l l financial and technical information required by IDA and AFD no later than two months from the effectiveness date. This action i s presently underway and expected to be completed no later than two months after effectiveness. The project financial statements shall be audited on a six monthly basis by independent auditors acceptable to IDA. Independent auditors will be appointed within three months after the effectiveness date.

(c) Other Covenants: Three additional covenants are included in the project: (i) organization o f at least one Joint Health Sector Review annually; (ii) the adoption o f the national Human Resource Development Plan by December 3 1,201 0; and (iii) the co-financing deadline for effectiveness o f the Co-Financing Agreement o f AFD is September 30,2009.

(d) Disbursement Conditions: No disbursements will be made (i) for bonuses under Component 2.1 until the manual establishing the system for such bonuses, satisfactory to the Association, has been adopted; (ii) for performance-based allocations under Component 1.1 until the manual establishing the system o f such allocations, satisfactory to the Association, has been adopted; and (iii) from the components under the Pooled Funding until the Co-financing Agreement o f AFD i s made effective and the Collaboration Agreement i s signed.

IV. APPRAISAL SUMMARY

A. Economic and financial analyses

37. The underlying rationale for the JHSSP i s the continued need for the Government o f Madagascar to improve budget sustainability by incrementally increasing public financing for the health sector, mitigating allocative and technical inefficiencies, and improving targeting o f resources for vulnerable groups and high priority health programs. JHSSP i s also expected to generate further benefits by adopting a programmatic approach that will reduce the fragmentation o f donor support and strengthen linkages with the M A P and PDSSPS.

38. With a per capita GDP estimated at US$375 in 2007 and about 70 percent o f i t s population l iving in poverty, Madagascar i s one o f the poorest countries in the world. The health

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sector faces many challenges and at the current level o f expenditures, the country will not be able to achieve the health-related MDGs. Preliminary results o f the MTEF, costed by the M o H with the support o f UNICEF and other partners, show that an additional US$7 per capita will be required for 2009-2010 and US$8.10 per capita for 201 1-2012 to achieve a reduction in child mortality by 46 percent, neo-natal mortality by 29 percent and maternal mortality by 44 percent, necessary to sustain progress in achieving these MDGs. Given the Government’s macroeconomic constraints, the financing gap in the health sector cannot be bridged with internal resources. Therefore, donor assistance, financing a large share o f the sector’s investment budget, will continue to be relied upon.

39. The Bank-financed CRESAN 11, which closed in December 2007, has supported the health sector since 1999 and financed some 65 percent o f the M o H investment expenditures in 2005. The key, however, i s not only to find the required resources but also to spend them effectively and efficiently. Despite M o H efforts, budget execution remains l o w (according to preliminary estimates at 73.4 percent in 2007), and constitutes a challenge that i s both internal (removing cumbersome procedures and addressing technical capacity shortcomings) and external (ensuring a higher degree o f predictability and coordination in the delivery o f foreign assistance). JHSSP aims to fill a part o f the financing gap, while at the same time addressing some o f the budget management bottlenecks confronting the Government, including internal management weaknesses at al l administrative levels, volatility o f donor funds, and high transaction costs created by the proliferation o f parallel projects with different management and reporting mechanisms. JHSSP will support a coordinated approach o f development partners in support o f a Government-owned health strategy, with a corresponding MTEF leading to greater harmonization in donor processes and procedures.

40. The economic value o f the proposed intervention, and the justification for supporting public intervention in the health sector, are attributable in part to the presence o f important market failures reflecting the presence o f externalities as well as the public goods dimension o f health services. Preventable diseases such as diarrhea and malaria are the major causes o f mortality and morbidity in Madagascar, especially among children under five. JHSSP will finance activities aimed at prevention and treatment o f these diseases, and will support information and community-based campaigns. In addition, JHSSP has a pro-poor bias, and will finance activities aimed at reducing the inequalities in access and utilization o f health services. There are large income inequalities in the utilization o f health services in Madagascar, partly due to poor physical access to health services in rural isolated areas, and partly to financial and cultural barriers to utilizing services. The recurrent budget o f the M o H i s unequally distributed across regions, and in general, richer regions receive higher amounts o f budget per capita than poorer regions. This also reflects an unequal distribution o f qualified medical personnel, which benefits richer urban areas, and somewhat the higher concentration o f health centers in better-off regions. The project will seek to address this unequal distribution o f resources by financing interventions in underserved, rural areas where poverty rates are highest. Moreover, the project will focus on cost-effective interventions to prevent and treat the illnesses that can be delivered at household, community and health center level. By improving coordination and harmonization among donors, the project will also improve allocative efficiency by diminishing transaction costs and thus diminishing administrative costs o f MoH when handling different donor- supported projects.

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4 1. Finally systems and process-related benefits are expected to be generated by the proposed intervention. Better planning, financing, organization and management o f the health sector will be supported (notably through technical assistance and knowledge-building through pi lot initiatives) and household-oriented benefits (better access, increased utilization o f health services and improved health status, especially o f vulnerable groups living in rural areas, women and children) will be sought. The adoption o f a programmatic approach i s aligned with the objective o f promoting a strategic partnership between the M o H and the principal development partners, and o f achieving greater aid effectiveness through harmonization o f donor assistance and better alignment to client processes and priorities.

B. Technical

42. The overall technical design o f the project i s aligned with the country’s priorities and consistent with international good practice. The project has been designed in response to health sector priorities and needs, thus is in line with the revised PDSSPS. The last Demographic and Health Survey (DHS) 2003/2004 provides solid baselines for the key health indicators for the country and the 2007 Health Infrastructure Development Plan is a reliable source o f information on availability at health centers and distribution o f resources.

43. Consultations and joint reviews with some o f the development partners helped identify specific support required by the government. Lessons learned and good practices from recent IDA or other development partner-financed health projects in Madagascar and in the region will be capitalized upon to ensure better scaling-up o f proved high-impact interventions: quality management at the primary health care level, community-based activities related to health, and integration o f services on reproductive health. The project will also benefit from analytical studies provided by AFD (improvement o f the budget allocation criteria for the district level, assessment o f insurance schemes), by UNICEF (costing o f a ‘minimum package’ o f high-impact, l ow cost health interventions) and from evaluation o f the current pilots under SHSDP: incentive measures for providers, universal access to obstetrical and neonatal emergencies. Lastly, innovative approaches calling upon mutual accountability and performance culture will be explored through results-based financing mechanisms.

44. Project elements will be implemented on the basis o f national strategies and international norms and standards (performance indicators, good practices in immunization, community-based malaria treatment and at the primary health level, performance-based contracting). The project aims to implement cost-effective interventions o f proven values to address priority health issues, and to avoid overburdening the Government counterpart with procedure issues.

45. The design recognizes the necessity to strengthen the health system as a whole in order to achieve the expected results. An emphasis on capacity strengthening i s relevant and the project will support the decentralized levels to use available data in decision-making, and will strengthen management, planning and budget process capacities to ensure timely and efficient budget execution.

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C. Fiduciary

46. Procurement. A new Procurement Code was passed by the Parliament and the Senate and became effective in July 2004 and included simplification o f procedures and compliance with international standards. The Procurement Code has also been supplemented by regulations, procedure manuals, and standard bidding and other procurement documents. The Bank approved the Use o f Country Systems (USC) on April 24, 2008, which includes International Competitive Bidding (ICB) and Quality and Cost-Based Selection (QCBS). However, this approval does not extend to Madagascar given that there are a certain number o f pre-requisites that have not been fulfilled, including the fact that Madagascar has not yet expressed i t s interest to be part o f the pilot. As a result, despite the support from other development partners for USC, there continues to be no formal approval from any partners on USC in Madagascar. Therefore, during the preparation o f the proposed project, it was agreed with, the Borrower that IDA Guidelines and Standard Bidding Documents (SBDs) would be used. The existing P I M will be updated before credit effectiveness to reflect the arrangements for the proposed JHSSP.

47. Procurement activities o f the project will be carried out by the Unite' de Gestion de la Passation de Marche's (UGPM) o f the M o H in coordination with the procurement team o f the CGP which is responsible for oversight o f implementation o f the on-going Madagascar SHSDP. This unit will function as a M o H procurement unit in accordance with the provisions o f the Procurement Code. The CGP procurement team i s currently duly staffed with two proficient procurement officers and an assistant. The U G P M has had some experience in managing procurement operations within the M o H and i s properly staffed with health procurement specialists. A Procurement Capacity Assessment o f MoH, including training needs and arrangements, was conducted as part o f project preparation. The assessment reviewed the organizational structure for implementing the pooled financing activities and the interaction between the UGPM, the CGP'S staff responsible for procurement, and the DF. Corrective measures were agreed upon in May 2007 during preparation o f the on-going project and are being implemented in a timely manner along with the agreed procurement action plan. As such, the procurement action plan i s being, and will continue to be, fine-tuned quarterly and the project procurement plan will be updated accordingly. A s part o f supervision missions and in addition to regular post procurement reviews, independent procurement and technical audits will be carried out as needed. The overall project and project risk for procurement i s therefore moderate.

48. Financial management. In accordance with Bank policy and procedures, the financial management arrangements o f the CGP and the regional operating units responsible for implementation o f the project have been reviewed in order to determine whether they are acceptable to the Bank. This review i s actually an update since the financial management systems o f these entities have already been assessed in the context o f the ongoing SHSDP. The conclusion o f the financial management assessment i s that the CGP and the related operating units o f the M o H satisfy the Bank's minimum financial management requirements specified in O P B P 10.02. However, some improvements will be needed to further strengthen the financial management system.

49. To efficiently address the challenges o f the proposed project, a financial management plan has been developed and agreed upon with M o H to ensure an environment which mitigates fiduciary risk. Measures to be taken are the following:

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Maintenance o f a qualified technical assistant recruited under SHSDP who i s acquainted with both the national financial management system and IDA financial management procedures. The mandate o f this technical assistant is to strengthen the financial management capacity o f the MoH, and specifically the DF, and supervise the financial management aspects o f al l programs to be implemented by MoH. This action has been completed; Extension o f the on-going contracts o f the seventeen financial management officers recruited under the SHSDP to: (i) provide the regional operating units with the required capacity to quickly disburse and account for project funds; (ii) ensure, at the regional and district levels, the use o f funds for the purposes intended; and (iii) assure timely preparation o f periodic financial reports required for proper monitoring o f activities implemented by regional operating units, with respect to financial and physical aspects. This action has been completed; Review o f the Chart o f accounts to reflect al l components and activities to be financed under this project and satisfy the requirements o f other development partners in financial, accounting and technical information related to the project. This action will be completed as part o f the revision o f the Project Accounting Manual o f Procedures; Update o f the Project Accounting Manual o f Procedures to include the new Chart o f accounts, agreed changes in f low o f funds, models o f IFRs and financial statements and al l policies and procedures to be applied under this project. The content and formats o f IFRs and financial statements were agreed at negotiations. The update o f the manual will be completed prior to credit effectiveness; and Customizing and upgrading o f the computerized accounting system currently used by the CGP in order to satisfy donor requirements in financial and technical information, and ensure timely production o f annual financial statements and quarterly IFRs for monitoring project activities. The new software will be functional no later than two months after credit effectiveness.

50. The review o f the Chart o f accounts and the extension o f the contract o f the seventeen financial management officers has been undertaken. To ensure proper application o f procedures described in the revised manual, a specific training will be provided prior to credit effectiveness. To mitigate risks raised by the limited capacity o f the Auditor General (Chambre des Comptes), the partners and Government agreed that, as an interim measure, an international private auditing firm acceptable to the donors will carry out the audit o f the project accounts joint ly with the Auditor General. This audit will be performed on a six-monthly basis and conducted in accordance with International Standards o f Auditing. The auditors will be recruited within three months after the effectiveness date. The audit report will be submitted to IDA and AFD not later than six months after the end o f each period. N o significant problems have been encountered so far in terms o f audit covenants: al l audit reports related to IDA-financed projects in Madagascar have been received in due time.

51. To build and strengthen the financial management capacity o f M o H staff at al l levels, capacity building activities are being developed in the medium-term through the ongoing public financial management reforms supported by PGDI and other development partners. Institutional strengthening activities are also being undertaken under Component 4 o f this project to enable the M o H to move towards sector-wide financial management arrangements by the end o f the project period.

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D. Social

52. A Poverty and Social Impact Analysis carried out in 2005 highlighted the absence o f citizen involvement in monitoring service quality in health as well as a lack o f empowerment o f local health committees, which represent a key focus o f community level involvement in the health system. The limited use o f public health centers is mainly related to financial barriers to access and poor quality o f health services provided. Moreover, lack o f education in communities prevents understanding o f the importance o f reproductive health services: family-planning is not widely accepted by men; antenatal care i s delayed; and women are reluctant to deliver in health facilities. Although public primary health services are free and drugs are subsidized through equity fund mechanisms, other related costs (transportation, accommodation, meals) represent important financial constraints to accessing health services. Health care providers are reproached for absenteeism, lack o f professionalism and/or skills and poor quality o f the services provided which lead to loss o f t rust between provider and patient. Community-based care has been addressed through the community-based health workers initiative but communities need to be empowered. Moreover, Madagascar’s physical characteristics o f having numerous remote and difficult to access areas makes it difficult to rely only on top-down supervision to monitor quality and performance o f around 3,000 health centers.

53. In this context, health service quality could be improved if there were support for engaging local communities in the monitoring o f health quality, and if the accountability and transparency o f the relationship between the service providers and users is strengthened at the local level. Social accountability mechanisms need to be established in order to provide community members with simple but effective reporting mechanisms as well as sensitize them to service norms and rights and responsibilities o f various actors in provision o f health care. Experience with the application o f social accountability mechanisms in other countries has highlighted their effectiveness in reducing absenteeism, improving treatment o f clients, and increasing utilization o f health services. Such mechanisms may also provide greater transparency and demand for timely allocations from the communes to pay for medicine dispensers and guards. Empowering the health committees to apply pressure on the mayors’ office to allocate these funds for training them and providing them with transport allowances to participate in health management committees also helps. These represent relatively small investments, since the potential payoff can be large, especially given the critical role played by the dispenser in providing drugs, an essential element in access and quality o f health care.

54. An ongoing pilot is testing and adapting a Community Scorecard to the health sector, and is expected to provide valuable lessons on how such mechanisms could be adapted and more systematically integrated into the health sector monitoring. A draft implementation manual has been developed, and could be used for scaling up these mechanisms in the future. These pilots are being tested both in areas in which top-down performance and quality enhancement projects are in place as well as in areas without these projects. During the pi lot stage, the Community Scorecard mechanism was selected because it was a more accessible mechanism for a wider variety o f actors, and did not require sophisticated statistical or analytical skil ls. The proposed social accountability mechanisms would directly tie into the multiple activities o f the project, including development and management o f human resources in the health sector, improving demand and utilization o f health services, and M&E.

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E. Environment

55. The handling, collection, disposal and management o f health care waste and other infected materials i s the most significant environmental issue associated with the proposed project. As such, i t has been classified as Category B for environmental screening purposes.

F. Safeguard policies

56. The only safeguard triggered is OP 4.01 Environmental Assessment, due to potential r isks in the ineffective medical waste management in health centers. As such, a Medical Waste Management Plan (MWMP) is required. The project does not trigger any o f the World Bank’s social safeguard’s policies, since land will not be acquired and c iv i l works will be limited to rehabilitation o f existing infrastructure. To address potential impacts on the environment and public health effectively, the M o H adopted the National Policy for Medical Waste Management in September 2005. This Policy was approved and disclosed on March 23, 2007 in the Infoshop and between March 20 and 26,2007 in-country.

Table 2 Safeguard Policies Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OPBP 4.01) [XI 11 Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [ I [XI Physical Cultural Resources (OP/BP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OP/BP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety o f Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI

57. The analysis o f the implementation and supervision o f the National Policy has shown that: (i) the National Office for the Environment o f the Ministry o f the Environment has been responsible for supervising the implementation o f the pol icy at the provincial and district level in a satisfactory manner; and (ii) the M o H has demonstrated clear ownership o f the problems related to management o f medical waste and has been an integral player in the development o f this policy as well as Information, Education and Communication campaigns and training activities conducted at various levels. In addition, a M W M P was developed for MSPP 11, and i s under implementation. Prior to appraisal o f the MSPP 11, the MWMP was disclosed in-country and in the Infoshop. Thus the Borrower has demonstrated the capacity to properly develop and implement a MWMP, which i s the only safeguard-related study required for this project and project. The relevant detailed M W M P was provided to the Bank in September 2008 and judged satisfactory.

* By supporting the proposedproject, the Bank does not intend to prejudice thefinal determination of the parties‘ claims on the disputed areas

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58. To improve the implementation o f National Policy on Medical Waste Management, the Government o f Madagascar through the M o H sent a commitment letter to the World Bank in September 2008 that the future M o H budget as from 2009 onwards will include the necessary budget for medical waste management for rehabilitated and. equipped health centers. The relevant detailed MWMP presents the strategic objectives o f the M o H and seeks to ensure the conformity o f health centers with the National Policy o f Medical Waste Management. As such, within this framework, the project will finance: (i) containers for syringes, trash bins, boots, gloves, masks fo t the maintenance personnel; on-site sanitary pits; (ii) incinerator construction; (iii) training for health care personnel per health center financed; (iv) development o f monitoring mechanisms and management tools and instruments for the medical waste management in the health sector; and (v) public awareness campaigns regarding the dangers o f unsafe medical waste management. The National Policy on the Medical Waste Management with the updated MWMP was disclosed in Madagascar and at the Bank’s Infoshop prior to appraisal. In addition, in September 2008, the M o H sent official instructions to al l health facilities to include a budget-line to ensure regular functioning o f their medical waste management system.

G. Policy Exceptions and Readiness

59. policies.

Policy Exception. The proposed project does not require any exceptions from Bank

60. Readiness. The main design parameters and operating systems for the project were established under the SHSDP. The project is deemed ready for implementation, subject to fulfillment o f the condition o f effectiveness.

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Annex 1: Country and Sector Background

Madagascar Joint Health Sector Support Project

A. Health Status and Outcomes

61. The last decade witnessed marked health improvements in Madagascar, especially among children. According to the Demographic and Health Survey (DHS), infant and chi ld mortality f e l l by 43 percent and 41 percent, respectively, between 1997 and 2004. Although some issues have been raised regarding the reliability o f these marked drops in mortality, other determinants o f child survival - such as morbidity and coverage o f important health interventions - have also improved. For instance, the prevalence o f diarrhea in children decreased by about 63 percent and the proportion o f anemic children fe l l by about 3 1 percent between 1997 and 2004. At the same time, vaccination, vitamin A supplementation, and exclusive breastfeeding increased.

62. Despite these advances, the maternal mortality ratio has unfortunately remained stagnant at about 469 per 100,000 l ive births since 1997, jeopardizing the likelihood that Madagascar will reach this MDG by 2015. While antenatal care has increased to 80 percent and the presence o f skilled staff at birth has increased from 47 percent to 51 percent, the full benefit o f skilled attendance at birth can only be realized if the referral system, comprising al l o f the essential elements o f access to the whole spectrum o f obstetric care including emergency services, i s fully functional. Some progress has been achieved in recent years in addressing this challenge through better communication networks between primary and f i rs t level referral facilities using solar based radios, strengthening o f blood banks at district level, provision o f ambulances and obstetric care equipment and the rehabilitation and re-equipping o f some district and referral facilities. Moreover, deaths due to abortion contribute significantly to the maternal mortality rate (40 percent in rural areas, and approximately 52 percent in Antananarivo alone), suggesting that improved access to family planning advice and services would considerably improve maternal health in the medium-term. Overall, more intensified efforts are needed for more systematic improvements in referral services and emergency obstetric care, particularly in rural areas.

63. Communicable diseases, especially malaria, diarrhea, and acute respiratory infections, often in association with malnutrition, are the main causes o f mortality and morbidity, mainly among children under-five. The M o H statistical yearbook 2004 shows that 24 percent o f outpatient consultations are for respiratory track infections, followed by 18 percent due to fever (suspected malaria), and 8 percent for diarrheal illnesses. Among children under-five, respiratory track infections, suspected malaria, and diarrheas represented 33 percent, 22 percent, and 14 percent o f primary health care consultations in 2004. Most vaccine preventable diseases seem to be under control in Madagascar - indicative o f high vaccination coverage - and in 2004 less than 1 percent o f al l children’s consultations at the primary health care level were due to measles.

64. Bilharziosis, lymphatic filariasis, tuberculosis, leprosy and malaria also represent a large health burden to the population. Bilharziosis affects about two and a hal f mi l l ion people in Madagascar, mostly in the western and central parts o f the country. Lymphatic filariasis affects all areas o f the country but especially the poor rural coastal areas, and in some o f these areas, the prevalence i s thought to be higher than 50 percent. Tuberculosis also represents an important health burden in the country with an estimated 20,000 cases per year and a detection rate o f only

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62 percent. Finally, despite marked reductions in the incidence o f leprosy, Madagascar remains one o f the few countries in the world that has not eradicated this disease. By end 2005, it had the highest registered prevalence in the world (2.5 per 10,000). While Madagascar has made some headway on the control o f malaria, tuberculosis and leprosy, these efforts have lost some ground mainly due to delays in access to resources, and deterioration o f the existing surveillance system. Madagascar has secured sizable resources for the control o f malaria, tuberculosis and HIV/AIDS treatment mainly through the Global Fund grant facility. Recently however, delays in implementation have occurred due to lengthy processes in defining appropriate strategies (e.g., for malaria) or delays in access to available funds. Nevertheless, social marketing o f highly subsidized permanently impregnated bed-nets have increased mother and chi ld prevention in the coastal regions. Diagnosis and treatment o f tuberculosis improved with the expansion o f the directly observed therapy system and increased drug availability nationwide.

