Document ofThe World Bank

Report No: 24217-SL

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED GRANT

IN THE AMOUNT OF SDR 15.1 MILLION (US$ 20 MILLION EQUIVALENT)

TO THE

REPUBLIC OF SIERRA LEONE

FOR A

HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

JANUARY 22, 2003

Human Development IICountry Department 10Africa Regional Office

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CURRENCY EQUIVALENTS

(Exchange Rate Effective January 21, 2003)

Currency Unit = Leones (Le)Le 2,089.17 = US$1.00

US$1.00 = Le 0.00047866

FISCAL YEARJanuary 1 -- December 31

ABBREVIATIONS AND ACRONYMSAfDB African Development BankAPL Adaptable Program LendingCDC Center for Disease Control and PreventionCPR Country Procurement ReviewCPAR Country Procurement Assessment ReportCTB Central Tender BoardDHS Demographic and Health SurveyDOTS Direct Observed Treatment Short-course (TB)EU European UnionFMR Financial Management ReportGDP Gross Domestic ProductGIMPA Ghana Institute of Management and Public AdministrationGOSL Govemment of Sierra LeoneGPN General Procurement NoticeHRD Human Resources DevelopmentHSRDP Health Sector Reconstruction and Development ProjectIBRD Intemational Bank for Reconstruction and DevelopmentIDA Intemational Development AssociationIEC Information, Education and CommunicationIFC International Finance CorporationIHSIP Integrated Health Sector Investment ProjectMICS-2 Multiple Indicator Cluster Survey-2MOHS Ministry of Health and SanitationNHAP National Health Action PlanPCU Project Coordination UnitPHC Primary Health CarePHU Primary Health UnitsPMR Project Monitoring ReportRBM Roll Back MalariaSAPA Social Action and Poverty AlleviationSBCQ Selection Based on Consultanfs QualificationSIL Specific Investment LoanTSS Transitional Support StrategyTB TuberculosisUNICEF United Nations Children's FundUNFPA United Nations Fund for Population ActivitiesWHO World Health Organization

Vice President: Callisto MadavoCountry Director: Mats Karlsson

Sector Manager: Alexandre AbrantesTask Team Leader: Astrid Helgeland-Lawson

SIERRA LEONEHEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 32. Main sector issues and Government strategy 53. Sector issues to be addressed by the project and strategic choices 8

C. Project Description Summary

1. Project components 92. Key policy and institutional reforms supported by the project 143. Benefits and target population 144. Institutional and implementation arrangements 15

D. Project Rationale

1. Project alternatives considered and reasons for rejection 152. Major related projects financed by the Bank and other development agencies 163. Lessons learned and reflected in the project design 174. Indications of borrower commitment and ownership 185. Value added of Bank support in this project 18

E. Summary Project Analysis

1. Economic 182. Financial 203. Technical 204. Institutional 215. Environmental 226. Social 237. Safeguard Policies 25

F. Sustainability and Risks

1. Sustainability 252. Critical risks 26

3. Possible controversial aspects 27

G. Main Grant Conditions

1. Effectiveness Condition 272. Other 27

H. Readiness for Implementation 28

I. Compliance with Bank Policies 28

Annexes

Annex 1: Project Design Summary 29Annex 2: Detailed Project Description 35Annex 3: Estimated Project Costs 42Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 43Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 49Annex 6: Procurement and Disbursement Arrangements 50Annex 7: Project Processing Schedule 65Annex 8: Documents in the Project File 67Annex 9: Statement of Loans and Credits 68Annex 10: Country at a Glance 69

MAP(S)IBRD 32088

SIERRA LEONEHEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

Project Appraisal DocumentAfrica Regional Office

AFTH2

Date: January 22, 2003 Team Leader: Astrid Helgeland-LawsonSector Manager/Director: Alexandre V. Abrantes Sector(s): Health (100%)Country Manager/Director: Mats Karlsson Theme(s): Health system performance (P), FightingProject EID: P074128 communicable diseases (P), Conflict prevention andLending Instrument: Specific Investment Loan (SIL) post-conflict reconstruction (P), Civic engagement,

participation and community driven development (S)

[] Loan [] Credit [X] Grant [] Guarantee [] Other:

For Loans/Credits/Others:Amount (US$m): $20.00FlaiiigPian(U$ $m 'P Source .- . .nLocal -iForeign( - .-' - Total BORROWER/RECIPIENT 1.00 0.00 1.00IDA GRANT FOR POST-CONFLICT 14.15 5.85 20.00Total: 15.15 5.85 21.00

Borrower/Recipient: GOVERNMENT OF SIERRA LEONEResponsible agency: MINISTRY OF HEALTH AND SANITATIONAddress: Ministry of Health and Sanitation, 4th Floor, Youyi Building, Freetown, Sierra LeoneContact Person: Dr. Noah Conteh, Director General of Medical ServicesDr. Clifford Kamara, Director of Planning, Information and StatisticsTel: (232) 22242119/22240068 Fax: (232) 22241527 Email: cwkamara@sierratel.sl

Estimated Disbursements ( Bank FY/US$m):'i F.Y. '2(:.3y ,- 0 2,;5'- 007 -2008 '

Annual 2.00 5.53 5.60 5.12 1.40 0.35Cumulative 2.00 7.53 13.13 18.25 19.65 20.00

Project implementation period: January 2003 - December 2007Expected effectiveness date: 05/01/2003 Expected closing date: 02/28/2008

OCS PAD F P_ R..h 0

A. Project Development Objective

1. Project development objective: (see Annex 1)

The project's overall development objective is to help restore the most essential functions of the healthdelivery system. The project will also help achieve the more specific objectives of:

(a) Increasing access to affordable essential health services by improving primary and first referralhealth facilities in four districts of the country.(b) Improving the performance of key technical programs responsible for coping with the country'smajor public health problems.(c) Strengthening health sector management capacity to improve efficiency and further decentralizedecision-making to the districts.(d) Supporting development of the private NGO health sector and involvement of the civil society indecision-making.

The first specific objective is limited in scope to the four districts which met specific selection criteria(such as importance to the demobilization, resettlement and peace processes; magnitude of the publichealth problems; clear need to rehabilitate the delivery of services, etc.). Within these four districts, theproject focuses on the rehabilitation of priority health facilities, and on support for the delivery ofaffordable and good quality care.

Through its second specific objective, the project will contribute to reducing the burden of some of the

most important infectious diseases country-wide (i.e., by supporting Malaria and TB control activities,and the Sanitation program).

The third specific objective aims to improve efficiency and make the health sector more responsive to theneeds of the population by supporting eligible district health teams country-wide (13 in total) and fivekey services of the MOHS (i.e., Human Resources Development; Planning, Monitoring and Evaluation;Financial Management; Procurement; and Donor and NGO coordination).

The fourth specific objective will improve the quality of services by (i) promoting development andregulation of the private NGO sector, strengthening the quality of care and enhancing the contribution ofthe private sector to the achievement of public health objectives, (ii) providing incentives to the healthproviders to establish practices in rural areas and smaller cities, (iii) contracting out clinical and

non-clinical services with the private sector, and by (iv) involving the civil society in decision making in

the health administration and in health facilities.

While the project must initially focus on the restoration of health service delivery, it will provideincreasing support to the reform process in the health sector (including to cost-recovery and to the set upof mechanisms to protect the access to services of the poorest population).

2. Key performance indicators: (see Annex 1)

Because of the scarcity of reliable baseline information on sector performance and health outcomes, the

project's key performance indicators will be based on input, process and performance indicators such as:

(a) health sector budget allocations and actual expenditures, i.e., recurrent (salaries and wages, andnon-salary) and investment allocations and expenditures;(b) public expenditures for primary, secondary and tertiary services;

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(c) progress in increasing the numbers of health providers with emphasis on medical, nursing andmidwifery health personnel;(d) progress in rehabilitating and equipping health facilities (overall and in the four participatingdistrict);(e) immunization coverage (the percentage of children aged 12 to 23 months immunized againstdiphtheria, pertussis and tetanus) in the four distncts assisted by the project. This indicator isexpected to increase from 46% in the year 2000 to 60% in the year 2005 and to 65% by the year2007;(f) the regular use of insecticide-treated bed nets by children under five years of age. This indicatoris expected to increase from 1.5% in the year 2000 to 20% in the year 2005 and to 40% by the year2007;(g) the contraceptive prevalence rate (the percentage of married or in union women aged 15 to 49years using a modem or traditional contraceptive method) in the four districts assisted by the project.The CPR is expected to increase, country-wide, from 3.9% in 2000 to 8% in 2005 and to 10% in2007, and;(h) the percentage of deliveries assisted by a doctor, nurse or midwife in the four distncts assisted bythe project. This indicator is expected to increase, country-wide, from 42% in the year 2000 to 55%in the year 2005 and to 60% by the year 2007.