Table 3 Coverage of effective child health interventions, Madagascar, 1992 - 2004 DPT 1 DPT 2 DPT 3 Measles All ORSIRHS Vita A Exclusive breastfeeding

1992 76.5 66.3 53.8 54 43.4 25.6 37.1 1997 67.7 60.1 48.4 46 36.2 23.4 4 47.6 200312004 71.3 66.7 61.4 59 52.9 42.4 76 67.2

Source: DHS 1992, 1997, 2003/2004; a: ever before survey in 1997 and during 6preceding years in 2003/2004

65. Many effective interventions to improve child and maternal survival and prevent or treat many o f these communicable diseases exist and can be delivered at very l o w costs. For instance, for the prevention and treatment o f diarrhea, pneumonia, and malaria, the main causes o f morbidity and mortality among children under-five, the following l o w cost interventions have proven effective: exclusive breastfeeding, oral rehydration treatment, antibiotics for pneumonia, vitamin A supplementation, and others. Similarly, to improve maternal survival many preventive and curative interventions exist that can be delivered at l o w cost: family planning, folic acid supplementation, skilled birth attendance, emergency obstetric care, and others. The coverage o f many o f these effective interventions to improve child survival has increased markedly over the years. Exclusive breastfeeding, the use o f oral rehydration solutions for home-based management o f diarrhea, and vaccination rates have noticeably increased over the last decade which, together with the distribution o f water purification products through social marketing, have contributed to improvements in child survival.

66. There are large socio-economic differences in the coverage o f many o f the high impact health interventions, especially those needed to improve child survival. For instance, the percent o f children fully immunized i s 2.5 times higher among the richest 20 percent o f the population than among the poorest 20 percent. In the case o f vitamin A supplementation, the socio- economic differences are much lower but s t i l l persist. These differences also reflect the failure o f the health system to reach the poorest segments o f the population. There are also large regional disparities in health outcomes, partly reflecting large income differences. The provinces o f Antananarivo and Antsiranana have the lowest percentages o f people living in poverty, and these are also the provinces with the lowest levels o f infant and child mortality. There are also large socioeconomic differences in child survival, which i s not surprising as income is one o f the main determinants o f child health. The mortality rate among children and infants among the poorest 20 percent o f the population i s more than three times higher than among children among the richest 20 percent.

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Figirre I: Neonatal, and child mortality across provinces and wealth quintiles, 2003/2004 160 ~

20 -

0 -

Poor** i f 111 ," Rlshn* L3 naonatal .I infant L3 underfive

ource DHS 2003/2004 and EPM 2005for poverty rates across provinces

,

67. In the case o f maternal health, the l o w percent o f births attended by skilled personnel and deficiencies in the referral system in case o f complications have thwarted improvements in maternal survival. Data from the last DHS shows that while more than 70 percent o f women receive at least two antenatal care consultations, only about 51 percent o f births deliver in the presence o f skilled health personnel, which significantly limits the possibility o f receiving proper attention in case o f complications. There are also large socio-economic and geographical differences in the percent o f women receiving antenatal care and in the percent o f birth attended by qualified health personnel.

Figure 2: Coverage of maternal health interventions, by income and rural-urban areas, 20

I 2 O 1

ource: DHS 2003/2004

12004

100 1

antenatal care skilled ddilery in health facility

68. Finally, community multi-sectoral approaches are also needed to ensure that households have access to clean water and sanitation, which will increase protection against the spread o f water-borne diseases. Improving this situation does not depend only on MOW, but efforts to improve these indicators will have a high impact on health.

B. Organization of the Health System

69. The health delivery system in the country follows a four-level pyramidal system. The basic health centers (centre de santt? de base - CSB I and CSB 11) are the f i rs t point o f contact in the system. In 2004, there were 1,106 CSB I and 1,842 CSB I1 spread across the entire country

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and catering to approximately 10,000 people for each facility. In addition, there are 85 district- level hospitals in district headquarters (centre hospitulier de district - C H D I) based in district headquarters but offering similar services to those offered in a CSB 11. The second step are the 55 C H D I1 hospitals (2004), also based at district headquarters but offering emergency surgery and comprehensive obstetrical care. At the third level, there are four regional hospitals (centre hospitulier regional - CHR) in the whole country, offering second referral services. At the fourth level, there are six university hospitals (centre hospitulier universituire - CHU) offering comprehensive national referral services.

Table 4 Consultation at public and private facilities, by income quintiles (EPM 2005) CH* CSB 1 CSB 2 Private Clinic Private doctor Other Total

Urban Most poor 20.1 18.6 38.8 3.1 3.2 16.2 100 2eme Quintile 14.9 11.3 31.6 5.9 24.3 11.3 100 3eme Quintile 20.4 14.7 25.4 16.3 13.2 8.8 100 4eme Quintile 11.2 10.5 29.4 8.1 31.9 7 100 Most rich 23.3 4.9 20.6 7.5 32.7 7 100 Total 19.0 9.5 26.2 8.3 26.0 8.6 100

Rural Most poor 5.1 25.5 58.0 0.9 6.2 4.1 100 2eme Quintile 4.9 19.0 53.9 2.1 7.0 13 100 3eme Quintile 3.5 12.9 56.9 3.0 12.6 11.3 100 4eme Quintile 1.2 11.6 66.9 2.1 11.4 6.9 100 Most rich 5.7 10.0 50.8 3.6 20.4 7.4 100 Total 4.0 15.1 57.3 2.5 12.2 8.6 100

70. The public sector offers the bulk o f health care services in the country, especially in rural areas. In urban areas, more than 30 percent o f f i rst contacts with the health system occur in a public primary health care facility, while in rural areas more than 70 percent o f all f i rs t contacts occur at a public facility. O n the other hand, the private sector accounts for about 30 percent o f al l f i rs t contacts in urban areas and about 14 percent in rural areas. Overall, more than 40 percent o f consultations take place at private providers among the richest 20 percent o f the population. The private sector, mainly concentrated in urban areas, also represents an important share o f service delivery. About one out o f every five primary health care facilities and two out o f every five referral hospitals are privately owned. The majority o f these facilities are concentrated in Antananarivo and other major cities. The private sector has an even larger presence in the retail sale o f pharmaceuticals. There are 203 pharmacies, located mainly in Antananarivo, and 1,625 drug retailers distributed throughout the country.

C. Health Sector Challenges and Issues

71. The health sector in Madagascar faces many challenges relating to the level o f overall financing, utilization o f health services, distribution o f health personnel, availability o f drugs and medical supplies in health facilities, and internal administration o f the health system, including budget execution.

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The overall level ofjinancing for health is very low

72. Total. health expenditures in Madagascar were estimated to be approximately US$6 per capita in 2005, which is around 1.4 percent o f the GDP. External assistance is a key source o f health financing, though out-of-pocket payments are also large. In terms o f distribution, there are large inequalities across regions, with richer regions receiving relatively more resources. This regressive distribution o f resources represents an obstacle to access and utilization o f quality health care. Insignificant resources f low to the CSBs, which partially explains the l o w quality o f the services rendered at this level. There are no clear criteria for equitable distribution o f health resources across regions. Resource mobilization and allocation remain the cornerstones o f the health sector strategy in Madagascar, as the country strives to increase the resources allocated to the health sector.

The demand and utilization of health services are very low

73. A large proportion o f the population does not receive care when in need. Data from the E P M 2005 shows that only two out o f every five people receive care in case o f illness or injury. In addition, there are large regional differences in the percent o f people receiving care, with about 65 percent o f people reporting an illness or injury in DIANA region receiving care compared to only 23 percent in Vatovavy Fitovinany and Melaky, two o f the poorest regions in the country. Geographic access to health care facilities is limited in rural areas, and about 10 percent o f those needing care l ive far from health facilities and are therefore unable to utilize health services when ill. A health mapping exercise done in 2007 showed that only about 58 percent o f the population has access to - lives within 5 kilometers o f - a primary health care center, though the situation has improved recently with the establishment o f 2 16 new facilities.

74. Financial barriers to access represent the main cause o f l o w utilization o f health services. The EPM 2005 shows that the cost o f receiving care is the main reason reported for non- utilization o f services in case o f illness. These financial barriers are often related not only to the direct cost o f the services but also to other expenditures, such as transportation costs and the opportunity cost o f seeking care. The Government has tried to alleviate these financial barriers, f i rst by eliminating user fees during the political crisis and then by creating F A N O M E and the equity funds. After the 2001 economic crisis, health service fees were abolished, including copayment on drugs, following which utilization o f health services increased significantly. However, given that the increase in health resources was not sufficient to compensate for the loss o f user fees, drug stock-outs became more common and the quality o f services deteriorated further as the workload o f the already insufficient health personnel increased. At the end o f 2003, the Government reinstated user fees, and by 2004, a new cost recovery system - FANOME - was put in place. This system was accompanied by an exemption mechanism to ensure that the poor had access to health care. Further, a small percent o f the sale o f drugs (2.2 percent) i s now set aside for an equity fund in each primary health care center to allow free access to drugs for the poor.

75. Early evaluation o f these reforms suggests that: (i) utilization o f health facilities decreased following the reintroduction o f user fees, although the exact role o f the re-introduction o f the fees i s not clear since the purchasing power o f the population has also decreased; (ii) stocks o f drugs and supplies have improved following the reintroduction o f user fees; (iii) the

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new equity fund successfully targets the poor as almost al l people in the exemption l i s t can be classified as being poor; (iv) coverage by the equity fund i s very limited, and despite widespread poverty, only one percent o f the population i s on the exemption l ist; and (vi) funds collected (2.2 percent o f the sale o f drugs) are not enough to guaranteed the sustainability o f the equity funds.

All employees

76. Despite the documented high prevalence o f poverty among the general population and the introduction o f payment mechanisms to assist those who have been identified as poor to have access to basic health services, the small number o f persons who claim to be indigent implies that there may be significant cultural barriers to identifying oneself publicly as poor or indigent. Similar measures have been gradually introduced in hospitals, given the impoverishing effects o f hospitalization, where most surgical and other consumables are not available and must be purchased in private outlets, resulting in unreasonably expensive bills.

Qualified employees Of which, number o f doctors Observations

The distribution of health personnel across the country is very uneven

Rural

77. A findamental issue underlying the uneven production and delivery o f health services in Madagascar is the huge variation in the allocation, training and competency levels o f medical personnel. Almost 50 percent o f the personnel o f M o H are concentrated in the area o f Analamanga. A few hospitals in the large cities have a disproportionately huge number o f doctors and specialists, whereas there are huge unsatisfied needs for certain vital specialties such as gynecology, surgery and pediatrics at the regional level. Likewise, the distribution o f doctors across rural and urban areas also shows huge imbalances. In addition, the relatively l o w productivity o f medical personnel in the public sector also poses a major problem. Besides shirking and absenteeism, poor productivity is also a result o f poor basic training o f the medical personnel (for example, many general practitioners do not know much about childbirth), unavailability o f essential goods and equipments to facilitate diagnosis and treatment and l o w levels o f remuneration. As a result, quality o f care suffers, especially at the CSB and in rural areas, and the system i s marked by little or no integration o f preventive and curative care, absence o f continuity o f the care and irrational use o f drugs. Even non-clinical activities are o f poor quality, with bad patient reception, long waiting hours, and absence o f communication with the patient.

CSB I 2.5 0.8 0.0 24 CSB I1 4.1 1.9 0.9 72 Total 3.7 1.6 0.7 96

All CSB CSBI CSBII

CSB I1 I 11.5 I 6.5 I 2.3 I 54 Total 1 10.9 1 6.2 I 2.2 I 5 7

Urban

6.4 3.3 1.2 153 5.0 2.0 0.0 9.0 4.0 1 .o

78. Table 5 compares the average number o f personnel in CSB in 2005 with standards established by national norms. While the health facilities in urban areas on average have more

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qualified health personnel than required by the national standard, health facilities in rural areas have much less staff, especially nurses, midwives, and health aides. The majority o f the qualified health care personnel are concentrated in the province o f Antananarivo. This is especially the case for physicians, as this province has 46 percent o f a l l doctors working in the public sector with only 28 percent o f the country’s population. Nurses and midwives (not shown in the graphs) are much better distributed as the share o f each province i s similar to their population share.

Figure 3: Percent of qclalijied health personnel and population percent across provinces 50 T

Antanananw Antsiranana Fianamtsoa Mahalanga Toamasina Toliara

Doctors EX nurses +population percentage

Source: Dubois et al. 2005.

Health facilities are poorly equipped

79. The continued supply and distribution o f drugs and medical supplies to the health facilities i s s t i l l not assured. After the crisis in 2001, the Government eliminated user fees at health facility level and started to distribute pharmaceuticals free o f charge. During this time, a health facility survey recorded widespread drug stock-outs in the CSBs. Only 15 percent o f the public primary health care centers did not suffer shortage in the supply o f a group o f essential drugs. About 30 percent o f facilities had shortages o f chloroquine, cotrimoxazole, mebendazole, and alcohol; about 46 percent had shortages o f paracetamol; and more than hal f were out o f acetylsalicylic acid. The mean duration o f the stock-out varied from 70 days for acetylsalicylic acid to 32 days for mebendazole. After the re-introduction o f fees and the FANOME/equity fund, the situation has improved although drug shortages are st i l l a problem. Over 20 percent o f health facilities, especially in rural areas, have shortages o f oral rehydration salts, serum glucose, folic acid, and lidocaine. For some o f these drugs the median duration o f stock-out was three months.

80. Adequate supply o f drugs was restored with the reintroduction o f cost recovery in January 2004 (after a period o f free distribution during the 2002 crisis), and the 35 percent markup on generic drugs i s among the lowest in Africa. However, this l o w level o f mark-up does not leave much room for additional resources to improve quality. While the Government has succeeded in maintaining l o w drug prices through subsidies to compensate for the high devaluation during 2004, i t will have to carefully manage the restoration o f prices reflecting drugs’ real cost in the near future.

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81. There are other indications of l o w quality o f services at public facilities. In 2003, only 59 percent o f public basic health centers had access to clean water, 53 percent had electricity, and only 16 percent had transportation. Further, only 2 1 percent o f public facilities collected al l the information required by the Integrated Management o f Childhood Illnesses protocol (age, weight, health card, temperature, and breathing frequency). Furthermore, in only 8 public facilities out o f 58, children were examined for the standard four signs o f health risk (vomiting, convulsions, anemia, and the capacity to drink). Additionally, only 61 percent cases o f anemia or severe malnutrition were correctly identified in public facilities. The situation has changed only marginally in 2005, and 61 percent o f CSBs now have access to a water source and 54 percent to electricity. However, in 2005 more than 90 percent o f facilities collected information on age, weight, health care and temperature o f children.

Area IRural IUrban

47.2 46.5 53.5 62.2 127 89.2 94.6 43.2 41.9 148

Source: EEEFS II, 2005.

82. The health system performs poorly at the hospital level also, limiting referral to urban areas and only when it is not further compounded by financial barriers. The quality o f service delivery in hospitals is affected by the lack o f proper medical specialists, equipment, maintenance, proper drugs and consumables. With support from development partners, hospital level services are being reviewed to lead to a reorganization o f the referral system, and a transformation o f the role and mandates o f district and regional hospitals for more effective and efficient service delivery.

33

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies

Madagascar Joint Health Sector Support Project

83. Madagascar Sustainable Health System Development Project (US$10 million credit). The project was approved in M a y 2007 and became effective on September 3,2007. The closing date is December 31, 2009. The development objectives o f the project are to contribute to the strengthening o f the health system and enhance the institutional capacity o f the M o H to improve access and utilization o f health services, especially in rural and.remote areas. The project has five components: (i) strengthening delivery o f health services; (ii) development and management o f human resources in the health sector; (iii) innovation in health financing management; (iv) improving demand and utilization o f health services; (v) institutional strengthening. The project i s satisfactory both in terms o f achievements o f development objectives and implementation.

84. Second Multi-sectoral STI/HIV/AIDS Project - MSPP I1 (US$30 million credit). The project was approved in July 2005, and made effective on M a y 1, 2006. The closing date i s December 31, 2009. The development objective o f MSPP I1 is to support the Government o f Madagascar's efforts to promote a multi-sectoral response to the HIV/AIDS crisis and contain the spread o f HIV/AIDS on i t s territory. In addition, MSPP I1 seeks to improve the quality o f l i fe o f persons living with HIV/AIDS through increased access to quality medical care and non- medical support services. Given the current epidemiological situation, the project focuses on at- risk groups in high prevalence areas, while moderately expanding services to other affected groups (e.g., orphans and other vulnerable children). The project consists o f the following components: (i) harmonization, donor coordination, and strategies; (ii) support for health sector response; (iii) STI/HIV/AIDS prevention and care; (iv) monitoring and evaluation; and (v) project management and capacity building. The project i s rated satisfactory for development objectives while implementation i s rated moderately satisfactory.

85. Community Development Fund - Additional Credit (US$19.1 million). The project was approved in August 2006 and made effective on December 04, 2006. The project has benefited from two supplemental credits. The objectives o f the project are to improve the use o f and satisfaction with project-supported social and economic services amongst participating rural and urban communities. The project i s implemented by the Fonds d'intervention pour le De'veloppement, an executing agency created in 1993 which has successfully executed earlier social funds in Madagascar. The additional financing i s mainly financing the costs associated with the scaling-up o f the activities implemented by the executing agency and supported by the project, while the future role o f the Fund in the new deconcentration and decentralization framework i s defined. The components o f the project are now as follow: (i) transfers o f funds to community associations; (ii) transfers o f funds to communes; (iii) social safety net activities (shocks); (iv) rehabilitation and reconstruction in response to natural disasters; and (v) capacity building activities. The project is rated satisfactory for implementation and achievement o f development objectives.

86. Second Community Nutrition Project. The initial project was f i rs t approved in April 1998 and became effective on November 2, 1998 for an amount o f US$42 million. The project also benefited from two additional financings, the f i rst one in an amount o f US$10 million,

34

effective in August 2004, and the latest, for an amount o f US$ lO million, became effective in August 2007. The closing date is currently December 31, 2009. The development objective o f the project is to improve the nutritional status o f children under the age o f three, pregnant and lactating women, and school-aged children. The project aims to ensure long-term sustainability o f nutrition outcomes by improving the quality and quantity o f food intake by children at home. The second additional funding supports the institutionalization o f the National Nutr i t ion Office to contribute to ensuring sustainability. The project finances four components: (i) community nutrition activities, including growth monitoring and promotion for children under three, vitamin A supplementation for children under three and lactating women, referral o f severely malnourished children to health services, community mobilization, training o f community- workers and social-workers; (ii) school nutrition activities consisting o f irodfolate supplementation for primary school children, deworming o f enrolled and non-enrolled children 3-14 years, iodization o f salt, and training o f primary school teachers; (iii) support to multi- sectoral activities, including support to the MoH for the Integrated Management o f Childhood Illness, and support to few pi lot projects in the agriculture sector on diversification and storage o f agricultural and food products; and (iv) information, education and communication, training and project management. The project i s rated moderately satisfactory for both implementation and development objectives ratings.

87. Governance and Institutional Development Project I1 - PGDI I1 (US40 million). The Second Governance and Institutional Development (PGDI 11) project was approved in June 2008 and i s not yet effective. The project will enhance and further deepen previous reforms initiated under the first PGDI which is scheduled to close in June 2009. I t builds on significant analytical work, in particular, the Public Expenditure Financial Assessment reports o f 2005, 2006 and 2008 as well as the Public Expenditure Reviews in 2005 and 2007 which provide general recommendations on the public expenditure reform agenda and specific recommendations for the transportation, education, environment, health, nutrition and water and sanitation sectors. The development objective o f the project is to improve the efficiency and transparency o f Government and selected public services in Madagascar in line with the MAP. The two main components address the following: (i) improving transparency and economic governance will require a comprehensive reform o f the public finance system; and (ii) institutional development and capacity building activities in selected government institutions.

88. Madagascar Fifth Poverty Reduction Strategy Credit - PRSC V (US$50 million) i s the overall umbrella support whose main objective i s to support the implementation o f the M A P and consolidate reforms under way in the areas o f public finance, governance and basic service delivery. I t sustains efforts to improve the overall institutional setting for improved delivery in education, health, nutrition, water and sanitation. These reforms are expected to be conducive to higher growth rates and faster cycle. In particular, the PRSC i s supporting improvements in financial management, including budget preparation and execution, implementation o f the new procurement code, improvements in human resource policy and decentralization o f service delivery. The project was approved in June 2008 and became effective on July 31, 2008. The closing date i s July 3 1,2009.

89. Madagascar Integrated Growth Poles Project Credit - Additional financing (US30 million). The overall objective o f the Integrated Growth Poles Project is to improve the business environment in three selected regional poles (Antananarivo-Antsirabe, Nosy Be, and Taolagnaro)

35

to ensure equitable and sustainable economic growth through construction and rehabilitation o f critical infrastructure, regulatory reform and strengthening capacity o f national and local institutions. The project was approved in July 2005, became effective on September 28, 2005 and was formally restructured in December 2007. The original Credit amount i s US$129.8 mi l l ion and the closing date i s December 31, 2010. An additional financing o f US$40 mi l l ion was approved in April 2008 and became effective on August 8, 2008. The additional financing will be used for completion o f originally planned activities that have remained unfunded to date. These include the rehabilitation o f part o f the Taolagnaro hospital and surgery block, as well as the provision o f goods and technical advisory services. The project is rated satisfactory on implementation and achievement o f development objectives.

Contributions of Other Donors

90. Implementation o f the PDSSPS is being supported through parallel financing by other development partners, including AfDB, JICA, UNICEF, UNFPA, USAID, and WHO. The EU will continue to provide direct budget support to the Government o f Madagascar, which indirectly supports the health sector. The GFATM has also awarded to Madagascar US$70 mi l l ion over five years in Round 7 to procure commodities such as insecticide treated nets, Artemisinin-based Combination Therapy and rapid diagnostic tests for malaria, and finance for indoor-residual spraying in the Central Highlands and Intermittent Preventive Therapy for pregnant women. GFTAM i s also funding HIV/AIDS related activities under Round 3 (US$382,000) to ensure the provision o f anti-retrovirals for 152 patients and related medicines for opportunistic infections for the next two years; i t will finance tuberculosis related activities under Round 4 (US$8.3 million) including prevention, case detection and treatment until 2010. Finally, JHSSP is expected to leverage additional sources o f financing under IHP+, including Norwegian grant funds for innovative results-based financing approaches.

36

Annex 3: Results Framework and Monitoring

Madagascar Joint Health Sector Support Project

Contribute to strengthening the health system to increase the utilization o f health services, particularly among mothers and children

Intermediate Results One per Component ,

Outcome 1 The health system delivers improved basic health

Higher Level Indicators 1. Maternal mortality ratio 2. Mortality rate, under-five (per

3. Total fertilitv rate 1,000)

Project Outcome Indicators

1. Births attended by skilled health staff (% o f total)

2. Modern contraceptive prevalence rate o f women ages 15-49 (YO)

3. Immunization DPT3Penta under- one

1. Percentage o f health centers with a functional refrigerator in the districts o f intervention 2. Percentage o f districts holding quarterly reviews with health Dersonnel 3. Percentage o f districts receiving performance-based allocations having achieved at least 75% o f their exDected results 4. a) Number o f health centers rehabilitated b) Number o f health centers with an adequate water supply in regions o f intervention 5. a) Number o f private doctors installed in project intervention areas b) Percentage o f private doctors installed in project intervention areas who stay in their posts for more than two years

Use of Outcome Information

Lack o f progress will result in recommended modifications to sector strategy andor analysis to understand relationship between the strategy and the outcomes.

Use o f Results Monitoring

Progress will be assessed by Government and partners at the Annual Reviews (based on most recently available data).

Lack o f anticipated progress will result in analysis o f obstacles to implementation and reconsideration o f assumed linkages between inputs/processes and outcomes.

37

Intermediate Results One per Component

Outcome 2 The M o H makes policy decisions to increase the use o f basic health services based on evaluations o f pilots.

Outcome 3 MOH manages and monitors the availability and equitable distribution o f , human resources for the health sector.

Outcome 4 Planning, budgeting, management, implementation, and monitoring and evaluation capacity i s improved at the central, regional, district and health facility levels.

Results Indicators for Each Component (Output Indicators)

1. Number o f anti-malarial treatment distributed to children under-five by community health workers in project intervention areas 2. Contraceptive prevalence rate at health centre level 3. Percentage o f births taking place at public and private health centers and hospitals (% o f total) 1. Human Resources Development Plan validated 2. Number o f health agents3 trained in-service for obstetrical and neonatal emergency care 3. Percentage o f health centers comply with minimum staffing norms (% o f total) 1. Budget execution rate o f M o H

2. Percentage o f districts and regions providing annual technical and financial reports at most 8 weeks after the end o f the fiscal year (% o f total) 3. Percentage o f health center monthly reports submitted within 15 days o f the end o f the month4 (% o f total) 4. Percentage o f hospitals in compliance with the policy on waste management (% o f total) 5. Percentage o f epidemics confirmed and controlled in less than 15 daw (% o f total)

Use o f Results Monitoring

See above.

See above.

See above.

These include nurses and midwives. Timeliness indicator.

38

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Annex 4: Detailed Project Description

Madagascar Joint Health Sector Support Project

91. The following detailed JHSSP description outlines the activities to be financed under a common action plan, although some o f these activities will be financed by the pooled account, and others by special accounts replenished separately by AFD and by IDA. The IDA credit would finance 100 percent o f expenditures under Components 1.2, 2.1 and 4.2 while the AFD grant would finance 100 percent o f expenditures under Components 2.2 and 4.3 as described in Annex 4. IDA and AFD would joint ly finance, at the respective percentages to be determined each year, 100 percent o f eligible expenditures under al l other project Components.

Component 1: Strengthening Delivery o f Health Services (IDA financing: US$31.1 million equivalent, AFD financing: US$10.2 million equivalent)

92. The objective o f this component is to strengthen the delivery and availability o f basic health services at regional, district and health facility levels. To this end, this component will support the following principal activities: (i) Allocations to Regions, Districts and Health Facilities; (ii) Performance-Based Contracting o f Basic Health Service Delivery; and (iii) Support to the Functionality o f Health Facilities.

93. Sub-component 1.1: Allocations to Regions, Districts and Health Facilities. The objective o f providing allocations to health facilities i s to assist them to improve the delivery o f the basic services, especially for neo-natal, child and maternal health. A certain proportion o f the allocation would continue to be provided, as under the on-going SHSDP I, to cover fixed recurrent costs o f the health facilities. This portion o f the allocation would be calculated on a per capita basis and according to the number o f health centers in the district to ensure equity. Additional resources would then be allocated based on documented performance and delivery o f an agreed upon set o f results in regions, districts and health facilities with the required capacity to manage such allocations. At the regional and district levels, these allocations would also be expected to lead to an improvement in the quality o f regular monitoring and supervision. At the facility level, these additional resources would be utilized for improving management and increasing the coverage o f basic health services at the community level. Technical assistance and training would be provided to the M o H to establish a simple operational performance-based incentive system for regions, districts and health facilities, and prepare a manual o f procedures defining eligibility criteria, and fiduciary and operational arrangements for the allocations, to be adopted prior to implementation o f the results-based portion o f the allocation. The expected result o f this sub-component would be (i) an increase in basic services provided by health facilities; and (ii) increase in supervision o f health facilities by districts and overall improvement o f management o f the health district.

94. Sub-component 1.2: Performance-Based Contracting of Basic Health Service Delivery. Given that access continues to be very l o w in Madagascar, with uneven distribution o f medical personnel, large distances impacting the supply o f key medicines, and no availability o f electricity or water supply, contracting out basic health service delivery on the basis o f results would be one o f the most efficient mechanisms to expand coverage to reach the rural population. This sub-component would thus support the extension and enhancement o f sustainability of

42

contracting out to private doctors in rural areas to include (i) installation o f at least 56 new doctors; (ii) capacity building o f the regional medical associations through training and exchange o f experiences, and provision o f basic equipment; (iii) a series o f feasibility studies on self- financing and community pre-payments; (iv) a financial audit; and (v) operating costs not exceeding 10 percent. In addition, this sub-component would seek to capitalize on other experience within Madagascar o f contracting out to private sector and c iv i l society, such as faith- based NGOs, f i rs t evaluating the cost/efficiency o f the approach with a view to scaling-up if possible.

95. Sub-component 1.3: Support to the Functionality of Health Facilities. The objective o f this sub-component is to improve the functionality o f health facilities to deliver basic services, including support to strengthening the cold chain and logistical supply chain. Despite the recent improvements in the immunization coverage, the performance o f routine immunization activities remains low, with one o f the reasons being the lack o f cold-chain storage space and out-dated equipment at a l l levels. Madagascar does not currently have the capacity to order and store the vaccines it needs al l at once, and i s forced to place frequent international orders for vaccine shipments, which not only increases the price o f vaccines but creates logistical challenges at a l l levels. To address this problem, this component includes the rehabilitation o f a central-level cold store, regional storage facilities, the provision o f refrigerators and cold-boxes at district facilities, as well as the rehabilitation o f and equipment for the existing infrastructure to comply with national norms, including water, sanitation and medical waste management norms. In addition, the JHSSP will provide the necessary drugs and medical supplies, where there are gaps in the national program, to (i) contribute to the fight against priority infectious diseases, including malaria, plague prevention and surveillance, filariosis elimination and immunization against rabies; and (ii) improve reproductive health and child services through provision o f safe delivery kits for normal and complicated births and purchase o f contraceptives. Finally, this sub- component will provide technical assistance and training to the MoH to undertake, among other things, needs and institutional capacity assessments o f pharmacies, and develop a manual o f procedures for management o f drugs and medical supplies at each level, including clear roles and responsibilities for each level, outline o f a training curricula, and practical management tools. This sub-component i s being financed solely by IDA.

Component 2: Innovative Demand-Side Interventions for Basic Health Services (IDA financing: US$15.5 million equivalent, AFD financing: US$1.4 million equivalent)

96. The objective o f this component i s to increase support to innovative interventions to stimulate demand for basic health services. Currently demand for health services is low: only 40 percent o f the population reporting an i l lness seeks care from qualified medical personnel. Geographical access to basic health services i s limited in rural areas, and financial barriers represent a main cause o f l o w utilization o f hospital services by the poor. While some forms o f health insurance exist, these again only cover a very small fraction o f the population that typically does not include the poorest and/or the sickest. The use o f specific services related to family planning and preventive care, in particular, remain low. To address these issues, this component includes the following principal activities: (i) Improving Access and Utilization o f Basic Health Services; and (ii) Expanding Enrollment in a Social Health Insurance Scheme for the Formal Sector.

43

97. Sub-component 2. I: Improving Access and Utilization of Basic Health Services. To increase utilization o f basic health services, this component will support the implementation o f selective innovative approaches designed to tackle financial and geographical barriers to access and to maximize utilization o f cost effective interventions as wel l as the rigorous evaluation o f these approaches, so that lessons can be learned and the M o H can make evidence-based decisions on improving service delivery, especially for mothers and children. The initiatives will draw on successful existing experiences in-country and similar experiences in other countries. This sub-component will therefore finance: (a) initiatives designed to improve geographical and financial access; (b) selective scaling up o f free access to maternal and neonatal emergency care; (c) behavior change activities; and (d) introduction o f a free minimum package o f basic services.

98. In terms o f activities designed to address access, th is sub component will finance a feasibility study to determine the extent to which transportation interventions would increase accessibility to routine health services, and develop and implement (i) a pi lot initiative for transportation subsidies to improve maternal and child health care access for the poor in remote districts that are only accessible six months out o f the year and those that require river transportation, and (ii) pilot initiatives for community-based case management o f key childhood illnesses, including pneumonia, malaria and diarrhea. The sub-component will provide technical assistance to the M o H to evaluate the design (contracting out o f the management to a third party), cost-effectiveness, r isks (such as over prescription o f cesarean or decreased competition with the private sector) and financial sustainability o f the pi lot providing free access to maternal and neonatal emergency care, and plan and implement a scale-up o f the scheme in priority regions if the experience i s conclusive. In terms o f behavior change activities, the sub- component will support the implementation o f (i) annual national mass media campaigns focusing on priority health topics, with the objective o f improving the population’s knowledge o f the diseases, preventive solutions and services available at each level o f service; (ii) specific communication campaigns targeting adolescents, focusing on improving adolescent reproductive health in public and private health centers; and (iii) the integrated adolescent reproductive health strategy, including vouchers for family planning, HIV testing and STI treatment services

99. Finally, this sub-component will finance the introduction o f minimum package o f high- impact, l ow cost basic health interventions to expand coverage o f basic health services focusing on maternal and child health, seeking institutional change on the supply side by providing performance-based bonuses to health service providers for the number o f children and mothers reached with this package. The M o H in cooperation with partners has identified and costed this minimum package proven to have a significant impact on under-five mortality rates, and the Government intends to deliver these services free-of-charge at national scale, which should increase demand and thereby utilization, bringing the country closer to achieving the MAP goals and the health-related MDGs. The package includes: (i) preventive services, such as immunization, micronutrient supplementation, and promotion o f insecticide-treated bed-nets; (ii) promotion o f health services, such as increasing prevalence o f exclusive breast-feeding and use o f family planning; (iii) basic curative services, such as treatment o f acute respiratory tract infections, diarrhea, other childhood illnesses, and tuberculosis; and (iv) reproductive health services, such as prenatal care, emergency obstetrical care, and post-partum care. This sub- component i s being financed solely by IDA.

44

Box I: Minimum package of high-impact low-cost health interventions

Pregnant Women = Insecticide-treated mosquito net = . Vaccination (tetanus toxoid) . . Folic acid 8 Prevention o f Mother-to-Child Transmission

8 IEC for Hand-washing

At least 3 Ante-natal consultations

Treatment of syphilis in pregnancy De-worming in pregnancy

of HIV/AIDS

At birth . Assisted delivery: Basic Emergency . . IEC for Hand-Washing

Obstetric Care Clean delivery and cord care

Lactating Women . Family Planning . Vitamin A supplementation . IEC Hand-washing

Children 0-28 days 9 Exclusive breast-feeding

Vaccination Management o f neo-natal infections Integrated management of childhood illnesses Comprehensive emergency obstetrical care for newborns (including intensive care for newborns)

8 . Children 1-5 months

8 Vaccination 8 Oral Rehydration Solution

Exclusive breast-feeding

Zinc for diarrhoea management Management o f Acute Respiratory Infections Integrated management of childhood illnesses

Children 6-12 months . Vaccination . Vitamin A supplementation . Complementary feeding . Oral Rehydration Solution . Zinc for diarrhoea management

. Management of malaria . . Insecticide-treated mosquito net

Management of Acute Respiratory Infections

Integrated management of childhood illnesses

Children 12-59 months . Vitamin A supplementation 8

8 Management o f malaria . Management o f Acute Respiratory Infections

Integrated management o f childhood illnesses

100. Sub-component 2.2: Expanding Enrollment in a Social Health Insurance Scheme for the Formal Sector. This sub-component will support the extension o f an exist ing compulsory social heal th insurance scheme “Organisations Sanitaires Inter-enterprises” (OSIE) to other professions. Currently the scheme i s financed by employers and employees o f a l i m i t e d number o f participating firms. OSIE provides a def ined basket o f services (preventive care, medica l visits, ambulatory care and drugs). Some f i rms extend the benefits for the person enrol led and i ts dependents to other services (specialized care, laboratories tests and deliveries). As such, th is sub-component will support technical assistance, feasibil i ty studies, monitoring and evaluation o f the pilot, training, and annual audits. Th is component i s be ing financed solely by AFD.

45

Component 3: Development and Management of Human Resources (IDA financing: US$3.7 million equivalent, AFD financing: US$3.7 million equivalent)

101. The objective o f this component is to improve human resource management in the health sector, with particular emphasis on rural areas, and strengthen capacity o f the Human Resource Department o f the MoH. The expected results o f this component would be a more equitable distribution o f qualified medical and paramedical personnel in specified rural regions. This component will thus support the following principal activities: (i) Finalization o f the National Human Resource Development Plan (HRDP); and (ii) Implementation o f this HRDP.

102. Sub-component 3.1: Finalization of the National Human Resources Development Plan. This sub-component will finance the development o f the HRDP, including defining professional profiles critical to the health sector, revising standards and redeploying personnel based on criteria and standards aimed at improving the rural-urban balance, ensuring the stability and continuity o f doctors in rural parts o f the country, and changing the structure o f incentives for doctors and other medical, paramedical and administrative personnel at a l l levels o f health care provision. The strategy would be complemented by the production o f an operational plan for human resources in the health sector and would support the development and management o f career plans and effective human resources management tools for medical personnel.

103. Sub component 3.2: Implementation of HRDP. This sub-component would support the implementation o f the HRDP, including, through the development and selective implementation o f innovative performance-based mechanisms, incentives to rural-based personnel to improve their performance. A pilot package o f incentives is currently being implemented in three regions and an evaluation will be undertaken after nine months o f implementation with lessons from the pi lot incorporated into the scaling-up to rural regions with poor health indicators. To this end, this sub-component will support the development o f selection criteria for regions to benefit from this intervention. This sub-component would also support (i) selective training o f health personnel on priority areas o f health service delivery, (ii) training and coaching to health personnel to strengthen capacity and competencies at regional and district levels, and (iii) development o f new training strategies, both for basic and continuing education. Finally, this sub-component would provide technical assistance and support for the improvement o f the information system for the management o f human resources.

Component 4: Institutional Strengthening and Monitoring and Evaluation (IDA financing: US$12.7 million equivalent, AFD financing: US$4.2 million equivalent)

104. A critical objective o f this component i s to provide support to build the capacity o f the MoH at all levels o f service delivery including public expenditure management, procurement capacity, financial management systems, budget execution, project oversight and planning and use o f data for decision making (evidence-based planning). To this end, this component will continue to support a number o f system development and institutional strengthening activities at the central and decentralized levels, including the following key activities: (i) Improving Technical and Management Capacity; (ii) Strengthening the National Health Management Information System (HMIS); (iii) Increasing Epidemiological Surveillance; and (iv) Support to Project Execution and Evaluation.

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105. Sub-component 4. I : Improving Technical and Management Capacity. The objective is to strengthen technical and management capacities o f particular departments within the MoH, including the partnership department, the planning department, the malaria control team, the social protection team, as wel l as to responsible for medical waste management and environmental surveillance. This component would also support thematic technical assistance; provision o f small equipment, materials and motorcycles; training and coaching activities at the central, regional and district levels o n increasing capacity in planning, programming, public expenditure management, procurement, financial management, internal audits; and supervision at a l l levels to ensure the optimal utilization o f resources to guarantee results in the health sector.

1 06. Sub-component 4.2: Strengthening the National Health Management Information System (HMIS). M&E systems provide information on inputs, structures, outputs and outcomes, and are central to managing results and strengthening performance. Very importantly the performance o f the H M I S has improved especially in terms o f timeliness and accuracy o f data. However, due to weak capacity, the system i s not fully able to capitalize existing information and data. The goal o f this sub-component is thus to integrate the M&E system for the whole sector (public and private providers and all sources o f funds) as wel l as to improve capacity in data collection, management, dissemination and its utilization for decision-making at al l levels o f the system. This will include direct support to the national Health Management Information System (HMIS) and statistical capacity building. T h i s sub-component is being financed solely by IDA.

107. Sub-component 4.3: Strengthening Epidemiological Surveillance. The objective o f this sub-component is to improve the epidemiologic surveillance, alert and response capacity o f the M o H at al l levels which will complement the on-going Epidemiologic Surveillance Monitoring Project for the Member States o f the Indian Ocean Commission. This sub-component i s being financed solely by AFD.

108. Sub-component 4.4: Support to Project Execution and Evaluation. This sub-component will finance annual financial audits, a technical audit, mid-term review and final evaluations, and operating costs o f the CGP.

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Annex 5: Project Financing

Source o f financing/activity

I. Pooled financing Component 1

sub-component 1.1 sub-comnonent 1.2

Madagascar Joint Health Sector Support Project

AFD IDA Total (US$ million) (U S$ million) (U S$ million)

8.8 11.2 20.0 1.4 1.4 2.8

Total US$ , Project Cost By Component and types of Local Foreign

expenditure US$ million US$ million million

Component 1 : Strengthening Delivery o f Basic 28.5 12.8 41.3

11. Parallel financing Component 1 sub-component 1.3

Component 2 sub-component 2.1 sub-component 2.2

Health Services Component 2: Innovative Demand-Side Interventions for Basic Health Services Component 3 : Development and Management of Human Resources Component 4: Institutional Strengthening and Monitoring and Evaluation .

_- 18.5 18.5

-- 15.5 15.5 1.4 -- 1.4

0.7 6.2

TOTAL

4.7 2.7

2.7 4.2

19.5 63.0 82.5

6.9

7.4

6.9

Total Project Costs 56.6 25.9 82.5

Component 3 sub-component 3.1 sub-comnonent 3.2

0.7 3 .O

0.7 3.0

1.4 6.0

Component 4 sub-component 4.1 sub-comnonent 4.4

1.4 1 .o

1.2 10.5

2.6 11.5

Component 4 sub-component 4.2 sub-comnonent 4.3

_ _ 1.8

1 .o --

1 .o 1.8

48

Annex 6: Implementation Arrangements

Madagascar Joint Health Sector Support Project

A. Institutional arrangements

109. The implementation o f the PDSSPS and therefore the project activities financed under the JHSSP will be overseen by the MoH, through its relevant directorates and services. Decisions will be made by a Steering Committee, comprised o f staff in adequate number and with proper experience and which i s essentially the MoH’s management team made up o f the relevant technical division chiefs and representatives o f health districts. This committee is responsible for: (i) general oversight o f Project activities, (ii) ensuring consistency o f Project activities with the Recipient’s policy and strategy; (iii) approving Annual Action Plans; and (iv) follow-up on Project performance and implemefitation progress.

110. A project coordination team (Cellule de Gestion de Programme - CGP), reporting directly to the Secretary General, will be responsible for the day-to-day coordination o f project activities. This CGP i s made up o f experienced professionals who have been responsible for oversight o f Bank-financed health projects over the last ten years and for managing grants from the Global Fund and AfDB. The CGP has performed i t s duties satisfactorily and has acquired experience in managing IDA funded activities, coordinating donors, NGOs, various M o H services and district health authorities. This team has demonstrated i t s capacity both to manage IDA’S and other donor’s financial management and procurement procedures and to identify innovative solutions effectively at al l levels o f the health care system to improve the accessibility and quality o f health services. Other donors have expressed interest in using this team for the execution o f their activities.

11 1. Given the project’s wide array o f activities in different areas, the CGP will collaborate with the following M o H Directorates: (a) Health district development (Direction de dkveloppement des districts sanitaires); (b) Infectious diseases (Direction de la lutte contre les maladies transmissibles); (c) Preventive medicine (which includes Nutr i t ion and Family planning services); (d) Planning and research (direction des etudes et de la plunification), (e) Health care establishments (Direction des ktablissements de soins), and ( f ) Pharmacy and laboratory.