* The source of base-line data on the output indicators (e to h) quoted above is the Government ofSierra Leone (GOSL) Multiple Indicator Cluster Survey 2 (MICS-2) published in November 2000under the title "Survey Report on the Status of women and Children in Sierra Leone" (see also thetable presented in section B 2 below). The data of this survey also include some outcome indicatorsbut the respective data are affected by important size and sampling techniques limitations. Becauseof these limitations and of the unavailability of DHS data, no outcome indicators were includedamong the project key performance indicators. If, at a later stage, data on outcome indicatorsbecome available, the list of key performance indicators will be amended accordingly.

* Additional indicators are to be found in Annex 1.* Data on the indicators for the four districts assisted by the project were not available at the date of

the PAD preparation. They will be collected dunng the annual sector review and operationalplanning exercise for the year 2003. Countrywide data from the MICSII survey will also be used as aproxy.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: 21332 Date of latest CAS discussion: 03/26/2002

A Transitional Support Strategy (TSS) for 2002-2003 was developed. The TSS presents the Bank'sbusiness plan to support the implementation of the Sierra Leone Government's Interim PovertyReduction Strategy (I-PRSP) which was launched on September 2001. The main objective of the TSS isto support the transition from post-conflict reconstruction to sustainable poverty reduction. In thetransitional phase, the focus of the TSS is on: (i) consolidating peace, (ii) resettlement andreconstruction, (iii) improving govemnance, and (iv) maintaining a macroeconomic framework conduciveto economic recovery. In the medium-term, Government will increasingly address longer-termdevelopment issues to be elaborated in the full PRSP. The provision of health services in rural andunderserved areas is one pnority of the TSS, and a means to help mitigate the risk of renewed conflictand lay the foundation for sustained poverty reduction.

The Health Sector Reconstruction and Development Project is one of the lending activities proposed in

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the TSS for FY03. The proposed project is aligned with the goals of the TSS as priority for rehabilitationof health facilities is given to war-tom and underserved areas. The key objectives of this project wouldencompass: (a) increasing access to affordable essential health services by improving primary and firstreferral health facilities in four districts of the country; improving the performance of key technicalprograms responsible for coping with the country's major public health problems; strengthening healthsector management capacity to improve efficiency and further decentralize decision-making to thedistricts; and supporting development of the pnvate health sector and involvement of the civil society indecision-making. As reestablishing the provision of services is crucial in returning to normalcy, theproject has important contributions towards the consolidation of peace and it is fully consistent with theTSS.

Regarding the high potential for conflict in the Mano River Basin, the TSS presents three transitionalscenarios. Under the first, provided that a satisfactory transition to peace occurs, the Bank would preparea CAS in about two years (this is considered the most likely scenario given recent progress in SierraLeone). However, under a second scenario, that would apply should there be significant slippage in thepeace process, the program outlined in the TSS will continue provided that progress is being made inreducing poverty. The HSRDP will be implemented,as described in the PAD under either of thesescenarios with a possible modification of the districts to receive assistance as accessibility to districts andspecific health needs might change. Under the third scenario, the Bank would (i) in case of conflictspreading to large areas of the country, suspend the preparation of new operations, conducting onlylimited portfolio implementation; and, (ii) should such conflict persist and spread county-wide, suspendall operations and prepare a Watching Brief. If conditions in the country so deteriorate as to make itnecessary to apply this last scenario, HSRDP will need some adjustments (similar to the ones used duringthe implementation to the IHSIP project that allowed the Bank to provide valuable support to thepopulation of the country in 1999-2000 when the armed conflict worsened). Nonetheless, in the case ofrenewed conflict country-wide and a severe deterioration of the security situation, HSRDP will besuspended as all the other Bank operations.

For FY03, Sierra Leone was allocated grants of SDR 30.2 million (US$40.0 million equivalent), and thisamount will be applied toward the financing of the Health Sector Reconstruction and DevelopmentProject and the Rehabilitation of Basic Education Project. These particular projects were selected forgrant financing because of (i) their importance in the Bank's program in Sierra Leone, (ii) these projects'strong development impacts, and (iii) the Government's particular interest in grant financing of the healthand education sectors as support to these sectors would be strengthened by the grant financing.

O Health Sector in the Sierra Leone TSS. The provision of health services in rural and underservedareas is identified as a priority in the TSS, and a means to help mitigate the risk of renewed conflict.and lay foundation for sustained poverty reduction.

o Strong development impacts. This particular operation is very timely and responds to the mosturgent health needs of the population during a critical period of time and will contribute tothe strengthening of the public and private health sector.

o Government preferences. The Government has expressed particular interest in grant financing forthe health sector as they see it as a means to draw greater and broader support for these programs.

In addition to these specific reasons for applying grant financing in this operation, the operationadvances the Bank's preference in the IDA13 Grant Guidelines that "While grant use will beguided by PRSP and CAS/TSS priorities, investments in education, health and clean water aregenerally expected to be an important component of grant use."

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2. Main sector issues and Government strategy:

At the end of a decade of war, political and social instability, and detenoration of the economicperformance of an otherwise well-endowed country, the health sector in Sierra Leone is facing manyissues.

a) The health status of the population is, compared with other SSA countries, critical; it is estimatedthat life expectancy at birth is only 43 years, and infant, under-five and maternal mortality rates are ashigh as 170, 286 and 18 per 1000 live births respectively. The country is plagued by diseases for whichcost-effective interventions are available but are not being used due to: (i) problems with resources of allkinds (financial, infrastructure and especially human resources); (ii) weak sector capacity, and; (iii)limited access to some geographical areas because of the security situation (until very recently), poorroads and inadequate communications. Among these diseases are malaria, tuberculosis, leprosy, acuterespiratory diseases, diarrhea, Lassa fever, onchocerciasis, and cholera and other water bome diseases.Also, compared with neighboring countries, the HIV/AIDS epidemic is more significant; the prevalencerate of HIV sero-positivity is now estimated at about 4.9% (the CDC Atlanta base line survey of 2002)and may be higher in some groups. As a result of war atrocities, the country was left with thousands ofamputees; a huge number of psychologically affected people (mostly women among whom many wereraped and/or lost their children and families; and children who are orphaned or living away from theirparents. Fertility rates are also high as a result of insufficient use of contraception, particularly in ruralareas. Lastly, malnutrition is widely spread among children and lactating mothers and contnbutessignificantly to the high mortality rates cited above.

b) The health delivery system is operating poorly. Durng the conflict, the country is estimated to havelost more than 50% of health facilities and the remaining facilities need rehabilitating, re-equipping, newstaff, and technical and financial support. While the recent conflict exacerbated the situation bydestroying health facilities and displacing (or worse) staff, the public health sector has not performedwell for more than a decade; with inadequate financing, MOHS could not supervise and supporttechnically the public health facilities country-wide. Further, the destruction of the infrastructure ofother sectors affected, and continues to affect, the health sector's operations since communications,transport, electricity, water supply, etc., were also severely disrupted.

Many international and local NGOs specialized in providing health care during conflict and inpost-conflict situations have successfully delivered services to the districts in which the public healthfacilities were not able to operate. In addition, NGOs are contributing substantially to alleviatingpsychological suffering and providing physical rehabilitation to amputees. As a result of the progress inpeace negotiations and increased security, these NGOs are now in the process of phasing out their aidprograms. Other NGOs (and particularly the religious NGOs), which had previously played an importantrole in the delivery of health care in rural areas, suffered severe damage in the war (of 47 missionfacilities in operation before the 1997 coup, only 20 are currently functioning), the mission hospitalshave lost their expatriate medical staff, and the current free drug policy (applied in some governmentfacilities and by the large international NGOs) is drawing patients away from their clinics which continueto use cost recovery (and to also successfully exempt the poor from it).