112. In close collaboration with the Directorate o f Finance and the Directorate o f Planning within MoH, the CGP will be responsible for annual project planning and budgeting. The CGP will also be responsible for project management including: (i) coordination and communication with all agencies involved in the implementation o f the Project, including al l M o H technical departments at the central and decentralized levels, on the basis o f the Annual Action Plans; (ii) preparation and consolidation o f district-level work programs and budgets, and finalization and submission to IDA and AFD, o f the Annual Action Plan by November 30 o f each year; (iii) maintenance o f records and separate accounts for all transactions related to the CGP; (iv) preparation, consolidation and production o f the project financial statements, quarterly financial reports and other financial information required by the Government; (v) management o f the three

49

designated accounts; (vi) overseeing procurement; and (vii) monitoring and evaluation o f the various activities supported under the project.

113. The CGP i s currently headed by a National Coordinator nominated by M o H who reports to the Secretary General and the Minister o f Health, and participates in the M o H management team together with the other technical directors, and the senior staff o f the health districts. The CGP will continue to have an internal controller to oversee al l administrative and financial transactions; a highly qualified accountant with at least one assistant; two procurement specialists; a procurement assistant; a monitoring and evaluation specialist; and at least one assistant. Implementation o f project activities will be the responsibility o f the above listed M o H Directorates who will collaborate closely with the decentralized health districts. The PIM is being revised to further define the roles and responsibilities o f al l concerned partners. An in- depth capacity assessment o f the CGP and M o H undertaken during pre-appraisal confirms that the CGP is adequately staffed and that appropriate resources have been earmarked to meet project implementation needs.

B. Implementation Arrangements

114. Implementation o f the project wil l be governed by four procedures manuals, including the Project Implementation Manual (PIM) which covers general implementation modalities for project activities and the monitoring and evaluation system, and the Project Accounting Manual o f Procedures, covering the planning, budgeting, financial management, accounting and procurement systems as well as including terms o f reference o f staff. These manuals, the adoption o f which are conditions o f effectiveness, are both in the process o f being updated. Two additional manuals will be prepared during the first year o f project implementation. The f i rs t relates to the Manual governing Performance Based Allocations under Component 1.1 o f the project. The Manual, satisfactory to IDA, will set forth, inter alia, eligibility criteria, and fiduciary and operational arrangements for the implementation o f activities financed through these allocations. The second Manual, also to be satisfactory to IDA, pertains to the provision o f Bonuses under Component 2.1 o f the project and will govern the implementation o f the minimum package o f services.

C. Partnership Arrangements

1 15. A number o f donors are active in the health sector in Madagascar. Donor collaboration on the design and implementation o f the health strategy in Madagascar has been excellent, and the scope o f partnerships is expected to increase even more under the sector-wide approach and within the framework o f IHP+. Three formal mechanisms o f coordination will be used:

(1) Bi-annual Joint Health Sector Reviews

116. M o H will continue to organize bi-annual Joint Health Sector Reviews and ensure the participation o f concerned Ministries (Finance, Water and Sanitation and Education), development partners, c iv i l society organizations active in the health sector, and other key stakeholders. The purpose o f the f i rst Joint Health Sector Review o f the year i s to analyze previous year’s performance and produce a set o f conclusions and recommendations for M o H endorsed by the participants. These then form the basis o f any necessary adjustments to the

50

Ministry’s Annual Work Plan. The purpose o f the second Joint Health Sector Review i s to review progress made during the previous six months and provides the basis for adjustments and course correction for the following year. The Joint Health Sector Reviews have three components: (i) joint preparation o f critical questions under a number o f thematic areas; (ii) a joint f ield visit to different regions to enhance the understanding o f problems in the f ield and undertake discussions with stakeholders at the regional, district and community levels o n critical questions; and (iii) a two-day plenary session to consolidate the field work and prepare a prioritized action plan for the following six month period.

117. The outcome o f each Review is a prioritized set o f actions for the coming year, agreed with participating development partners, and which incorporates their respective contributions, reflects their collective recommendations on priority areas for action, and facilitates performance monitoring. This collective approach to sector monitoring and coordination i s expected to improve efficiency, accountability and prioritization o f donor support in the sector. In the past, these Reviews have been successful in giving voice to al l levels o f health service providers and facilitating a constructive dialogue around bottlenecks and capacity constraints to service delivery. The Reviews will continue to provide a mechanism for monitoring progress on PDSSPS implementation, and will serve as one o f the country’s health sector coordination mechanisms.

(2) Donor and Government Agreements

11 8. A document outlining the Guiding Principles for a SWAP has been developed laying out the coordination, financing and monitoring principles governing the implementation o f the National Health Sector Development Plan. This was signed by Government and the development partners and serves as the foundation for the development o f a country compact, a critical milestone o f IHP+, which i s expected to be prepared in 2009. With respect to the pooled financing under the proposed project, a separate Collaboration Agreement has been drafted to outline the organizational, institutional and coordination arrangements for implementation, the roles and responsibilities o f each partner pooling their resources as well as and arrangements for adding new partners during implementation. This Collaboration Agreement will be signed by the Government, IDA and AFD.

(3) Joint Supervision Arrangements

119. Development partners contributing to the pooled account will arrange regular jo int supervision missions and work closely together on team composition, planning and implementation with counterparts to minimize administrative efforts for the government. This will include coordination o f the policy dialogue in line with specific areas o f expertise o f individual agencies to allow for efficient allocation o f resources and use o f government capacities as far as possible. Regular supervision missions are envisaged twice every year, and in addition to the fiduciary requirements o f participating development agencies in the pooled financing, will support the Bi-annual Joint Health Sector Reviews to monitor implementation o f the PDSSPS as well as the JHSSP. To the extent possible, development partners will also coordinate the use o f parallel funds available for implementation support measures (e.g. for technical assistance) and share evaluation results and background reports as applicable.

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Annex 7: Financial Management and Disbursement Arrangements

Madagascar Joint Health Sector Support Project

Summary

120. The proposed lending instrument for this project would be an investment credit o f an amount equivalent to US$63 mi l l ion to support the Government o f Madagascar’s efforts to increase the utilization o f maternal and child health services. This project consists o f four components: (i) Strengthening Delivery o f Health Services; (ii) Innovative Demand-Side Interventions for Basic Health Services; (iii) Development and Management o f Human Resources; and (iv) Institutional Strengthening and Monitoring and Evaluation.

121. Despite recent reforms undertaken by the Government, the country’s financial management system at the central, regional and district levels remain weak with poor implementation and management capacity. To address this high fiduciary risk, transitional institutional arrangements were agreed with M o H to entrust the financial management aspects o f this project to the financial management unit o f the CGP, which has extensive experience in managing IDA funds. The CGP will retain the existing experienced and qualified fiduciary staff, including three accountants, and will be in charge o f overall coordination o f the project as wel l as the fiduciary aspects, including budgeting, accounting, financial reporting, disbursement operations and procurement. The financial management staff will be supervised by the MoH’s DF, who in turn will be supported by a technical assistant for the duration o f the project. With regard to operating units responsible for the implementation o f project activities at the regional and district levels, these continue to be supported by financial officers recruited under SHSDP to strengthen their capacity in financial management. The financial management arrangements o f the CGP and operating units have been assessed to determine whether they are acceptable to the Bank and the main conclusion i s that these entities meet the minimum IDA requirements as described in OPiBP 10.02. (This review is in fact an update since the financial management system o f these entities has already been assessed for the ongoing SHSDP). Some improvements will be needed, however, to further improve the system.

Country Issues

122. The World Bank’s Country Financial Accountability Assessment and Country Procurement Assessment Report, completed in 2003, and some diagnostic works carried out over the last three years by the World Bank and other donors, identified a range o f weaknesses and issues hampering the performance o f Madagascar’s budget and expenditure management system. To address these issues, the Government developed, from 2004 to 2007, in collaboration with al l key development partners, priority action plans for public finance reforms. While overall implementation progress o f the reform program i s encouraging, significant efforts s t i l l need to be made to strengthen internal and external control systems. Deficiencies in the control system impact the whole expenditure circuit o f budget execution, especially with respect to the control o f salary payments and delivery o f goods and services to the administration. Moreover, control agencies neglect their quality control function o f budget management as they are more concerned with irregularities and mismanagements. With respect to external audit, the main weakness relates to the lack o f an adequate number o f skilled and experienced auditors at the “Chambre

52

des comptes” who are able to perform the increasing numbers o f complex tasks required. As a result, significant delays have been noted in the presentation o f the budget execution laws to the Parliament. T o mitigate risks in public expenditure management, the World Bank, through the PGDI, in collaboration with a number o f donors, continues to support Government’s public finance reforms reflected in its annual priority work plan.

123. Regarding the accounting profession, some positive developments have been noted over the last three years. Yet a number o f local accounting f i r m s continue to operate below international standards. To improve the capacity and the competitiveness o f local auditing f i rms, the following measures have been implemented when auditing IDA-financed projects: (i) local auditors are obliged to partner with international accounting f i rms; (ii) the international accounting firm must participate effectively in the fieldwork portion o f the audit; and (iii) the audit report must be joint ly signed and submitted by the local and international audit f i rms. An accounting and auditing Report on Observance o f Standards and Codes was carried out and finalized in June 2008 and clearly identified issues and actions to be taken to strengthen the capacity o f the accounting profession in Madagascar. The country action plan describing key actions to be implemented has been finalized and submitted to IDA for financing.

124. The use o f country systems s t i l l remains risky for Madagascar due to certain fiduciary weaknesses: inefficient and cumbersome expenditure processes, poor and ineffective internal control, weak external control, incapacity o f the management information system to satisfy reporting requirements. As a result, JHSSP will utilize transitional financial management arrangements while at the same time contributing to the strengthening o f the sector fiduciary systems so that by the end o f project implementation, the M o H will have introduced sector-wide financial management arrangements, including audits.

Institutional and Financial Management Arrangements and Risk Assessment

125. The CGP, within the MoH, will be responsible for project management including: (i) coordination and communication with al l agencies involved in the implementation o f the Project, including al l M o H technical departments at the central and decentralized levels, on the basis o f the Annual Action Plans; (ii) consolidation o f district work plans and budgets; (iii) maintenance o f records and separate accounts for all transactions related to the CGP; (iv) preparation, consolidation and production o f the project financial statements, quarterly Interim unaudited Financial Reports (IFRs) and other financial information required by the Government; (v) management o f the pooled account, the designated account-IDA and the designated account- AFD; (vi) overseeing procurement; and (vii) M&E o f the various activities supported under the project. The CGP i s currently headed by a National Coordinator nominated by the M o H and includes specialists in accounting, procurement and M&E. Implementation o f project activities will be entrusted to: (i) technical departments o f MoH; and (ii) operating units at the regional and district levels, which will receive timely payments from the CGP based upon submission o f satisfactory quarterly budgeted actions plans. The regional and district level operating units will manage disbursements from their own bank accounts. Under the supervision o f the financial officer(s), they will maintain records and accounts for al l transactions related to them, and prepare financial report and other basic information on project management and monitoring as required by the CGP. The district level health authorities will also handle the accounting and payment o f all transactions o f health centers.

53

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126. the measures to be taken to mitigate them.

The above table identifies the risks that the project management may face, and provides

Strengths, Weaknesses and Action Plan

127. following table which also provides relevant measures to address them:

The main deficiencies noted in the financial management system are summarized in the

Table 7 Financial Management Weaknesses and Actions Significant weaknesses

The Department o f Finance (within MoH), responsible for supervising CGP accounting staff, is not familiar with I D N d o n o r procedures in financial management and disbursement.

Lack o f qualified staff at the regional and district levels.

I

Chart o f accounts not yet updated to reflect components and activities to be financed under the Project.

Project Accounting Manual o f Procedures not yet updated to: (i) reflect agreed changes in procedures to be applied; and (ii) include the new Chart o f accounts and models o f IFRs.

Incapacity o f the computerized system in place (used by SHSDP) to satisfy entirely the needs o f this Project and the requirements o f other development partners in financial, accounting, and technical information.

Actions

Ensure SHSDP accounting staff retained in the CGP structure.

Maintain the financial management Technical Assistant recruited under SHSDP throughout the duration o f the project.

Extension o f the contracts o f the seventeen (1 7) financial management officers recruited under SHSDP to: i) provide the operating units with required capacity to quickly disburse and account for project funds; ii) ensure, at the regional and district levels, the use o f funds for the purposes intended; and iii) ensure t imely preparation o f periodic financial reports required for proper monitoring o f activities implemented by operating units, with respect t o financial and physical aspects. Update the existing Chart o f accounts to reflect new components and activities and satisfy reporting requirements and integrate into updated Project Accounting Manual o f Procedures.

Update the Manual t o provide clear guidance to project staff working at the central, regional and districts levels.

Organization o f user training to ensure proper application o f procedures, proper record keeping, and adequate safeguarding o f assets. Customizing and upgrading the computerized accounting system used by SHSDP in order to: (i) meet user needs; (ii) satisfy other donors’ requirements in financial/technical information; and (iii) ensure t imely production o f annual financial statements and quarterly IFRs for monitoring project activities.

Date due by

Done

Done

Done

Done

Before effectiveness

Before effectiveness

The new software wi l l be functional no later than two months after credit

effectiveness

Responsible

MoH/DFB

M o W D F B

M o W D F B

Consultant

Consultant

Consultant

Consultant

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Significant weaknesses

Absence of acceptable arrangements in auditing.

Actions

Organization of user training by the consultant to ensure efficient use of al l modules offered by the software.

Recruitment of an international private auditing firm acceptable to IDA and AFD to carry out the audit of the project accounts jointly with the Auditor General. This audit will be performed bi-annually and conducted in accordance with International Standards o f Auditing.

The terms of reference of the audit will be submitted to IDA and AFD, and reviewed by the financial management specialist of IDA and AFD to ensure the adequacy of the audit scoDe.

Financial Management Arrangements

Budgeting

128. The expected project period for Madagascar JHSSP

Date due by

N o later than two months after credit effectiveness Three months

after effectiveness

Done

Responsible

Consultant

MoH, IDA, AFD

MoH, DFB

is four years. A project implementation-plan and disbursement schedule has been agreed upon up and will form the basis for discussions on annual budget and action plans. The annual budget will be prepared in line with the Government’s policy and strategy. The DF, Direction des Etudes et de la Planzjkation (DEP) and the National Coordinator will be responsible for coordinating the preparation o f an annual budget for the project. Budgeting arrangements for the project will be described in details in the Project Accounting Manual o f Procedures. The annual estimates will reflect financial requirements o f the project and should be finalized three months before the beginning o f the fiscal year, and submitted to the MFB for discussion and decision-making in conformity with the defined calendar. The budget format will be based on the project components, activities, categories, and geographic codes. It will show expenditure estimates per quarter and a total expenditure for the whole year; and funds expected from IDA, AFD and other donors (if any).

Accounting

129. Madagascar JHSSP will use an accounting system in compliance with generally accounting standards and the Plan Comptable des Opkrations Publiques and donor requirements. This system will operate on double-entry accrual principles and will use standard book accounts (journals, ledgers and trial balances) to enter and summarize transactions. Revenue will be recorded when cash i s received, while expenses and related liabilities will be recorded when incurred, especially upon receipt o f goods, works and services.

130. The regional operating units will maintain a simple cash book showing clearly cash received, payments made for each component and activity for which they have implementation responsibility, and cash balances. They also will prepare on a quarterly basis, in collaboration

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with the financial officers, a more simplified form o f reporting on sources and uses o f funds, and send i t to the CGP for consolidation with their activity reports.

131. The Project Accounting Manual o f Procedures (for MoH/CGP and related operating units) will be updated to harmonize donor procedures and will describe the accounting system(s) and accounting policies to be followed, the Chart o f accounts, the formats o f books and records, the financial reporting, and relevant information to facilitate record-keeping and maintenance o f proper control over assets. In addition, staff will be trained to ensure better understanding and proper application o f al l procedures described in this manual. The Project Accounting Manual o f Procedures will be finalized and submitted to IDA and AFD prior to credit effectiveness.

132. While al l the donors involved in the project appreciate the need to use Government systems, the Integrated Financial Management Information System installed within the MFB does not serve the needs o f the project without many urgent corrections in the short-term. As this i s not feasible, an interim measure has been therefore taken while the government system is being improved. To ensure timely production o f financial information required for managing and monitoring project activities, the CGP will use the existing integrated computerized system which in particular facilitates annual programming o f activities and resources, record-keeping (general accounting and cost accounting), financial and budgetary management, fixed assets management, procurement management, and preparation o f financial statements and quarterly IFRs.

133. However, this software needs to be customized and upgraded to: i) meet user needs; ii) satisfy other donors requirements in financial and technical information; and iii) ensure timely production o f project financial statements and al l other reports as required by donors for monitoring project activities. This update i s presently underway and expected to be completed no later than two months after credit effectiveness. The consultant undertaking this update will provide user training to ensure efficient use o f al l modules offered by the software.

Internal Control and Internal Auditing

134. The CGP i s staffed with an adequate number o f qualified and experienced accountants from SHSDP. To ensure effective transfer o f skills and allow the CGP to respond to a possible increase o f the volume o f financial management tasks once other donors provide financing, an accounting assistant will be selected among the M o H staff based on qualification and experience. To further strengthen the financial management capacity o f the DF and help it to adequately supervise the CGP, the financial management technical assistant recruited under SHSDP will be maintained throughout the duration o f the project.

135. The MoWCGP and related operating units will have an administrative and accounting procedures manual describing clearly the lines o f responsibilities and authority that exist with appropriate segregation o f duties. The manual will also provide sufficient information to facilitate record-keeping and the maintenance o f proper control over assets. This manual will be submitted to IDA prior to effectiveness.

136. To ensure efficient use o f credit funds for the purposes intended and consistent application o f procedures on procurement, financial management, disbursement, the Internal

60

Audit Department within M o H plays the role o f internal auditors. This Department reports directly to the Minister o f Health and ensures that al l issues identified during the internal audit are addressed quickly to improve project performance.

Fin an cia1 Reporting

137. reports:

To monitor the implementation o f the project, the CGP will produce the following

Bi-annualfinancial statements comprising: i) Summary o f Sources and Uses o f Funds (by components, project activities, credit category and showing al l sources o f funds); ii) Project Balance Sheet; iii) the Accounting Policies Adopted and Explanatory Notes; and iv) a Management Assertion. Quarterly IFRs: This financial report with the physical progress report will be needed to facilitate project monitoring. The IFRs should be submitted to IDA and AFD within 45 days o f the end o f the reporting period (quarter). The IFR would reflect al l project activities, financing, and expenditures, including funds from other donors deposited both in the segregated Designated Accounts and the Designated Account for Pooled Funds. The form and content o f quarterly IFRs and annual financial statements were agreed at negotiations. Models o f these reports will be presented in the Project Accounting Manual o f Procedures.

0

A uditing

13 8. The financial statements o f the project will be audited by an international private auditing firm acceptable to the donors, in collaboration with the Auditor General. This audit will be performed on a six-monthly basis and conducted in accordance with International Standards o f Auditing. The auditors should be recruited within three months after the effectiveness date. The audit report wil l be submitted to IDA and AFD not later than six months after the end o f each period. The auditors will be required to: i) express opinions on the project financial statements and the IFRs; and ii) carry out a comprehensive review o f the internal control procedures and provide a management report outlining any recommendations for their improvement. The terms o f reference o f the audit were submitted to IDA prior to negotiations and reviewed by the financial management specialist o f IDA to ensure the adequacy o f the audit scope, drawing special attention to particular risk areas identified during project preparation.

139. The quality and content o f the audits o f SHSDP as well as the internal audits undertaken by the M o H have been satisfactory to-date. These audits will encompass al l activities undertaken at a regional level. Under JHSSP, accountability and transparency mechanisms for the management o f the performance-based allocations will be further enhanced at local levels, including the obligation o f allocation beneficiaries to post the status o f use o f funds in a public place. The regional accountant (financed by SHSDP) will also continue to provide support to the region in managing and overseeing the utilization o f funds.

Funds Flow and Disbursement Arrangements

140. Funds flow arrangements for the project are as follows and shown in Figure 4. For the implementation o f the project, the following bank accounts wil l be opened in local commercial

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banks under conditions satisfactory to donors:

IDA

Designated Account for Pooled Funds to be managed by the CGP: Denominated in Euro, disbursements from the IDA Credit and the AFD Grant will be deposited in this account to finance 100 percent o f goods, works, consultants’ services, training, operating costs and allocations under Parts Al, A2, C1, C2, D 1 and D4 o f the Project as indicated in the Financing Agreement. The disbursement percentages for expenditures to be financed by each donor through the pooled account will be agreed between donors on an annual basis based on the Annual Action Plan; Designated Account - IDA to be managed by the CGP: Denominated in $US, disbursements f i om the IDA credit will be deposited in this account to finance 100 percent o f the specific types of expenditures that are eligible, i.e. goods, works, consultants’ services, training, operating costs and bonuses under Parts A3, B1 and D2 as indicated in the Financing Agreement; and Designated Account - AFD to be managed by the CGP: Denominated in Euro, disbursements from AFD grant will be deposited in this account to finance 100 percent o f the specific types o f expenditures that are eligible, i.e. goods, consultants’ services, and training under Parts B2 and D 3 as indicated in the Financing Agreement.

AFD

Figure 4 Flow of Funds

Designated Account IDA (Central level:

CGP)

Designated Account Designated Account AFD (Central level: Pooled Funds (Central

level: CGP) CGP)

District Accounts

Contractors, suppliers o f goods and services

Regional Accounts

141. While disbursing proceeds from the credit account, IDA may: . reimburse the borrower for expenditures paid from the borrower’s resources;

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. advance credit proceeds into the Designated Account IDA and the Designated Account for Pooled Funds o f the borrower that are held in a commercial bank acceptable to IDA to finance eligible expenditures as they are incurred and for which supporting documents will be provided at a later date (see below: Disbursement from the Designated Account for Pooled Funds and Designated Accounts); make a direct payment to a third party; and enter into special commitments in writing to pay amounts to a third party in respect o f expenditures to be financed out o f the credit proceeds, upon the borrower's request and under terms and conditions agreed the Bank and the borrower.

. . 142. To ensure prompt payment o f contractors and suppliers operating in the regions, the borrower may open regional bank accounts to be managed by each operatifig unit. Denominated in local currency, disbursements from the Designated Account for Pooled Funds will be deposited in these accounts opened in local commercial banks to finance 100 percent o f eligible expenditures under the pooled account agreed with IDA and AFD , and indicated clearly in the Financing Agreement. The amount to be advanced to the regional accounts will be determined on the basis o f quarterly action plans for an amount not exceeding a fixed ceiling indicated in the Manual. Subsequent payments will be based on monthly Statements o f Expenditures submitted by operating units after appropriate authorization and approval by CGP. The operating units will submit monthly expenditure reports indicating sources and uses o f funds and justifying the use o f funds, and accompanied by reconciled bank statements. The reconciliation o f the regional and district bank accounts will be undertaken on a monthly basis. For this purpose, the opening balance o f regional accounts and advances received from the designated account for the month are reconciled with the closing balance and expenditures for the same period. Unused funds in regional and district 'accounts will be refunded to the Designated Account for Pooled Funds by using the exchange rate at the time o f project closure. To ensure timely implementation o f its quarterly action plan, each health center at the communeAoca1 level would submit their budget to the district level health services, which would in turn pay directly the suppliers as wel l as the per diem for technical staff during a mission. All supporting documents will be retained by the regional and district operating units, and be made available for review by periodic Bank supervision missions, internal and external auditors.

Method o f Disbursement

Disbursement from the Designated Account for Pooled Funds

143. Flows o f funds from the Designated Account for Pooled Funds wil l be governed by a Collaboration Agreement signed by donor partners and the Government. IDA and AFD will deposit into the Designated Account for Pooled Fund their contribution as per agreed Annual Work Plan, in an agreed proportion and periodicity (on a quarterly basis) as defined in the Collaboration Agreement. Disbursements from the Designated Account for Pooled Fund will be made on the basis o f quarterly IFRs, in accordance with procedures reflected in the Collaboration Agreement. Under this disbursement method, a forecast o f project expenditures will be agreed between the CGP and donors, covering a period o f six months. The borrower may request an advance for an amount not exceeding this cash forecast. Supporting documentation for these disbursements will be submitted with the subsequent IFRs and reviewed by donors to confirm eligible expenditures during the period covered by the IFRs. The cash request at the reporting

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date will be the amount required for the forecast period as shown in the approved IFRs less the balance in the Designated Account for Pooled Funds at the end o f the quarter and account balances at the end o f the quarter in the regional and district accounts. Subsequent disbursements from the Designated Account for Pooled Funds will therefore be made in respect o f this cash request. Detailed disbursement procedures will be described in the Project Accounting Manual o f Procedures.

Donors IDA

Disbursement from the Designated Accounts

Amount $ USS63.0 million

144. Disbursements will be done based on quarterly IFRs whereby a forecast o f project expenditures will be agreed between the CGP and IDA covering a period o f six months. The recipients may request an advance for an amount not exceeding this cash forecast. The amount o f the advance agreed with IDA will be deposited respectively in the Designated Account-IDA. Supporting documentation for these disbursements (Le. the IFRs) will be submitted and reviewed by the IDA to confirm eligible expenditures during the period covered by the IFRs. Detailed disbursement procedures will be described in the Project Accounting Manual o f Procedures. The cash request at the reporting date will be the amount required for the forecast period as shown in the approved IFRs less the balance in the Designated Account IDA at the end o f the quarter.

AFD Total

Minimum Application Size

$ US$19.5 million equivalent $ US$82.5 million

145. There will be a minimum value for applications for direct payment and special commitments, which i s 20 percent o f the amount advanced to the respective Designated Account. The Project Accounting Manual o f Procedures describes in details the application steps and requirements for requesting a reimbursement, a direct payment for third party, and applying for a special commitment.

Donor Contributions

146. Within the context o f the sector-wide approach, a portion o f IDA financing will be pooled with contributions from AFD. To strengthen donor collaboration and ensure harmonization o f borrower and donor fiduciary procedures, a Collaboration Agreement will be signed by the Government and the cooperating partners pooling their funds for this project. The contribution o f each donor to the project i s as follows:

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Allocation of Credit Proceeds

147. The proceeds o f the IDA credit will be allocated according to the following Table.

Category

(1) Goods, works, consultants’ services, Training and Operating Costs under Parts A.3, B. 1 and D.2 o f the Project

(2) Bonuses under Part B. 1 o f the Project

(3) Goods, works, consultants’ services, Training and Operating Costs under Parts A. 1 , A.2, C. 1 , C.2, D. 1 and D.4 o f the Project

(4) Performance-Based Allocations under Part A. 1 o f the Project

TOTAL AMOUNT

Amount o f the Credit Allocated

(expressed in SDR)

19,000,000

3,500,000

10,800,000

7,200,000

40,500,000

Percentage o f Expenditures to be Financed

(inclusive of Taxes)

100%

100%

Such percentage o f Eligible Expenditures as the Association may determine for each Fiscal Year based on the Annual Action Plan

Such percentage o f Eligible Expenditures as the Association may determine for each Fiscal Year based on the Annual Action Plan

Supervision Plan

148. The financial management specialist will pay regular visits to the CGP to ensure timely implementation o f al l pending measures indicated in the agreed action plan. Taking into account the level o f risk associated with the financial management aspects o f this project, a supervision mission will be conducted once a year when project expenditures begin. This periodicity can be revised based on the risk rating associated to the project after each supervision mission. The mission’s objectives will include ensuring that strong financial management systems are maintained for the project throughout i t s l i fe. IDA’S Implementation Status Report will include a financial management rating and the IDA financial management specialist will review quarterly IFRs, the audit reports and follow-up on timely implementation o f recommendations from auditors.

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Annex 8: Procurement Arrangements

Madagascar Joint Health Sector Support Project

A. Madagascar’s Procurement Environment

149. Madagascar is in the process o f major procurement reforms. A new Procurement Code was passed by the Parliament and the Senate and became effective in July 2004. The main pillars o f the code are transparency, efficiency and economy; accountability; equal opportunity for al l bidders; prevention o f fraud and corruption; and promotion o f local capacity. The Procurement Code was supplemented by regulations, procedures manuals, and standard bidding and other procurement documents. The Procurement Code defines methods o f procurement and review procedures. The Code also created (i) the Public Procurement Oversight Authority or Autorite‘ de Regulation des Marche‘s Publics (ARMP) in 2006, which includes oversight o f the National Tender Board or Commission National des Marche‘s (CNM) for procurement reviews, and the Regulatory and Appeals Committee or Commission de Regulation et de Recours for the handling o f complaints and norms. Finally, the Code provides for the creation o f procurement units or Unit& de Gestion de la Passation de Marche‘s (UGPM) under the leadership o f a Personne Responsable des Marche‘s Publics (PRMP), and a Commission d’Appel d’Offies in each Ministry, and decentralized departments o f national public institutions.

150. The Procurement Code is generally consistent with good public and international practices and includes provisions for: (i) effective and wide advertising o f up-coming procurement opportunities (general procurement notice for each procuring entity and A M P website); (ii) public bid opening; (iii) pre-disclosure o f al l relevant information, including transparent and clear bid evaluation and contract award procedures; (iv) clear accountabilities for decision-making; and (v) an enforceable right o f review for bidders when public entities breach the rules. The Country Procurement Assessment Report (CPAR) was adopted in June 2003. The action plan o f the CPAR was agreed upon with Government during the December 2003 CPAR mission and workshop. The CPAR is expected to be updated in 2010. During the preparation o f successive PRSCs 2 to 6, four key ministries (education, health, transport and agriculture) were assessed on the application o f the new procurement code provisions, with these assessments being used as triggers from one PRSC to the next.

151. The Bank approved the Use o f Country Systems (UCS) on April 24, 2008, which includes International Competitive Bidding (ICB) and Quality and Cost-Based Selection (QCBS). However, this approval does not extend to Madagascar given that there are a certain number o f pre-requisites that have not been fulfilled, including the fact that Madagascar has not yet expressed i t s interest to be part o f the piloting program. As a result, despite the support from other development partners for UCS, there continues to be no formal approval from any partners on UCS in Madagascar.

B. Organization of Procurement within the Ministry o f Health

152. In conformity with the Procurement Code, a UGPM was created within the M o H staffed with three procurement specialists, and supervised by a Chef de bureau. This unit reports directly

66

to the PRMP, who acts o n behal f o f (i) the CNM for clearance o f contracts b e l o w the prior rev iew thresholds; and (ii) the Min is ter o f Hea l th for contract signing. The PRMP holds the rank o f a Di rector in the organization chart and reports direct ly to the Minister. F igure 5 shows the inst i tut ional structure for procurement within the MoH.

Cabinet

’

Figure 5 Institutional Structure for Procurement within the M o H

BA D P PRMP +UGPM

I

Direction GCnCral Direction GCneral Protection Sociale

O t h e r l i 7 Institutions and Organizations DProtS DULM

DGPFE DPLMT

153. Procurement Process within the MoH. A f t e r the inst i tut ion has prepared and validate i ts annual work program, each directorate w h i c h functions as a “Gestionnaire de Cre‘dit” or (GAC) must send the l i s t o f activit ies to b e procured to the UGPM so that the latter m a y prepare the general procurement notice and post it pub l i c ly in newspapers. The UGPM consults the technical services so as to draft the terms o f reference, the technical specifications and the program o f activities. The UGPM then drafts the bidding document to be submitted for approval by the PRMP and the CNM in accordance with their respective thresholds. Depending on the contract amount, the bid will be advertised in newspapers, or displayed at the UGPM office. B i d s should b e opened at the t ime and place specified in the bidding documents, and the data sheets, in the presence o f the bidders or their representatives who w i s h t o be present. The evaluation commission evaluates the bids and submits an evaluation report to the PRMP and depending on the thresholds, to the CNM. The contract i s then prepared and signed by the contractor, consultant o r supplier, and countersigned by the PRMP. The contract has to be submit ted to the Contrde des De‘penses Engage‘es who verif ies if the expenditure i s in l ine with the “Programme d’engagernent” of the M o H . F ina l ly the contract i s made effective. The same process applies at

67

regional levels as the regional authorities have their own PRMPs and Commission Regional des marches.

C. Assessment o f M o H Capacity to Implement Procurement

154. As agreed with the Government, procurement activities o f the project will be carried out by the UGPM o f the M o H in coordination with the procurement unit o f the Cellule de Gestion de Programme (CGP) which is responsible for oversight o f implementation o f the on-going SHSDP. This unit will function as a M o H procurement unit in accordance with the provisions o f Madagascar Procurement Code. The CGP procurement unit i s currently duly staffed with two proficient procurement officers and an assistant. The UGPM has had some experience in managing procurement operations within the M o H and is properly staffed with health procurement specialists. Although the M o H through the CGP has extensive experience with World Bank procedures, in general, the M o H does not have a lot o f experience with other donor procedures, mainly due to previous parallel project implementation units and donor-managed procurement.

155. The UGPM faces a number o f challenges. One key institutional problem relates to the fact that the U G P M currently has not been allocated an independent budget because o f institutional structural problems in the organization chart, and as a consequence, the staff continues to be functionally responsible and report to their respective technical units. Moreover, the M o H continues to suffer from frequent staff turnover. The UGPM also faces a problem o f establishing technical specifications, scope o f works and terms o f reference, mainly due to weak capacity in interpreting and formatting documents provided by the technical units o f the Ministry. To address these issues, an action plan has been prepared with a series o f corrective actions that are currently on-going, including ensuring adequate qualified staff in place, availability o f budget and clarification o f the roles and responsibilities o f each unit within the budget preparation and execution framework. An evaluation o f budget execution has been conducted and implementation o f an action plan i s underway. In addition, a one-year technical assistance, financed by PGDI, i s being provided to strengthen the capacity o f the U G P M to apply the action plan at i t s level, in coordination with other departments, and in partnership with the key decision-makers.

156. A Procurement Capacity Assessment o f the UGPM o f the M o H and the CGP was carried out in October 2008. The assessment reviewed the organizational structure for implementing the pooled financing activities and the interaction between the UGPM, the SHSDP’s staff responsible for procurement, and the MoH’s DF. The key issues and risks concerning procurement for implementation o f pooled financing activities have been identified and include the phasing o f activities to be undertaken and handling o f potential urgent issues and/or needs. Corrective measures were agreed upon in May 2007 during preparation o f the on-going project and are being implemented in a timely manner along with the agreed procurement plan. As such, the procurement action plan i s being and will continue to be fine-tuned quarterly and the main procurement plan will be updated accordingly. The overall project risk for procurement is therefore average. Table 9 outlines the procurement risk assessment and corresponding risk mitigation measures.

68

Designation

Staffing

Establishment o f te rms o f reference and technical specifications Project management

rztion D u e date Concerns Risk mitigation

Competent but not Integration o f conversant with al l SHSDP’s procurement donor procedures staff within the

Interpretation and Technical assistance formatting o f with health expertise documents coming for UGPM from technical un i t s Lack o f clarity on Project roles and implementation responsibilities manual to be updated

U G P M

and training to be held at al l levels

During project implementation

During first three months o f implementation

By effectiveness

D. Procurement for the Activities under the Project

157. General: Procurement for project activities, above thresholds specified below, would be carried out in accordance with the World Bank’s Guidelines: “Procurement under IBRD Loans and IDA Credits” dated M a y 2004; and in accordance with the Guidelines: “Selection and Employment o f Consultants by World Bank Borrowers’’ dated M a y 2004, revised October 2006, ’

and the provisions stipulated in the Legal Agreement. All procurement below the prior review thresholds shall be conducted in accordance with procedures set forth in the Procurement Code, with modifications, if needed, to ensure that the procedures are acceptable to the Bank. Other than the Procurement Code, the Bank has not yet approved use o f country systems as a whole. However, the set o f procurement regulation texts, procedures and local standard bidding documents were reviewed and found acceptable at appraisal.

National Competitive Bidding

158. National competitive bidding (NCB) procedures will be undertaken in accordance with the Procurement Code o f 2004 and including inter-alia: (a) an explicit statement to bidders o f evaluation and award criteria; (b) national advertising with public bid opening; (c) award to the lowest evaluated responsive and qualified bidder; and (d) foreign bidders would not be precluded from participation in NCB. Registration and/or classification o f contractors may be used for establishing bidder qualification or for preparing a l i s t for use under price comparison procedure but not as criteria for bidding. Price references or bracket o f bid values shall not be permitted for bid rejection. The organization and responsibilities for executing the procurement function, general guidance, procurement methods and procedures, procurement monitoring report formats, etc, will be included as part o f Project Implementation Manual (PIM). The description o f various items under different expenditure categories are described in general below. For each contract to be financed by the project, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time-frame are agreed in the Procurement Plan.

69

The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

I International Competitive Bidding

159. Advertisement: A General Procurement Notice will be published in UN Development Business and Development Gateway Market (dgMarket) and will show al l I C B for goods and works and major consulting service requirements. As required by the Procurement Code, a general procurement notice will be published in the local press every year for all procurement activities covered by the Annual Action Plan. Specific procurement notices will be issued in Development Business and dgMarket, and at least one newspaper with nationwide circulation, for I C B contracts and before preparation o f shortlists with respect to consulting contracts above us$200,000.

160. Procurement of Works: Works procured under this project would include provision o f basic water and sanitation facilities at health centers, and minor rehabilitation o f health facilities. The procurement will be done using the Bank’s Standard Bidding Documents (SBD) for al l I C B and using national SBD for NCB, agreed with or satisfactory to the Bank. TO the extent practicable, contracts shall be grouped into bid packages estimated to cost the equivalent o f US$3,000,000 or more and would be procured through I C B procedures. For contracts estimated to cost less than US$3,000,000 equivalent per contract, c iv i l work procurement may be carried out through N C B and contracts for small works, estimated to cost less than US$lOO,OOO, may be procured through quotations procedures. The bidding documents shall include a detailed description o f the works, including basic specifications, the required completion date, basic forms o f agreement acceptable to IDA and relevant drawings where applicable. Specific procedures details can be found in the PIM.

161. Procurement o f Goods: Goods procured under this project would include office furniture and equipment, vehicles, computer hardware and software, equipment for mobile health centers, and goods to strengthen health center to deliver basic package o f services, including the provision o f necessary drugs, equipment including cold-chain equipment and testing facilities. The procurement will be done using the Bank’s SBD for al l I C B and national SBD agreed with or satisfactory to the Bank for NCB. To the extent practicable, contracts shall be grouped into bid packages estimated to cost the equivalent o f US$500,000 or more and would be procured through I C B procedures. For contracts estimated to cost less than US$500,000 equivalent per contract, procurement o f goods may be carried out through N C B procedures and purchase o f small furniture estimated to cost less than US$50,000 will be conducted through prudent shopping procedures.

162. Direct Contracting for works and goods may be used in exceptional cases, such as for the extension o f an existing contract, standardization, proprietary items, spare parts for existing equipment, and urgent repairs and emergency situations, according to paragraphs 3.6 and 3.7 o f the Guidelines. The items to be procured through Direct Contracting would be agreed on in the Procurement Plan.

163. Procurement of non-consulting services: Procurement from United Nations specialized agencies, acting as suppliers, pursuant to their own procedures consistent with para 3.9 o f the

70

Bank Procurement Guidelines, may include United Nations Development Program, UNICEF and WHO. The form o f contract between the Government and the UN agency will be prior reviewed by the Bank. The items to be procured from UN agencies would be agreed on in the procurement plan if and when to be used. In addition, services o f the national drug procurement agency, SALAMA, may be used as a procurement agent to purchase drugs and medical supplies in accordance with Article 3.10 o f the Guidelines.

164. Selection of Consultants: The project will finance the contracting o f consultancy services for technical assistance, financial and technical audits, and capacity building. Firms will be recruited on the basis o f the QCBS method, using the Bank’s Standard Request for Proposals and for al l consulting assignments to cost more than US$200,000. For contract estimated to cost less than US$200,000 equivalent per contract, selection o f consultants may be carried out through QCBS and the following selection methods. Selection based on consultant’s qualifications (CQS) can be used for the recruitment o f training institutions and for assignments that meet criteria set out in Para. 3.7 o f the Consultant Guidelines. Least-cost selection may be used for the selection o f consultants for non-complex assignments in accordance with para 3.6 o f Consultants’ Guidelines. Single source selection (SSS) can be used to contract f i r m s or individuals for assignment that meet criteria set out in Para. 3.9 to 3.13 o f the Consultant Guidelines and for contract which amount do not exceed US$lOO,OOO. Specialized advisory services would be procured through Individual Consultants Selection (ICs), based o n the qualifications o f individual consultants for the assignment in accordance with the provisions o f paragraphs 5.1 through 5.3 o f the Consultant Guidelines. Short lists o f consulting services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants, when this i s possible, in accordance with the provisions o f Paragraph 2.7 o f the Consultants Guidelines.

165. Operating Costs financed through the project would be procured using the implementing agency’s administrative procedures, which were reviewed and found acceptable to the Bank. The procurement procedures and SBDs to be used for each procurement method, as wel l as model contracts for works and goods procured, are presented in the PIM.

166. Training programs and workshops would be packaged in the project’s action plans and budget and items therein procured using appropriate methods. Training programs would be agreed upon in the Procurement Plan.

167. Contract management and expenditure reports: The M o H wil l submit quarterly reports to IDA and AFD not more than 45 days after the end o f every quarter. The IFR should include the status o f (i) implementation o f procurement plans (concerned steps in the procedure and any deviation), and (ii) contracts management and expenditures on contracts.

168. Review by the Bank o f Procurement Decisions: All work contracts estimated to cost US$3,000,000 or more, and goods estimated to cost US$500,000 or more will be subject to Bank’s review in accordance with the procedures in Appendix I o f the Procurement Guidelines. Given that no large contracts for works and goods are foreseen, the f i rs t two contracts below respectively US$3,000,000 for works and US$500,000 for goods will be subject to Bank’s review. Any amendment to existing contracts raising their value to the level equivalent or above prior review thresholds are subject to IDA review. All contracts awarded on basis o f direct

71

contracting will require IDA prior review and clearance. The agreed procurement plan will identify all contracts to be submitted for the Bank’s prior review.

Table Expenditure Category

Works

Goods

Consultant Services - Firms

Zonsultant Services - Individuals

‘0 Thresholds for P r o w Contract Value Threshold (US$)

3,000,000 or more

100,000 or more and less than 3,000,000

Less than 100,000

All amounts

500,000 or more

50,000 or more and less than 500,000

Less than 50,000

All amounts

200,000 or more

Less than 200,000

All amounts

50,000 or more

Less than 50,000

411 amounts

?merit Methods ani Procurement Method

ICB

NCB

Juotation

3irect contracting

ICB

NCB

Shopping

Direct contracting

QCBS

QCBS, CQS LCS sss ICs

ICs

sss

Prior Review Contracts Subject to Prior Review (US$)

All

First two contracts

First two contracts

All

All

First two contracts

._

411

All

First two contracts

All

All

_-

A l l

169. All single source selection wi l l be subject to IDA prior review. Consultancy contracts with f i r m s with estimated value o f US$200,000 or more, and consultancy contracts with individuals estimated value o f US$50,000 or more and amendment o f existing contracts raising their value to the level equivalent or above prior review thresholds or above wi l l be subject to IDA prior review in accordance with the procedures in Appendix I o f the Consultants Guidelines.