The private for profit health system, although recently developing, remains weak and limited to theWestern Region and the capital city.

This makes restoration of a functioning health sector a crucial priority for the country. At present themost important challenges for the public health sector are to find solutions for:

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(a) the lack of infrastructure, especially in the distncts most affected by war;(b) the limited administrative capacity of the public sector and its persistent inefficiencies;(c) the lack of human resources (resulting from (i) staff attrition, (ii) inadequate training(undergraduate, postgraduate and continuous on the job training), (iii) emigration of medicaldoctors (in particular, of specialized physicians) to developed countries; (iv) distortedgeographical distribution of health workers (during the war the health providers left the unsafezones and came to work in Freetown); and the lack of skill and motivation of the remaininghealth personnel, and;(d) the lack of capacity of the private for profit health sector and its inability (or unwillingness)to address major public health problems.

Health Status IndicatorsSource of data: MIv4CS 2 Survey 2000

Indicators Latest estimated valueInfant mortality rate 170 per 1000 live births

Under-five mortality rate 286 per 1000 live births

Maternal mortality rate 1800 per 100,000 live birthsUnderweight prevalence in children under 5 years 27.2%of ageStunting prevalence in children under 5 years of 33.9%ageWasting prevalence in children under 5 years of 9.8%agePopulation with access to safe drinking water 54.0%

Population with access to safe excreta disposal 63.1%meansAntenatal care 68.0% of pregnant women received at least one

consultationDeliveries attended by skilled personnel 41.7%

Contraceptive prevalence rate (modem 3.9%contraception)Births weight below 2.5 Kg 52.5%Iodized salt consumption 23.4% of households

Children receiving vitamin A supplementation 58.2%Mothers receiving vitamin A supplementation 32.6%Breast feeding (exclusive of other foods) of 2.4%children under 4 months of age

Complementary feeding of children aged 4 to 9 52.5% of children 4-9 months old are receivingmonths breast milk and complementary food

Inmmunization rates in children 12 to 23 months of DPT 45.5%; measles: 61.7%; TB: 61,2% andage polio:72.8%Neonatal tetanus immunization of pregnant women 57.7%

Use of Oral Rehidration Therapy 86.1%Acute respiratory infections treated 50.2%Impregnated bednets used by children under 5 1.5%years of ageMalaria treatment in children under 5 years of age 60.9%

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Knowledge on HIV/AIDS prevention and 21.1% and 19.0%|misconceptions I IData quality is affected by sample size and sampling techniques limutations. For instance regarding the matemal mortality theMICS-2 can only say that, with 95% probability, the MMR is not smaller than 1000 and not bigger than 2600 maternal deathsper 100,000 live births. More accurate data will only be available later on with: (i) the opportunity of a DHS (scheduled for2003) and of specialized surveys (such as the HIV sero-positivity survey scheduled for 2002) and, gradually, (ii) the resuming ofthe health facility data collection and reporting system

c) The health sector's capacity to manage health service delivery was considerably weakened, and thedecentralization of decision-making halted in recent years. During the period 1993-1996, the MOHSprepared a comprehensive sector reform and service delivery program, which was outlined in documentssuch as the 1993 National Health Policy, the 1994 National Health Action Plan (NHAP) and the 1995NHAP Core program. At the time, GOSL (using performance indicators and qualitative information)ranked health as the best performing public sector of the country; in more recent years, MOHS'performance has also been ranked very high. Recognizing these efforts, the World Bank agreed todevelop a project to support the sector-wide program of the GOSL, the Integrated Health SectorInvestment Project; credit 2827-SL. Unfortunately, the rebel conflict (which worsened in 1996 andsporadically thereafter) halted the reforms and re-focused MOHS's work on solving problems stemrmngfrom instability, loss of resources, an increasing number of displaced persons and refugees, and a markeddeterioration of the health status of the population. Although sector performance was greatly reduced byproblems with financial resources, decrease of staff and looting of premises, the most affected parts ofthe system were, without doubt, the district health teams and the decentralization process.