72

170. The thresholds for prior review by Bank are specified in the Procurement Plan. Table 10 shows (a) the proposed thresholds for the different procurement methods, and (b) the proposed initially-agreed thresholds for prior review by the Bank. The Bank will review procurement arrangements proposed by the Borrower for the items specified in the procurement plans for their conformity with the Financing Agreement and the applicable Guidelines. Any procurement i tem not specified for prior review may be subjected to a post-review o f the procurement process.

1 Ref. No.

1.1.1.

E. Procurement Plan

2 3 4 5 Description of Assignment Estimated Selection Review

cost Method by Bank (Prior I Post)

Equipment for 50 health centers 500,000 ICB Prior

171. The M o H has developed a Procurement Plan for project implementation which provides the basis for the procurement methods. This Plan was approved prior to negotiations and will be available at the MoH/UGPM. It will also be available in the project’s database and on the Bank’s external website. The Procurement Plan will be updated annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

t

Equipment for 3 surgery blocks for ’”” cesareans and laparoscopy

1’3’4‘ Purchase o f caesarian operation kits

Purchase o f implantable contraceptives 1’3’3’ (Implanon: 80.000 unit in 2009 and

83.375 unit in 2010) 1.3.3. Purchase o f equipment: extraction kit 1.1 for Implanon for 250 health facilities

1

F. Frequency o f Procurement Supervision

500,000 ICB Prior

1,765,338 ICB Prior

2,622,000 sss Prior

Prior sss 50,000

172. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the implementing agency has recommended bi-annual supervision missions to visit the field to carry out post review o f procurement actions.

G. Details o f the Procurement Arrangements Involving International Competition

1. Goods, Works, and Non Consulting Services

(a) L i s t o f contract packages to be procured following I C B and direct contracting:

6 Expected Proposals Submission Date

Jun-09

Jul-09

Aug-09

Jul-09

Jul-09

7 Comments

including 20 CSB built by

Accord

Delivery included

SALAMA’

SALAMA

’ SALAMA i s the national medicine procuring unit.

73

1

Ref. No.

-

- 1.3.9.

1 1.3.9.

2 1.3.9.

3 1.3.1 0.1

2.1.2. 1

2.1.4. 1

-

-

- - -

- 3.2.2.

4.2.3 -

3

Description of Assignment

4 5 6 7

Fight against plague : purchases o f medical supplies Operationalization o f rabies treatment centers : vaccines and supervision Elimination o f filariose: medicines and implementation support Rehabilitation, equipments and imdementation o f the Droiect

Estimated "st

Purchase o f individual 400.000 safe delivery kits Medical inputs for the integrated package o f services for mothers and children at health facility and community level Support to installation o f doctors: goods and equipment Support to M&E system at all levels: goods and equipment

Selection Review Expected Comments Method by Bank Proposals

(Prior I Submission Post) Date

310,187 Ju1-09 I SALAMA sss Prior

SALAMA I Prior 1 Oct-09 I 122,180 I sss

3,500,000 ICB Prior Jul-09 Multiple contracts NCB Prior Jul-09

737,201 I SSS I Prior I Jul-09 I SALAMA

2,496,038 ICB Prior Aug-09

3,000,000 I $.ss I Prior I Dec-09 I SALAMA

1 Ref. No.

Package service 1,000,000 I SSS 1 Prior 1 Aug-09 1

2 Description of Assignment

4

1,568,580 I ICB I Prior I Aug-09 I -

5 6 7

(b) ICB contracts estimated to cost above US$3,000,000 for works and US$500,000 for goods per contract and all direct contracting will be subject to prior review by the Bank.

2. Consulting Services

(a) L i s t o f consulting assignments with short-list o f international f i rms.

1.2.1.

2.1.1. 1

3.1.1

Contracts with Sante Sud for the installation o f private doctors in rural areas Support to urgent neonatal and maternal care Technical assistance for the finalization of the National Human Resource

QCBSICQS

QCBSISSS

CQS

Prior Aug-09 -

Prior Jul-09 '

Prior Jun-09 - 3.2.3. Development Plan Training for 20 female health aides per

3 Estimated Cost

1 3':'3'

1,000,000

region

Training of 20 surgical assistants

1,700,000

3.2.3. 4

619.200

In-service training o f mid-wives and nurses on SONUB

250,000

184,000

468,750

Method by Bank Proposals (Prior I Submission

IPost) IDaie 1 - QCBSISSS Prior Jun-09

CQS I Prior 1 Nov-09 1 -

CQS I Prior I Jun-09 I -

74

4.1.4. Technical assistance for management o f 7 I medical waste 150,000 Prior Aug-09

(b) Consultancy services estimated to cost above US$200,000 per contract and single source selection o f consultants (firms), the two f i rst contracts below US$200,000 and o f individual consultants assignments estimated to cost above US$50,000 will be subject t o prior review by the Bank.

(c) Short l i s ts composed entirely o f national consultants: Short lists o f consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

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Annex 9: Economic and Financial Analysis

Madagascar Joint Health Sector Support Project

173. The underlying rationale for Madagascar JHSSP - the need for the Government to improve budget sustainability by incrementally increasing public financing for the health sector, mitigating allocative and technical inefficiencies, improving targeting o f resources for vulnerable groups and high priority health programs, and for reducing fragmentation in donor support and strengthening linkages with MAP and PDSSPS - is a val id one.

A. Introduction: Macroeconomic Context

174. With a real per capita GDP o f US$375 in 2007 and about 70 percent o f the population living in poverty, Madagascar is one o f the poorest countries in the world. After becoming independent in 1961 , the country witnessed a long period o f economic decline caused in part by poor governance and protectionist and inward looking policies. Two liberalization episodes in the late 1980s and 1990s improved economic performance. After the second episode, the country experienced a period o f growth powered by the dynamisms o f the industries that benefited from preferential trade access. Between 1997 and 2001, GDP grew at about 4 percent per year, while inflation was kept under control. However, the political crisis in 2002 halted this trend as GDP dropped by about 13 percent.

175. After 2002, the new Government’s sound macroeconomic management consolidated the gains o f previous liberalizations and, despite large external shocks (e.g., cyclones, high o i l prices, and the elimination o f the multi-fiber agreement), growth resumed and has continued at about 5 percent per year. Recent GDP growth has come largely f rom improvements in agriculture, increased tourism receipts, and public investments. Through a tight monetary policy, inflation was also brought under control after a 27 percent rate in 2004 to 10.3 percent estimated for 2007 (period average).

Table 11 Key Macroeconomic Indicators 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

GDP growth 3.7 3.9 4.7 4.7 6 -12.7 9.8 5.3 4.6 5.0 Per capita GDP US$ 250.7 256.9 248.3 250.3 284.6 278.1 323.9 251 281.8 288 Inflation rate CPI 4.8 6.4 10.1 9.9 4.8 13.9 -0.8 27.3 11.4 10.8 Total Revenue 10.1 8 10.3 12 10.9 11.2 Fiscal Revenue 9.6 7.5 9.8 10.9 10.1 10.7 Grants 3.9 2.2 5.1 8.2 5.7 47.9 Total Government Expenditure 18.4 15.7 19.5 25.1 21.2 21.3 Global balance including grants -3.6 -5.5 -4.1 -4.8 -4.6 37.4 Poverty rate 73 70 81 72.1 68.9

Poverty rate urban 63 44 62 53.7 52 Source: Madagascar PER based on datafiom IMF and EMP surveys

Poverty rate rural 76 77 86 77.3 73.5

176. In an effort to improve public resource management and strengthen the system o f delivery o f public services, the government strengthened the role o f the regions by integrating

76

de-concentrated services o f the public administration under the authority o f the regional chiefs. In 2008, for the first time, budgetary resources were allocated to the regions, making them responsible for the implementation of a small part o f the investment budget, but the budget management capacity and efficiency o f the regional administrations is uneven.

Ethiopia Kenya

177. Despite this progress many challenges remain given the country's l o w socioeconomic indicators and weak revenue mobilization. Fiscal resources have never been above 11 percent o f GDP while the country depends more and more on highly unpredictable foreign funds. Nevertheless, the country has benefited from the Heavily Indebted Poor Countries initiative; in 2006,alone the country received US$2.3 bi l l ion in debt reduction, close to 43 percent o f its GDP.

5.7 4.3 55.1 44.9 4.9 19.2 56.0 44.0

B. Sustainability'

Economic Analysis I: Trends in Health Financing and Implications for Budget

Malawi Mozambique

178. Compared to other sub-Saharan countries, Madagascar spends l i t t le on health, a situation that will worsen if donor financing winds down in the future. As seen in Table 12, the per capita spending on health is below the median in the region and much below the US$30 to US$40 per person per year recommended by the WHO to finance a package o f essential services.' At the current level o f expenditures, the country will not be able to achieve the health related MDGs. Preliminary results o f the MTEF show that an additional US$7 per capita will be required for 2009-20 10 and US$8.10 per capita for 20 1 1-20 12 to achieve a reduction in chi ld mortality by 46 percent, neo-natal mortality by 29 percent and maternal mortality by 44 percent, necessary to sustain progress in achieving these MDGs.''

9.8 Not available 58.9 41.1 5.8 8.9 71.0 29.0

Table

Countries

Rwanda Tanzania

12

-

4.1 12.7 50.6 48.8 4.9 Not available 45.2 54.8

IMadagascar (2003) I 3.5 I 11.9 I 60.0" I 40.0 I

Uganda Zambia Sub-Saharan African countries median

7.4 Not available 72.1 27.9 5.8 17.4 47.1 52.9 6.0 12.9 57.1 42.9

Source: MoH. 2005. Madagascar National Health Accounts 2003

This section borrows heavily from the Madagascar PER Health Chapter. Commission for Health and Macroeconomics, WHO, 2002

The expenditure o f the rest o f the world (5 percent) was added to that o f the public sector (55 percent). lo Calculated by the MoH, UNICEF and other partners 11

77

179. Foreign aid represents the largest source o f finance for the health system, followed by public and private funds. The 2003 National Health Accounts estimated that donor funds account for 37 percent, public funds for 32 percent and the private sector contributions for around 31 percent o f the total sector financing. Household expenditures, which constitute the main source o f private financin,g, are out-of-pocket expenditures in both public and private facilities as pre- payment mechanisms only cover a small proportion o f the formal sector workers.

180. The M o H manages the large majority o f public funds, more than 80 percent o f al l public expenditure on health in the last decade. Though budgetary allocations to the sector have increased in real terms and as a share o f the national budget over the past years 2004-2008 (Table 13 below), budgetary allocations o f 256 mi l l ion ariary in 2008 (around US$144 mi l l ion or 8.4 percent o f the national budget) are still far away from the Abuja consensus o f allocating 15 percent o f total Government expenditure to the health sector. At the same time, actual spending on health has been lower than the planned budget over the past three years (on average around 65 percent) demonstrating important shortcomings in the sector’s absorption capacity. l2

Table 13 Total Budget and Expenditure of MOH 2004-2008 2004 2005 2006 2007 2008

Allocation to MoH (in billion Ariary) Share o f the National Budget f??) Share o f GDP e’)

Allocation (real, in billion Ariary) Real growth (%)

Actual spending o f MoH budget, on commitment basis (in billion Ariary)

Share of the National Budget (%) Share of GDP (99)

Actual spending o f MoH budget (real, in billion Ariary) Real growth (%) Real expenditure per capita in Ariary Real expenditure per capita in U S $

Execution rate (%)

Memo GDP deflator Nominal GDP (in billion Ariary) Exchange rate (Ariary per US$, annual average)

99.4 5.9 1.2

87.0

142.0 7.6 1.7

124.2 63.6

7484.0 4

142.9

14.3 8,155.7 1,870.8

140.8 6.5 1.4

104.6 20.3

69.1 3.2 0.7

79.7 -5 1.3

2752.8 I

49.1

17.8 10,095.7 2,003.3

167.8 6.4 1.4

111.8 6.8

120.3 4.6 1 .o

103.2 74.1

4182.4 2

71.7

11.5 11,781.0 2,142.5

198.7 256.0 7.1 8.4 1.4 1.6

121.1 145.3 8.3 14.9

145.9 n.a 1.1

88.9 21.2

4515.8 2

73.4’

9.3 7.4 13,729.0 15,677.0 1,873.9 1,779.7

Population (millions) 16.6 18.6 19.2 19.7 20.2 Source: Madagascar PER Health Chapter based on data f rom the Ministry of Economics, Finance, and Budget, updatedfigures based on MFB and WB estimates

Based on preliminary estimates

181. Moreover, the distribution o f the health budget i s still largely in favor o f central administration, even though efforts have been made to improve the discrepancies between

l2 See annex 10 for an assessment o f some o f MoH’s main budget management issues.

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financing o f the central and regional administration^.'^ The salary budget had been de- concentrated to the six provinces (according to the previous territorial boundaries) but not yet to the regional level. Apart from salaries, around 38 percent o f the non-salary recurrent budget has been transferred to the regional level with the main beneficiary being the CHDl /CSB and the SDSPS in 2008. The national policy o f decentralization and de-concentration (PN2D) foresees a transfer o f the non-salary recurrent budget to the CSBsKHD I o f 21 percent in 2008, whereas this share has been at around 10 percent. Furthermore, the PNZD also foresees that 46 percent o f the non-salary recurrent budget is allocated to the central level in 2008. Allocations in 2008, however, were st i l l at around 62 percent.

Scenario 1 Health budget (in billions o f Ariary) Scenario 2

182. The total health budget for M o H in 2009 falls short o f the two possible projections made in the sector’s MTEF 2009-2011. As shown in Table 14, the first scenario i s conservative assuming the M o H will finance only the most critical activities. The second scenario assumes the financing o f the most critical activities as well as a number of sector reforms (including community participation, financial allocations and performance allocations at the decentralized levels and a high impact service package that is largely subsidized). Unfortunately however the approved budget for 2009 does not meet even the total estimated needs o f the conservative scenario, with a difference o f about MGA 45 billion. In the second scenario, the difference is MGA 106 billion. Due to the l o w execution rate o f the MoH, the difference with actual expenditures would in reality be much higher.

69.1 120.3 145.9 1 374 428 436 464

Table 14: Comparison between actual health budget and projections of the MTEF Actual Spending 1 Budget I MTEF Projections

2005 2006 2007’ I 2009* I 2009 2010 2011 2012

Health budget (in billions o f Ariary) 69.1 120.3 145.9 435 530 532 592

Based on pre1imin‘k-y estimates (MFB) * Loi de finances 2009

183. The Government is unlikely to sustain these l o w levels o f expenditures on health, much less achieve the expenditure levels o f the MTEF, without additional financial aid. The CRESAN I1 project which has financially supported the health sector since 1999 closed in December 2007. This project alone increased the funding o f the Ministry by US$40 million. For instance, in 2004 this project financed close to 3 1 percent o f all M o H expenditures classified as investments. This figure rose to 65 percent in 2005. The SHSDP which followed CRESAN I1 has been effective since August 2007 and disbursed US$3.24 million. Other projects that have supported the sector have already closed or are approaching their closing dates.

184. Like the SHSDP, the proposed project intends to fill part o f the financial gap for the sector. Currently foreign support to the sector i s mainly organized through projects, although the Government has also benefited from general budget support from the World Bank and the EU.

~

l3 MOH, Appui Technique pour l’amelioration du processus budgetaire du MOH - Revue comparative, recommandations et Plan d’action, 2008

79

The volatility o f donor funds, and varied management and monitoring procedures for each project creates large transaction costs for the Ministry. As seen in Table 15, investment expenditures in the sector have experienced large variations, partly due to the volatility o f donor funds which finance large parts of the Ministry’s investment budget and to l o w execution rates o f this expenditure. As in al l programmatic approaches, al l donors agree not only to support a health strategy with a corresponding MTEF but also to progressively harmonize their procedures to fol low a unique monitoring and evaluation systems is expected to lessen the volatility o f donor support and decrease the transaction costs.

Table 15 Growth rate of investment expenditure of MoH 1998 1999 2000 2001 2002 2003 2004 2005 2006

Yearly change in investment expenditure 65 -3 26 8 -79 396 164 -82 8.5 Source: World Bank. PER Health Chapter

C. Justification o f Government intervention and efficiency benefits f rom the JHSSP

Economic Analysis 11: Addressing efficiency and equity in the health sector:

185. Government intervention in some o f the activities financed by JHSSP is justified as they are aimed at reducing market failures due to the presence o f externalities or public goods. JHSSP will also finance activities aimed at reducing the inequalities in access and utilization o f health services and some o f these activities will also improve efficiency in the use o f public resources.

Externalities

186. One o f the common justifications for government intervention in markets is the presence o f externalities, where economic agents can impose a cost or benefit to others without paying or charging for it. Without government intervention, too much o f the negative effect or too little o f the benefit would be produced. When preventing or treating an infectious disease individuals do not necessarily take into account the effect o f their action (or lack thereof) on others. Without government intervention, the level o f preventive and curative efforts will be lower than optimal. Madagascar JHSSP aims at financing many activities aimed at prevention and treatment o f many o f these diseases such as: immunization for childhood illnesses, testing and treatment o f sexually transmitted diseases and malaria control.

Public Goods

187. Some o f the interventions used to prevent infectious diseases can be characterized as public goods. Nobody can be excluded from benefiting from a public good and a having a person benefiting from it does not decrease the potential benefit to others. These characteristics render almost impossible the private provision o f these goods. JHSSP will finance such activities. Sub components under the Institutional Strengthening and Monitoring and Evaluation - which aims at building medical waste management capacity and strengthening the epidemiological surveillance capabilities - can be justified by these same considerations together with information campaigns for activities.

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Equity

120 -

100 -

8 0 -

6 0 -

40 -

20 -

o i

188. There are large income inequalities in the utilization o f health services in Madagascar, due partly to lower physical access to health services in rural isolated areas, and partly to financial and cultural barriers to access services. Government provision o f services can also be justified on the basis o f equity considerations, and most o f the activities that will be financed by JHSSP meet this criterion by focusing on rural and underserved areas.

100 - 90 - 80 -

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189. In general, a case can be made for the provision o f health services that the poor consume more than the non-poor, where the income elasticity o f consumption i s low. People living in rural isolated areas are more likely to be poor than people living in urban areas. The poverty rate in urban areas i s about 52 percent while in rural areas i s about 74 percent. Therefore, services targeted to the latter - mobile clinics and outreach activities - are more likely to be used by the poor in isolated areas and areas with l o w density o f population, and will be financed by JHSSP. In addition, preventive and treatment services for infectious diseases can also benefit the poor more than the r ich as they are more l ikely to suffer from these diseases. The last EPM household survey showed that the poor were more l ikely to report malaria and diarrhea than the non-poor. The provision o f services to treat and prevent these diseases will therefore benefit the poor more than the non-poor.

Table 16 Type of illness reported in the last two weeks across income quintiles Illness Poorest I1 I11 IV Richest Total

Fever o r suspicion o f malaria 46,9 42,9 48,9 41,9 39,9 43,9 Diarrheal diseases 12,s 14,2 13,l 12,l 10,6 12,4 Source: EMP 2005

190. Also, basic health services, especially in rural areas, tend to be used more by the poor than by the r ich who visit private services or higher level public facilities. JHSSP will finance the rehabilitation and equipment o f health centers throughout the, country, the redeployment o f midwives to basic health centers, the contracting o f private doctors to move to and serve distant rural communities.

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191. by public service facilities does not risk the displacement o f the private sector in these areas.

As the private sector is almost not present in rural areas, improving the services provided

Table I 7 Place of consultation across income quintiles and urban and rural areas CH* CSB 1 CSB 2 Private clinic Private doctor Other Total

Urban Poorest 20.1 18.6 38.8 3.1 3.2 16.2 100.0 I1 14.9 11.3 31.6 5.9 24.3 12.1 100.0 I11 20.4 14.7 25.4 16.3 13.2 10.0 100.0 IV 11.2 10.5 29.4 8.1 31.9 8.9 100.0 Richest 23.3 4.9 20.6 7.5 32.7 11.0 100.0 Total 19.0 9.5 26.2 8.3 26.0 11.0 100.0 Rural Poorest 5.1 25.5 58.0 0.9 6.2 4.1 100.0 I1 4.9 19.0 53.9 2.1 7.0 13.0 100.0 I11 3.5 12.9 56.9 3 .O 12.6 11.3 100.0 I V 1.2 11.6 66.9 2.1 11.4 6.9 100.0 Richest 5.7 10.0 50.8 3.6 20.4 9.4 100.0 Total 4.0 15.1 57.3 2.5 12.2 9.1 100.0 Source: EMP 2005

192. The project will also finance activities aimed at increasing financial accessibility o f the poor to basic health services. Currently, most private expenditure on health i s out-of-pocket expenditure, which is extremely regressive and exposes families to the r isk o f impoverishment in case o f illness. Pre-payment mechanisms cover a very small percentage o f the populations. Government intervention in risk pooling mechanisms can also be justified as an intervention intended to alleviate the lack o f insurance markets.

193. The recurrent budget o f the M o H i s unequally distributed across regions, and in general, richer regions receive higher amounts o f recurrent budget per capita than poorer regions. Madagascar JHSSP will seek to lessen this unequal distribution o f resources by financing services in underserved areas. One o f the activities to be financed by the project will be mobile health teams that will offer health services to isolated populations in hard-to-reach areas, and in areas with l o w population density.

Allocative Efficiency

194. The 2003 National Health Accounts classified al l health expenditure o f M o H across different functions, and estimated that about 39 percent o f al l resources managed by M o H were spent on ambulatory services provided by CSBs and hospitals, 17 percent on preventive and public health services, and 7 percent on inpatient care. In general, the distribution o f public resources in Madagascar health sector gives priority to the most cost effective interventions to ensure health improvements as the largest percentage was used for both preventive and public health services and ambulatory care. However, there i s room for improvement, as a fifth o f al l resources went to the percent o f the entire Antananarivo that i s

central administration o f the ministry and as many resources, about 0.5 budget o f 2006, went to the construction o f a medical complex in not in use. Madagascar JHSSP will further improve the allocative

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efficiency o f public expenditure as it will finance preventive care, public health activities, and - in the case o f hospital care - will only finance f i rs t referral hospitals for activities related to maternal health. The focus is on the most cost-effective interventions to prevent and treat the illnesses by emphasizing health interventions that can be provided at household and community level, and services that can only be provided at primary health care facilities. This is reflected in the project’s emphasis on information campaigns, strengthening o f community participation on health care, and on improving the quality o f the services provided by basic health centers. By improving coordination and harmonization among donors, the project will also improve allocative efficiency by diminishing transaction costs and thus diminishing administrative costs that M o H has when handling different donor supported projects.

D. Economic Analysis 111: Systems and process-related benefits

195. The benefits o f Madagascar JHSSP can be determined in terms o f (i) systems- and process-related benefits, e.g., better planning, financing, organization and management o f the health sector and other key actors; and (ii) household-oriented benefits, as exemplified by better access and utilization o f health services and improved health status, especially o f vulnerable groups living in rural areas, women and children.

196. to improve both the quality o f services and access to the poor:

Health care delivery reforms under PDSSPS and the activities supported by JHSSP aim

Access to good qualityprimary care services. Improved quality o f care at the primary care level and improved access will have positive impacts on poverty reduction. The increased utilization o f quality health services at the primary acre level is expected to reduce the need for hospitalization and protect poor households against financial shocks. The benefits o f increased primary care funding will go disproportionately to the poorer households who currently receive no or poor quality o f services. Expansion of coverage for priority programs. Improvements in mother and chi ld health, prevention o f the spread o f HIV/AIDS and addressing communicable diseases have been identified as priority areas for coverage expansion under PDSSPS. All four are critical health issues for the poor, and to this extent the expansion o f services will directly benefit the poor by reducing barriers to access to care Improvement in implementation and monitoring capacity. The M o H has not been able to execute its entire budget in recent years and has had difficulties in ensuring an equal or at least a progressive distribution o f financial and human resources across the country, and has therefore not been able to reach vulnerable and isolated pockets o f the population. Without removing these bottlenecks in the management o f human and financial resources, the health system will not be able to fully reap the benefits o f investments. Despite the government’s strong commitment, improvements in service delivery will be limited without improvements in the capacity o f the different decentralized levels, particularly the district level which i s in charge o f service delivery. The newly created regional level will see an increase in responsibility in the coming years. The JHSSP will finance many activities aimed at strengthening capacity at various levels in the health system, including at the district and regional levels to manage primary health care services.

197. The Madagascar SHSDP supports the overall development and strengthening o f health systems. Activities financed and undertaken under Madagascar JHSSP are expected to result in

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significant improvements across a range o f demand-side, supply-side and institutional aspects o f the health system, especially in the production and delivery o f quality services in rural and remote areas. The project will also provide technical assistance for capacity building, with the aim o f strengthening institutions and promoting good governance. It will provide the government with evaluations o f pi lot interventions to inform and enhance the quality o f policy debates and encourage evidence-based pol icy development. It will facilitate the introduction o f stronger incentives for results, and strengthen collaboration and consistency across sectors in order to promote development effectiveness. And finally, it will support the .development o f strategic partnerships with donor agencies and other actors with the aim o f promoting harmonization and aid effectiveness.

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Annex 10: Public Finance Issues in the Health Sector

Madagascar Joint Health Sector Support Project

A. Financing o f the Health Sector

198. The PDSSPS has identified a number o f key bottlenecks to increased access and use o f health services in Madagascar, among which it highlights the l o w level o f health financing and inefficiencies in resource allocation. The Madagascar SHSDP has played an important role in building capacity within the Ministry and coordinating on-going interventions by the development partners. Despite improvements, the health sector continues to face a number o f budget management problems.

Budget planning

199. The Ministry has faced a number o f challenges in the preparation o f its budget envelope. Delays in the transmission o f the budget framework paper by the MFB to l ine ministries regarding the 2009 budget law has limited the time for M o H to revise its draft 2009 budget proposal according to actual budget envelopes (inscribed in the budget framework paper) and thus to finalize the MTEF prior to the budget hearings. Moreover, the Ministry has allocated significant administrative capacity to update this MTEF, the budget envelopes for 2010 and 201 1 are, however, based only on “needs assessment” o f the Ministry (regions and districts), disconnected from a global MTEF that i s not yet in place. O n the whole, delays in the finalization o f the MTEF and the absence o f reliable medium term resource envelopes has constrained M o H to use the MTEF as a strategic planning and advocacy instrument as wel l as for its dialogue with the MFB in budget hearings.

200. In addition, the M o H budget preparation process i s fragmented. While budget planning and budgeting o f activities is a harmonized process at the local level fol lowing the preparation o f the work programs, the process at the central level is not unified. The preparation o f the recurrent and investment budget is separated which reinforces inconsistencies between investment and (non-salary) recurrent expenditures. Medium-term recurrent cost projections o f existing and planned investments are not made in a systematic manner; there i s also l i t t l e affordability o f existing policies and the sustainability o f present investment decisions. Furthermore, the financing o f the Ministry’s investment budget depends largely on donor funding making it vulnerable to the erratic nature o f donor funding commitments, often lowering the level o f actual disbursements.

201. Budget planning at the local level continues to improve, although budget management capacity s t i l l remains a challenge. The planning, programming and monitoring functions o f regional and district health management teams have been continuously strengthened. All regions and districts have adjusted their budgeting process to the new budget/program format, and some have begun to introduce performance-based planning using management tools and technical support from various partners. The performance o f the district management teams has started to improve as a result, and all but a few o f the districts are now able to formulate their three year plans and develop annual work programs along clear norms and criteria.

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Budget execution

202. The implementation o f the domestically financed budget is subject to regularization o n a tri-semester basis. In 2008, the MFB augmented the commitment ceilings o f recurrent and investment expenditures for the M o H to increase the Ministry's budget execution. Apart from the regularization o f expenditures, a number o f execution procedures exist that constrain the ability o f the Ministry and other line ministries to execute their budget, even though efforts are made by the MFB to simplify expenditure procedures. According to one evaluation study, on average twenty different steps and at least seven days are required to process e~pendi ture. '~ Budget execution was partially streamlined following the introduction o f a modem computerized integrated financial management system (Syst2me Inte'gre' de Gestion des Finances Publiques, SIGFP) in 2006. A new, simplified software i s currently installed fol lowing a number o f technical problems with a new SIGFP version. The regions will only have access to the new system starting in 2009.

203. Procurement procedures are based on a new procurement code, introduced in 2004, that follows international standards. Audits conducted in four sector ministries (including the MoH) over the past years, indicated an increase o f compliance but also a need for more capacity building and institutional development combined with strong oversight by the procurement oversight authority to ensure that the new regulations are systematically applied.

204. Despite some improvements in MoH's budget execution over the past years, the Ministry continues to experience severe difficulties in executing its budget. The execution rate (on commitment basis) o f M o H budget amounted to 65.8 percent in December 2008. Some o f the main budget management difficulties are: i) delays in certain expenditure procedures (for example the nomination o f the Credit Manager) due to bureaucratic bottlenecks or limited capacity at the central and local level (e.g. the establishment o f commitment plans by the ORDSEC's) hindering the Ministry to make timely commitments against the budget at the beginning o f the budget year; ii) delays in the application o f procurement procedures owing to insufficient technical capacity o f the GAC's, weak functioning o f the procurement units Unite' de Gestion de la Passation de Marche's (UGPM) and delays in the nomination o f the Personne Responsible des Marche's Publics (PRMPs) in the regions; (iii) the dysfunction o f the ORACLE system (frequent breakdowns) and the s t i l l ongoing trial period o f the new software that does not allow timely and accurate access to information on budget allocations, commitment and actual expenditures; and (iv) insufficient information f low related to the commitment o f expenditures at the central level (i.e. the insufficient regularization o f grants and TVA, the continued manual collection o f information based on the fiches de centralisation comptable (FCC), the absence o f financial districts in some regions which delays the process o f commitment, delays in the transmission o f information from the local level to the central administration).

205. The Ministry's 2008 budget inscriptions included projects that have been already closed (i.e. the European Union, GTZ, AFD and FSP) which has inflated the budget envelope o f the Ministry and adversely impacted the execution rate o f grants and loans.

l4 The main reason for this excessive oversight and approval requirements is red tape and ineffective administrative procedures, which according to independent evaluations does not translate into higher quality o f services.

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206. At the regional level, the share o f the budget allocated to the basic health centers and transferred by the districts has been either small or none in the past. In order to increase the budget allocated to the CSB and C H D l , the Ministry separated the management o f the district sunituire et de protection sociule (SDSPS)’s recurrent budget by providing a budget l ine for health centers (CSB, CHD, CHRR, CHU) and, separately, for the office o f the SDSPS. The share o f the recurrent budget to be allocated to both entities has been left to the discretion o f the SDSPS’s medical inspectors. Even with the boosting o f their budget, the execution rate o f the health centers investment budget i s very weak. According to a rapid f ield study, delays in the commitment o f expenditures are due to delays in the nomination o f the PRMP that impacted adversely the execution o f program^.'^ The f ield visit also highlighted that most CSBs do not know their budget envelope. In fact, regional Directorates are often informed about completed works and services o f the budget during the reception ceremony. The rapid assessment also showed that two regions had transferred the implementation o f its investment budget to central administration as they did not have the capacity to implement it.

207. Furthermore, the implementation o f the annual plans by the Districts i s st i l l weak due to poor implementation capacity, insufficient resource flows to the regions and districts, and l o w capacity for procurement o f the large quantities o f commodities and equipment needed to expand health services. Support to regional and communal administrative authorities is also st i l l weak owing to substantial limitations at central level, where budget management functions remain weak and require increased efforts to strengthen the administrative and managerial capacity o f the health system.

Budget monitoring

208. The M o H has a number o f internal documents (Le. the National Health Policy 2005, PDSSPS 2007-2011 and its respective action plan (PMO), and the MAP) that, ideally, should assist the Ministry in the budget planning process. To feed into the different reports, the M o H prepares mid-year reports on a monthly, tri-semester, bi-semester and annual basis at a l l administrative levels o f the Ministry. The range o f reporting requirements constitutes a severe administrative burden for the Ministry. The health centers; for example, are required to prepare more than 20 reports on a monthly basis that are send to the program manager at the central administration, with a copy to the DDDS. This does not only require the allocation o f an important share o f the staff to prepare the reports but it also raises questions whether the Ministry can effectively use this wide range o f information to feed into its strategic planning process during the fiscal year.I6

209. The M o H continues to strengthen its budget management to remove administrative bottlenecks and to address allocative inefficiencies and institutional weaknesses. An important initiative was the set up o f a task force (“cellule d’uppui”) in 2007 that was responsible for the preparation o f the MTEF as well as the 2009 budget program. The task force is made up o f representatives o f various administrative units (the Secretary General, the DEP, the DF and the DDDS, which has significantly improved the collaboration between various Directorates on

l5 MOH, Appui Technique pour l’amelioration du processus budgetaire du MOH - Revue comparative, recommandations et Plan d’action, 2008 l6 MOH, Appui Technique pour l’amelioration du processus budgetaire du MOH - Revue comparative, recommandations et Plan d’action, 2008

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budget planning. Nevertheless, the work o f the task force has mainly focused on budget planning at the central administration, whereas it could also play an important role in training and continuous assistance on budget management to the de-concentrated units; and therefore the overall coordination and harmonization o f the budget planning and costing process across al l administrative levels.

210. To address delays in budget execution in 2008, the Ministry implemented a number o f measures that aim to improve its execution rate, including: i) assistance provided to the DULMT, SME, DDDS and in particular, the region o f Analamanga (facing one o f the lowest execution rates) on the implementation o f their budgets; ii) circulation o f guidelines on the management o f the Public Investment Program (PIP) at the regional level; iii) support to de-concentrated units for the use o f email for the transmission o f information; as wel l as iv) a closer collaboration with the Directorate o f the Information System o f the Ministry o f Finance to reinforce the utilization o f the SIGFP at the MoH. Moreover, a comparative study with the Ministry o f Education was carried out in May-June 2008 to assess best practices and lesson learned o n budget planning, execution and monitoring between both ministries. The findings o f the studies will be integrated in a public finance priority action plan o f the Ministry.

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Annex 11: Safeguard Policy Issues

Madagascar Joint Health Sector Support Project

211. The JHSSP will mostly involve activities such as: policy and institutional reforms; financing reforms; strengthening human and institutional capacity; support to priority health programs to improve maternal and child health and control major diseases; and community involvement in local health service management and support to community-based health activities. Civ i l works involved will be mostly rehabilitation o f existing health facilities and the project will not support acquisition o f land for the construction o f new health facilities. N o negative environmental impact i s envisaged in the proposed project. Although the project may finance malaria campaign activities as a lender o f last resort if the Presidential Malaria Initiative is not able to sufficiently finance the malaria project, Madagascar ratified the Stockholm Convention on Persistent Organic Pollutants in 2005, and the Government does not plan to use any DDT in spraying during the project implementation period.

212. The handling, collection, disposal and management o f health care waste and other infected materials is the most significant environmental issue associated with the national health program. Thus the project is rated as category B and triggers OP 4.01 Environmental Assessment due to the potential risks associated with the ineffective medical waste management in health facilities. In fact, the inappropriate handling o f infected materials constitutes a risk not only for the staff in hospitals and in municipalities who are involved in health care waste handling and transportation, but also for families and street children who scavenge on dump sites, most o f which are inadequate. To mitigate this risk, a Medical Waste Management Plan (MWMP) shall be available and appropriately costed with clear institutional arrangements for i t s execution.

213. In September 2005, the M o H adopted the National Policy for Medical Waste Management, which contains the following elements: (i) global and specific objectives as regards management o f medical waste; (ii) specification o f the legal framework; (iii) waste characteristics with the prescribed elimination modes; (iv) norms, safety standards and measures to be adopted as well as critical equipment; and (v) a description o f the monitoring system and an action plan with impact and results indicators for a period o f four years. The National Policy for Medical Waste Management was approved and disclosed on March 23,2007 in the Infoshop and in the country between March 20 and 26,2007.

214. The analysis o f the implementation and supervision o f the National Policy has shown that: (i) the National Office for the Environment o f the Ministry o f the Environment has been responsible for supervising the implementation o f the policy at the provincial and district leve l in a satisfactory manner; and (ii) the M o H has demonstrated clear ownership o f the problems related to management o f medical waste and has been an integral player in the development o f this policy as well as information, education and communication and training activities conducted at various levels. In addition, a MWMP was also developed for the MSPP, and i s under implementation. Prior to appraisal o f the MSPP 11, the M W M P was disclosed in-country and in the Infoshop. Thus the Borrower has demonstrated the capacity to properly develop and implement a MWMP, which i s the only safeguard-related study required for this project.

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2 15. The existing MWMP includes proper disposal of hazardous bio-medical waste and a bio- safety training program for the staff o f al l hospital, health centers and community-based programs, including traditional midwives and practitioners, who may be involved in HIV/AIDS testing and treatment. M o H has been responsible for implementation o f the MWMP, and has demonstrated capacity to properly implement the plan. Since May 2004, M o H has installed 200 small-scale burners to bum medical wastes in al l health centers rehabilitated under IDA-financed health projects. Supervision missions have determined that burners are being used at the C H D o f Ankazobe, Antanifotsy and Faratsiho.

216. Management undertaken in April 2008 shows that:

The World Bank evaluation o f the execution o f the National Policy for Medical Waste

The health sector has put in place three departments to implement the National Policy: (i) Service dYppui a m Ge'nies Sanitaires (SAGS), (ii) Service des Vaccination (SV), et (iii) le Sous Programme Pre'caution Universelle (SPPU). The SPPU i s in charge o f the characterization o f the sorting and collection system o f medical waste following the medical waste management template in Appendix 1 o f the National Policy. The SAGS i s in charge o f designing and providing the elimination equipment for each health center, and since January 2007, has already put in place several removable incinerators (Montfort) as w e l l as simple incinerators. A technical audit was undertaken in February 2007 on the efficiency o f the elimination equipment according to the different types o f incinerators. The findings and recommendations o f technical audit have been implemented to improve the quality o f incinerators in heath centers; The health sector has undertaken several trainings and capacity building efforts linked to the management and elimination o f medical waste in health facilities o f various sizes and has provided elimination equipment in rehabilitated health centers; and The budget o f the M o H does not yet include a specific line item for the financing o f medical waste management in health centers. As a result, when health centers receive insufficient budget, medical waste management i s not considered as a priority; thus, many health centers still do not use the medical waste management infrastructure and do not implement medical waste management plans. Overall, the M o H remains weak in the monitoring and supervision o f medical waste management in health centers.

217. To address this weakness, the Government o f Madagascar through the M o H sent a commitment letter to the World Bank in September 2008 that the future M o H budget as f rom 2009 onwards will include the necessary budget for medical waste management for rehabilitated and equipped health centers. The relevant detailed MWMP presents the strategic objectives o f the M o H and seeks to ensure the conformity o f health centers with the National Policy o f Medical Waste Management. As such, within this framework and to further strengthen the implementation o f the National Policy on the Medical Waste Management, the project will finance: (i) containers for syringes, trash bins, boots, gloves, masques for the maintenance personnel; on-site sanitary pits); (ii) incinerator construction, (iii) training for health care personnel per health center financed, (iv) development o f monitoring mechanisms and management tools and instruments for the medical waste management in the health sector, and (v) public awareness campaigns regarding the dangers o f unsafe medical waste management.

218. The SAGS has been an integral player in the development o f the policy as wel l as information, education and communication activities and training conducted at various levels.

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However, considerable work needs to be done on ensuring that the norms outlined in the policy are applied to each type o f health facility. The most recent supervision mission (October 2008) developed an action plan in collaboration with the SAGS to prepare a detailed plan and timetable to reinforce the implementation o f technical medical waste norms for different types o f health facilities, along with performance indicators and budget. The relevant detailed MWMP was provided to the Bank in September 2008 and judged satisfactory by the Bank. The project will be implemented in accordance with the provisions o f the MWMP, which shall not be amended or waived without the discussions and the non-objection o f the Bank.

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Annex 12: Project Preparation and Supervision

Madagascar Joint Health Sector Support Project

Planned Actual PCN review 07/17/2008 07/17/2008 Initial PID to PIC 07/25/2008 07/24/2008 Initial ISDS to PIC 07/25/2008 07/22/2008

Negotiations 01/26/2009 0 1 /26/2009 Board/RVP approval 02/26/2009 Planned date of effectiveness 06/30/2009 Planned date of mid-tern review 0613 0120 1 1

1213 1/20 13

Appraisal 10/08/2008 1011 212008

Planned closing date

Key institutions responsible for preparation o f the project: - - Donor partners included: African Development Bank, AFD, JICA, UNICEF,

in Government : Ministry o f Health and Family Planning, SHSDP

UNFPA, USAID, WHO

Bank staff and consultants who worked on the project included:

Name Title Unit Maryanne Sharp Sr. Operations Officer & TTL AFTH3 Lubna Bhayani Health Economist, Consultant AFTH3 Ando Raobelison Public Health Specialist, Consultant AFTH3 Adrien Dozol Jr. Professional Officer HDNHE Ioana K r u s e Economist, Consultant AFTH3 Gervais Rakotoarimanana Sr. Financial Management Specialist AFTFM Sylvain Rambeloson Sr. Procurement Specialist AFTPC Lova Ravaoarimino Procurement Analyst AFTPC Siobhan McInerney-Lankford Counsel LEGAF Suzanne Morris Sr. Finance Officer LOAG2 Paul-Jean Fen0 Environmental Specialist AFTEN Nicole Klingen Sr. Health Specialist HDNHE

Norosoa Andrianaivo Program Assistant AFTH3 Benjamin Loevinsohn Lead Public Health Specialist & Peer Reviewer SASHD Christopher Walker Lead Specialist & Peer Reviewer AFTH 1

Aurelien K r u s e Young Professional OPCOS

Bank funds expended to date on project preparation: i 1. Bankresources: $100,000

2. Trust funds: -- 3. Total: $100,000

Estimated Approval and Supervision costs: 1. Remaining costs to approval: $ 50,000 2. Estimated annual supervision cost: $1 00,000

92

Annex 13: Documents in the Project File

Madagascar Joint Health Sector Support Project

The following documents are available in the project file:

A.

s

s

B.

s

s

s

s

s

s

s

s

s

s

s

s

s

s

s

s

s

Project Documents

Project Appraisal Document for a Madagascar Sustainable Health System Development Project, April 20,2007 Second Health Project Concept Note Review Meeting, July 17,2008 Manuel de ProcCdures pour la Gestion Administrative, Financibre, Comptable et Passation de march& du PDSSPSP, August, 2008