IHSIP was restructured to provide the financing of activities in response to the new situation in thecountry, and remarkably permitted MOHS to continue functioning during all these years of war. To alarge extent this was possible due to the dedication of the national staff and was facilitated by theassistance received from the IDA credit to the sector. Other organizations, such as UNICEF and WHO,have also succeeded in mobilizing extra budgetary resources and have provided valuable assistance.Over the past several years, sector capacity has gradually been re-established. In August 1999 the sectorwas able to resume the annual review and planning meeting with donors and NGOs, and launched thenational immunization days. District health personnel, among which many have functioned mostly dueto the support from international NGOs, attended these meetings. A decision was taken to increase thesupport to districts from the public budget and donors and, in addition, to also make available funds fromthe current IDA credit. In November 2000 the annual program review and planning meeting for the year2001 was held with an even more active participation of NGOs, donors and district staff. Continuing thispositive trend, at the beginning of the year 2001, the health districts meeting the criteria for satisfactoryfinancial management and accounting practices received funding for their most urgent needs, conductingsupervision or training from the current IDA project. During the same year the AfDB declared effectiveits credit and, in 2002, EU has intensified project preparation activities aiming at providing support to thehealth sector by early 2003.

Government Strategy: In the past years (1993-1995) the MOHS strategy was: (a) to rehabilitate healthfacilities using resources pledged by donors, and; (b) to further develop and reform the sector by meansof a sector-wide program (i.e., the NHAP Core program) financed by the GOSL and by MOHS'straditional partners (such as WHO, UNICEF, UNFPA, Saudi Fund for Development, the IslamicDevelopment Bank, the European Union, AfDB and IDA). During this period the Government's overallgoals were to 'improve social conditions and alleviate poverty along with sustained economic growth."In the health sector, the sector policy was translated into a five-year sector-wide program (NHAP)onginally estimated at about US$270 million but downsized to US$138 million (NHAP Core program)after a more realistic analysis of the sector's financing capacity and absorption limitations. The main

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thrusts of the NHAP were to develop a sound health delivery system and to staff it adequately, promoteenvironmental health and communicable disease control, foster community participation, decentralizeservices at district level, improve sector financing; privatize certain services and enhance internationalcollaboration. To this sector-wide program, IDA contributed US$20 million through the IntegratedHealth Sector Investment Project, which was one of the first sector-wide operations in the Region.Starting in 1996, when the war and insecurity worsened, the MOHS aimed to provide expanded healthservices to the increasingly large populations in safe areas (basically the Western Region) with reducedfinancial and material resource. Through 1999 the sector operated on the basis of Quarterly EmergencyPlans, until the regular mechanism (set up in 1995) of reviewing sector performance and planning for thefollowing fiscal year was reinstated. This participatory planning process continued and was improvedduring the October 2000 and 2001 planning sessions and in particular in 2002.

GOSL, taking into account the progress in peace negotiations and the overall improvement of the securitysituation is currently updating the health sector policy. The new policy is two pronged and aims at: (i)re-establishing the provision of health services, and (ii) gradually strengthening the sector capacity todeliver services by decentralizing decision making, re-instating cost-recovery (in a manner that willpreserve the affordability of drugs and services by the poor), and by improving sector management toobtain efficiency gains. The implementation of this new policy would be supported by the proposed IDAgrant.

3. Sector issues to be addressed by the project and strategic choices:

a) Sector issues and choices. The proposed project will address the range of issues faced by the sectorduring the post conflict period, comprising both the restoration of the health delivery system and thestrengthening of public and private health sector capacity. Nonetheless, within these major issues theproject will target very specifically a few priority geographical and public health areas of concern. Forinstance, through the first project component (Restoring essential health services) the project will supportfour priority districts (Bombali, Koinadugu, Kono, Moyamba). Likewise, the project's first componentwill provide support to three priority technical programs (i.e., Malaria, TB, and Sanitation) while theproject's second component (Strengthening Public and Private Sector Capacity) will support five keysupport programs of the MOHS (i.e., Planning, Monitoring and Evaluation, Financial Management,Procurement, Donor & NGO Coordination and Human Resources Development). These choices werebased on criteria such as health needs, timeliness of the interventions, cost-effectiveness, and a potentialpositive impact of health interventions on stability and resettlement of the population of certain districts.Some other important considerations were: (i) the size of the financial gap in some areas or, conversely,the support from another donor (such as WHO and UNICEF in safe motherhood, immunizations andnutrition; EU and ADB in drug procurement, stock management and distribution); (ii) the potential forraising grants for activities such as Onchocerciasis and HIV/AIDS; and (iii) a preoccupation with keepingthe project relatively simple and doable.