Health Sector Documents

Comptes Nationaux de l a SantC 2003 de Madagascar, MinSANPF, 2005 Public Health Expenditures Review, Volume 11: SantC, Rapport No. 38687-MG. The World Bank, June, 2007 Cadre des DCpenses a Moyen Terme du Secteur SantC 2009-2012, Madagascar. Note technique de prdsentation lors de la rCunion du groupe thematique Clargi, MinSANPF. July 04,2008 Politique GCnCrale de 1’Etat 2008, Ministkre de I’IntCrieur, January, 2008 Enquete Ddmographique et de SantC de Madagascar 2003-2004, Institut National de la Statistique (INSTAT) et ORC Macro. 2005 Annuaire des Statistiques du Secteur SantC de Madagascar, MinSANPF, Institut National de l a Statistique (INSTAT). Editions de 2003-2004-2005-2006-draft 2007, Enquete Periodique auprks des Menages, Rapport Principal. Institut National de l a Statistique (INSTAT).Editions de 2003,2004,2005,2006. Health Sector Note, Madagascar, The World Bank. May, 2005. Cartes Sanitaires de Madagascar. Services des Statistiques Sanitaires, MinSANPF. 2007 L e Secteur Pharmaceutique ri Madagascar, Tahina Andrianjafy. 2004 Liste Nationale des MCdicaments Essentiels, MinSANPF. January, 2008 L a Situation des Enfants dans le Monde, UNICEF. 2008 L’Efficience et 1’EquitC des Formations Sanitaires malgaches, Serie de documents de travail N”76, Human Development Unit, The World Bank. May, 2005 Enquete sur les dCpenses de sante publique et l a distribution des services dans le secteur sante a Madagascar en 2006-2007. Nathalie Francken, Banque mondiale, UNICEF. May, 2008 Situation de 1’Approvisionnement en Eau dans les Centres de sante de base, MinSANPF. August, 2008 Allocation de Ressources et Acquisition de Services de SantC en Afrique. Qu’est-ce qui est efficace pour amkliorer l a santC des pauvres ? SCrie de documents de travail No 105, Human Development Unit, The World Bank. March, 2006 La Strategic de la Banque mondiale pour obtenir des Resultats dans l e domaine de la SantC, de l a Nutrition et de l a Population, The World Bank. 2008

93

m

Performance-based Contracting for Health Services in developing countries: a Toolkit. Benjamin Loevinhson, The World Bank Institute, 2008 Etude sur 1’Humanisation de l’H8pital a Madagascar : Determination des Causes de non- motivation du personnel de sante. MinSANPF, PHRD. September, 2007 Etude sur I’Humanisation de I’Hapital a Madagascar: Etudes et Analyses de I’Organisation et des infrastructures d’accueil de I’H’bpital. Proposition d’une Strategic Nationale pour 1’AmClioration de 1’Accueil. MinSANPF, PHRD. September, 2007 Etude sur I’Humanisation de I’H6pital a Madagascar: Causes de mauvais accueil et comportement du personnel hospitalier. Strategies d’amilioration. MinSANPF, PHRD, September 2007 Projet Pilote sur 1’Humanisation de I’H6pital : amelioration de l’accueil au niveau des hapitaux de rCference des RCgions de Diana et Boeny, Fiche Technique PDSSPSP, MinSANPF.2008 Pilote d’un financement de l’offre de services de sante base sur les performances, Distr ict d’ Ambalavao et d’htsalova, Fiche technique, GAVI, Banque mondiale, MinSANPF. August, 2008 Rapport de mission en vue de la definition d’une composante de Dkoncentration et de Dkveloppement des Formations Sanitaires, AFD. July, 2008 Prise en Charge des Maladies de 1’Enfant Communautaire, Documentation des Bonnes Pratiques. UNICEF, February, 2006 Enquete sur la Couverture Vaccinale, Rapport provisoire, Direction de la SantC de la Mkre et de I’Enfant, MinSANPF. 2008 Strengthening Routine Immunization in Madagascar, UNICEF. April 2008 Poverty and Social Impact Analysis: Health Care and the Poor. Republic o f Madagascar. The World Bank. June, 2006. L’ExpCrience pilote du Fonds d’Equite au niveau du CHD2 de Marovoay. MinSANPF, GTZ. July, 2007 Faisaibilite d’un financement par un fonds d’achats dans le cadre de l’approche sectorielle de la santd. MinSANPF, PHRD. September, 2007 Projet Pilote de Fonds de Prise en Charge Universelle pour les Soins obstetricaux et Ndonatals d’Urgence et des maladies des enfants de 0 B 6 mois, Fiche Technique PDSSPSP, MinSANPF. 2008 Rapport sur 1’Atelier d’Harmonisation du Fonds de Prise en Charge Universelle. July, 2008 Experience pilote de Subvention des CoOts connexes au traitement de la Tuberculose, Fiche Technique PDSSPSP, MinSANPF. 2008 Etude sur I’Harmonisation des Approches Communautaires a Madagascar-Phase 1 : Aperqu synthktique et Cartographie, MinSANPF. June, 2008 Guide des Promoteurs pour la mise en place de Mutuelle de Sante a Madagascar, MinSANPF. August, 2007 Guide pour l e dkveloppement de la participation communautaire dans la gestion des pharmacies au niveau des CSB (FANOME), MinSANPF. 2004 Guide de Paquet d’ Activites Communautaires pour le CoSAN, PDSSPSP, MinSANPF. 2008 Textes reglementaires portant creation des CoSAN au niveau des Fokontany et des communes, PDSSPSP, MinSANPF. 2008

94

D

m

C.

Guide Kominina Mendrika, PDSSPSP, MinSANPF. 2008 Accelerating Malaria Control towards Elimination in Madagascar, Note technique de presentation a l a ConfCrence internationale sur l e Paludisme, Antananarivo. May, 2008 Elaboration du plan de developpement des ressources humaines pour l e secteur de la santC a Madagascar, rapport prdliminaire. Carl-Ardy Dubois, Suzanne Boivin, Lucien Albert. Unit6 de sant6 internationale, UniversitC de Montreal. May, 2006. Etude sur les Mesures Incitatives pour faciliter 1’Attraction et la RCtention des Professionnels de santC dans les RCgions rurales et enclavCes de Madagascar. MinSANPF, PHRD. September, 2007 Initiative pour l e redeploiement et l a rCtention des professionnels de santC dans les Regions d’ Androy, Melaky et Vakinankaratra, Fiche Technique PDSSPSP, MinSANPF. 2008 Note de Cadrage et proposition concernant I’Extension et la PCrennisation des installations des mddecins privCs communautaires en zones rurales a Madagascar, ONG SantC Sud. July, 2008 Guide OpCrationnelle de la Contractualisation, MinSANPF, WHO. 2004 IntCgration d’un volet de prdvention sanitaire (( Eau-Assainissement-Environnement D, Note prkparatoire. Service de 1’Assainisssement et du GCnie Sanitaire, April, 2008 Guide pour 1’Elaboration de Plans de DCveloppement SantC au niveau region et district, MinSANPF. 2008 Renforcement du systkme d’information sanitaire a travers 1’amClioration de la performance des districts sanitaires. Services des Statistiques Sanitaires, MinSANPF. February, 2008 Charte DIORANO-WASH. February, 2008 Guide de Surveillance IntCgrCe de la Maladie et Riposte (SIMR) de l’OMS, adapte et valid6 a Madagascar, MinSANPF. 2008 Renforcement de la gestion des produits antipaludiques et des autres intrants de santC a Madagascar, President’s Malaria Initiative, MSH/SPS USAID Deliver Project, CDC, April, 2008 The WHO’S Global Tuberculosis Laboratory Initiative, http://www. who.int/tb :dots/laboratorv/ali Enquste sur La Couverture Vaccinale, Madagascar FCvrier 2008 UNICE/WHO JMP Progress Report on Drinking Water and Sanitation, July 2008

Policy Documents

Madagascar Action Plan 2007-2012, Commitment 5 : Health, Family Planning and the Fight against HIV/AIDS, updated version on 2008 Politique Nationale de SantC. June, 2005 Plan de dkveloppement du Secteur SantC et de la Protection Sociale 2007-2012. September 17,2007. On-going update Mission et Programmes Prioritaires du Ministere de la SantC et du Planning Familial 2008-2012, Presentation de son Excellence Monsieur l e Ministre de la SantC et du Planning Familial au Grand Staff de Fianarantsoa. July 30,2008

95

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Indicateurs de performance par niveau relatif aux programmes prioritaires du MinSANPF, 2008-2012. Note de presentation au Grand Staff du MinSANPF, Direction des Etudes et de l a Planification, MinSANPF. July 30,2008 Declaration de Ouagadougou sur les soins de santC primaires et les systkmes de santC en Afrique au cours du nouveau millknaire. April 30,2008. WHO Politique Pharmaceutique Nationale. 2002 Programme d’Action pour 1’Integration des Intrants de Sante ti Madagascar - Plan stratdgique 2008-2012. June, 2008 Feuille de Route pour la RCduction de la Mortalit6 Maternelle et Neonatale a Madagascar, 2005-201 5. November, 2007 Politique integree de Planning Familial et SantC de la Reproduction des Adolescents, draft. 2008 Politique Nationale de Sante de 1’Enfant. September 2005 Politique Nationale de Nutrition, 2004 Plan Pluri-Annuel complet du Programme Elargi de Vaccination 2007-201 1.2007 Plan de Rehabilitation de la Chaine de Froid, piriode 2004-2013. November, 2003 Reforme hospitalike, les Axes StratCgiques, MinSANPF. 2007 Politique Nationale de Promotion de la Sante, draft 3. 2008 Politique Nationale de contractualisation dans le secteur de la SantC a Madagascar. 2004 StratCgie Nationale de Lutte contre les IST classiques 2007-2012, Programme ISTNIH, MinSANPF, SE/CNLS. June, 2007 Plan d’Action de Madagascar pour une Reponse efficace face au VIWSIDA 2007-2012, SE/CNLS. May, 2007 Politique Nationale de Lutte contre le Paludisme 2005-2009, MinSANPF. 2005 Plan StratCgique de Lutte contre le Paludisme - Madagascar: vers l’klimination du paludisme 2007-2012, MinSANPF. 2007 Programme National de lutte contre la Tuberculose, MinSANPF. 2005 Politique Nationale contre la Bilharziose, MinSANPF. 2002 Plan d’Action 2006-201 0 pour 1’Elimination de la Filariose lymphatique de Madagascar, MinSANPF. 2006 Coordination en mati&re de Ressources Humaines, Presentation du Directeur des Ressources Humaines du MinSANPF au Grand Staff de Fianarantsoa. July 3 1,2008 Politique nationale de gestion des Etablissements de Soins et de SCcuritC des Injections, Septembre 2005

96

Annex 14: Statement o f Loans and Credits

Madagascar Joint Health Sector Support Project

Project ID FY

PO95240 2007 PO55166 2001 PO01568 1998 PO74235 2004 PO74236 2004 PO74448 2004 P103950 2008 PO83351 2006 PO74086 2007 PO52186 1999 PO76245 2003 PO90615 2006 P105135 2008 PO72160 2002 PO51922 2001 PO73689 2003 P103606 2007 PO82806 2004 P113224 2009

~~

Purpose

Original Amount in US% Millions

IBRD IDA SF GEF Cancel. Undisb.

Difference between expected and actual disbursements

Orig. Frm. Rev’d

MG - M N t r Sect. Recovery and Restruct. MG-Com Dev Fund SIL (FYOl) MG-Community Nutrition 2 (FY98) MG-Env Prgm 3 (FY04) MG-GEF Env Prgm 3 (FY04) MG-GOV & InSt D ~ v TAL (FY04) MG-Governance & Inst. Development Integ Growth Poles MG-Irrigation & Watershed Project (FY07) MG-Microfinance (FY99) MG-Mineral Res Gov SIL (FY03) MG-MultiSec STI/HIV/AlDS 2 (FY06) MG-PRSC V (FY08) DPL MG-Priv Sec Dev 2 (FY02) MG-Rural Dev Supt SIL (FYOl) MG-Rural Transp APL 2 (FY03) MG-Sust. Health System Development MG-Transp Infrastr Invest Prj (FY04) MG-Supplemental PRSC V Grant

0.00 10.00 0.00 178.00 0.00 47.60 0.00 40.00 0.00 0.00 0.00 35.00 0.00 40.00 0.00 209.80 0.00 30.00 0.00 20.90 0.00 40.00 0.00 30.00 0.00 50.00 0.00 23.80 0.00 117.80 0.00 80.00 0.00 10.00 0.00 165.60 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

10.00

0.00 0.00 0.00 0.00 9.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

0.00 0.00 0.00

0.00

0.00 1.23 0.00 0.00 0.00 0.00

6.10 0.00 5.00

12.10 2.50

-2.90 3 1.20

110.40 24.70 2.60 4.00

17.30 1.05

-0.20 23.20 18.10 0.80

28.50 0.00

5.40 0.00 0.00 0.00

-13.40 1.44 9.14 0.00

1.44 0.00 -6.14 0.00 0.00 0.00 5.24 -4.19 2.49 0.00

-1.78 1.11 -3.56 0.00 13.48 0.00 0.00 0.00

0.07 -3.91 -3.25 -3.25 16.40 16.46 -1.50 0.00 10.53 10.53 0.00 0.00

PO94103 2007 MG-Regional Telecoms (FY07) 0.00 30.00 0.00 0.00 0.00 28.20 0.00 0.00

P113134 2009 MG-Emerg. Food Sec. & Recons. Project 0.00 40.00 0.00 0.00 0.00 0.00 0.00 0.00 ERL (FY09)

Total: 0.00 1,198.50 10.00 9.00 1.23 312.65 34.56 18.19

97

Committed

**Ouasi partici FY ADDrOVal ComDany L o a n - Eauitv * G T M

2007/08 Abm 0.00 0.49 0.00 0.00 0.00

1998 Aef ghm 0.08 0.00 0.00 0.00 0.00

2006/07 BFV-SocGen 0.00 0.00 0.00 7.48 0.00

1992/2005/07 Bni 0.00 2.09 0.00 0.00 0.00

Bni leasing 0.00 0.10 0.00 0.00 0.00

2000/08/09 Boa-M 0.00 2.46 0.00 3.64 0.00 BP

Credit

Celtel

Mc

2004 Madagascar 0.00 3.88 0.00 0.00 0.00

2006107 Lyonnais 0.00 0.00 0.00 7.48 0.00

2007 Madagascar 25.00 0.00 0.00 0.00 21.00

2007/08 Madagascar 0.00 0.68 0.00 3.76 0.00

Total Portfolio: 25.08 9.71 0.00 22.36 21.00

* Denotes Guarantee and Risk Management Products.

** Quasi Equity includes both loan and equity types.

Disbursed Outstanding

**Ouasi partici

0.00 0.49 0.00 0.00 0.00

0.08 0.00 0.00 0.00 0.00

0.00 0.00 0.00 5.32 0.00

0.00 2.09 0.00 0.00 0.00

0.00 0.10 0.00 0.00 0.00

D a n t L o a n - Eauitv *GTIRM

0.00 2.46 0.00 2.64 0.00

0.00 2.08 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

12.00 0.00 0.00 0.00 10.08

0.00 0.68 0.00 2.29 0.00

12.08 7.91 0.00 11.22 10.12

98

Annex 15: Country at a Glance

Madagascar a t a glance 6/2/08

Key Development Indicators

7 )

Population. md-year (millions) Sutface area (thousand sq. km) PopuhtiongmMh (36) M a n population (% oftotalpopulation)

GNI (Atlas method, US$ bilions) GNIpercaDita LAtlasmethcd. US$) GNI per capita (PPP, nternatbnd $)

GDPgmwth (%) GDP per capb growth (%)

(most recent estimate, 2oW-2W7)

Povertvheadcountratio at$ladav(PPP.%) Poverty headcountratio &$2a day(PPP,%) L h expectancyatbirth(years) Infant rmttalay(per1 ,WOlivebirths) Childmalnutrition(%of childrenunder.5)

Adult literacy, male (% of ages 15 and older) Adult litwacy. female (%of ages 15 and ddeij Gross primaryenrdlmnt, male (%of age group) Gross primaryenrdlmnt, female(% of age grcup)

Accesstoanimprovedratersource (%ofpopuktion) Accesstoimproved sanitation facilities(% ofpopulation)

Madagascar

19.7 587 2.7 22

6.6 33 0

6.2 3.7

61 85 56 74 42

77 65

141 136

46 32

Sub- Saharan

Africa

770 24,265

2.3 36

648 842

2,032

5.6 3.2

41 72 47 96 29

69 50 98 86

56 37

LOW

income

2,403 29.21 5

1.8 30

1,562 650

2.698

8.0 6.1

59 75

72 50

108 96

75 38

Net Aid Flows

(US$rnllions) Net OOA and offioal aid Top 3 donofs (in 2 W )

France unlted states Japan

A d (96 dGNI) A d pwcapita(US$)

Long-Term Economic Trends

Consumer p c e s (annual %change) GDP rm!Aic& defbtor (annual % chance)

Exchangerate (annual average, bcal perUS$) Terms oftmde index (2000 = 100)

Popuhtion, md-year (mlllans) GDP (US$ mllons)

Ag I lCU~tU re Industry

SeNlces

Household final consufndonexDendture General gov? final consurnpbon expenditure Gross capital formabon

Manufacturng

EXpwtS of gWdS and SBNICSS Imports of goods and servces Grosssaungs

1980

230

54 10

5.7 25

15.0

42.3

9 1 4,042

30.1 16.1

539

89.3 12.1 15.0

13.3 29.7 -2.4

1990

39 7

143 22

13.4 33

11.8 11.5

298.8 79

12.0 3.081

2000

322

46 32

8.4 20

10.7 7.2

1,353.5 100

16.2 3,878

(% o f G W ) 28 6 293 12 8 14 3 11 2 12 3 58 6 565

86 4 832 8 0 9 0

17 0 15 0

16 6 307 28 0 380 9 2 9 4

2007 *

754

104 61

44 10 0

38

I O 3 10 3

1,873 9 51

19 7 7.383

25 8 16 1 12 7 58 0

79 0 9 4

27 3

16 8 357 13 3

Agedisntut ioq 2006

Male Femle

7074

60-64 5 x 4 $044

sa41

2324 1014

04

20 10 0 10 20

Dercent

Under-5mortalilyrate (per1,OM))

I I Growth of GDP and GDP per capita (%)

I --O-GDP - GDPpercapcta 1

1980-90 ‘1990-2000 200047 (averageannual growth %)

2 8 3 0 2 8 1 1 2 0 3 3

2.5 1.8 1.9 0.9 2.4 2 7 2. 1 2.0 2. I 0.3 2.3 3.7

0 .7 2.2 2.0 0.5 0.0 7.6 4.9 3.3 17.0

0.8 3.8 1.0 5.7 4.1 9 8

Note: Figures in italics are fmyears other than those specified. 2007 dataare prelminaly. Group data are through2006. .. ndicates dataare not availabb a.Addata arefor2006.

Devebpment Economics, Development Data Gmup (OECDG).

99

Madagascar

Balance of Payments and Trade

(US$mBons) Total merchandise exports (fob) Total merchandise impwts (or) Net trade n goods and SNICS

Cwrentaccwntbahnce asa%ofGCP

Workers' remittances and cmpensa!ion ofemployees (receipts)

Reserves ncbding gdd

Central Government Finance

1% d G P ) Cwrentrevenue (Induding giants)

Current expenditwe

Ovemll surplus'deficit

Highest marginal tax rate (%)

Tax reveme

Inchvidual Corporate

External Debt and Resuwce Flows

IUS$rn)%ons) Total debtoutstanding andchsbursed Total debt service Debt relsf(HPC MDRI)

Total debt (% of GDP) Tdaldebtservice(%ofexports)

Foreign direct investment (net imlows) POrtfdlOeqUlty (net nfiows)

M O O 2007

829 1.229 1,097 2,225 -283 1,197

-218 -1,033 5.6 -1 4.0

11 - 288 602

12.4 11.6 11.3 11.4 11.4 11.0

-5.7 -9.5

4,691 1,601 117 35

1,035 1,219

121.0 21.7 9.7 2.1

83 0 0 0

:omposition of total external dett, 2006

BRD 0

IDA E 3

JS rnllons

Private Sector Develoment

T i m requred to start a business (days) Cost tostart abuslness(%ofGNIpercapita) T i m requred to register property (days)

Ranked a?, a mqorconstrarnttobusiness (% ofmanagerssurveyed whoagreed)

Access tdcost of frnancng CWNpbW

Stwkmarkel ~ p i t a l i ~ a b o ~ (% ofGDf) Bank capital to asset tatio (%)

mo 2006

7 - 22.7 - 134

-

68 3 46t

0 0 7 1 0 0

IGovernance indicators, ZWOand 2006

Voiceand acmuntabiliiy

mstical stai i i iy

Regulatory quality

Rile d l a w

Control of mrrupion

Techndoay and Infrastructure mo 2005

Paved roads (% of totap Fkedline and mobilephone

High technology expocts subscrbers@er 1,OWpeople)

( O h of manufactured exports)

11.6

8 40

1.0 0.8

Environment

Agnculturalland(%oflaxl area) 47 47 Fcfest area ( O h of hnd area) 24.9 24.6 Nationdlyprotectedareas ph oflandarea) .. 5.8

Freshwater reswrces per capta (cu. metes) _. 18.1 13 Freshwater Mhdrawal (%of hternal resources) 4.4

C02emssicns per capla(mt) 0.14 0.73

GDP per unit of energy use (2000 PPP $per kg of oil equivalent)

Energyusepercapta(kgofd1eqItivalmt)

IBRD TOW deM &tandnganddidursed Dtsbunments

I ntereSt payments Pnnclpa repayments

IDA 'rota4 debt wtstandnganddistiursed 1378 636 Risbursments 94 139 Tot& debt swiee 27 28

8 4 of v&& IFCowi aeccunt 8 4

Risbumements fotlFC awnaccwt 1 0 Pmfaliosaes ptepaVmenfsand

repapentsfor IFC ownacmunt 2 2

MlGA Gross exmure 1 6

Note Figures in tallcs are for years other than those speofied 2007 data are prelimnary indicatesdataare not avalabk - ndcatesobservabonisnotapplicabe

Devebpmmt E c ~ c ~ ~ K s . Development Data Group (DECDG)

612108

100