Other choices considered were:(a) the development of a project to exclusively support the private or the public health sector (thepreferred option was a project supporting both public and private health providers and thecontracting out of public health services with private providers),(b) the design of a project to provide support using a social fund mechanism versus a project fundingthe public sector and executed by MOHS (the preferred option was not to duplicate the current socialfunds projects, which include also Bank financed projects, but to support these projects byequipping, providing drugs, vaccines, consumables and technical support to the health facilities builtwith social fund assistance),(c) the design of the new project using all the sector-wide features of the rather successful current

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Integrated Health Sector Investment Project (IHSIP). This option was carefully analyzed and, as aresult, the most beneficial features of the IHSIP have been incorporated into the HSRDP design (suchas the annual review, planning and budgeting exercise, the emphasis on decentralization, etc.).However, considerng the need to simplify the project design, to better target the priority areas ofconcem, and to be able to more accurately evaluate outputs and outcomes, the HSRDP was designedas a sector investment operation (with some innovative features).

These choices led to the proposed project design which includes two components and to the lendinginstrument described below.

Section D on "Rationale" and "Project alternatives and reasons for rejection" provide complementaryinformation to this section.

(b) The lending instrument: As mentioned, the current IDA project (IHSIP) was one of the firstsector-wide programs in the Africa Region. The preparation and implementation of this project haveshown that this approach had great advantages for continuously adapting the project to changes in thesector, made donor contributions more purposeful and strengthened the MOHS's capacity to deal withmultiple partners. At the same time, there were also drawbacks, in that the Bank, as the donor of lastresort, was often called on to: (i) fund recurrent expenditures while important investments were chosenwith priority by other donors such as AfDB and EU; and (ni) finance (however thinly) all programs andcould not concentrate on the most essential and more cost effective activities. As a result, the impact onthe health status of both the national sector-wide program and, in particular, of the IDA project provedimpossible to measure accurately.

The relevance of an APL (Adaptable Program Lending) was also discussed. It was felt that such alending instrument would be appropnate, but not before the situation in the country becomes stableenough to allow the development of a sector policy covering a period of 10 years or more and not beforethe sector capacity, including the health management information system, was strengthened to makepossible the monitoring of indicators on sector performance and outcomes.

Based on these considerations an investment operation is being proposed (SIL). Nonetheless, somefeatures of the current sector-wide program have been retained. For instance:

(a) To allocate the resources to activities for the benefit of three of the MOHS priority programs(Malaria, TB and Sanitation) and five MOHS key departments (Planning and Monitoring, HumanResources Development, Financial Management, Procurement, and Donor & NGO Coordination), andmajor investments in rehabilitation of infrastructure and equipment of the four districts selected toreceive IDA support, but also to verify annually the relevance of these allocations through the AnnualReview and Operational Planning process (initiated since the launch of the current sector-wide operation)and, if necessary, make further adjustments, and;(b) To implement the project through the MOHS and without the help of a separate project unit (all thesefeatures are shared with the current sector-wide project).

C. Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

Component 1: Restoring Essential Health Services.This component will: (a) provide assistance to four priority districts to deliver adequate health services

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and (b) support three priority technical programs to improve their performance and control infectiousdiseases of high public health importance in Sierra Leone (i.e., Malaria, TB and Sanitation).

1.1 Restoring health service delivery in four priority districts (Bombali, Koinadugu, Kono,Moyamba). The project will finance equipment, drugs, vaccines, furniture, training and supervisionneeded for the adequate functioning of 50 health posts built with support from the IDA fundedCommunity Reintegration and Rehabilitation Project and from other social fund projects. The projectwill also finance civil works, equipment, rehabilitation and upgrading of water distribution and medicalwaste disposal systems, essential staff quarters, training, communication means and ambulances for 12health centers and four first referral hospitals. Finally, it will provide support to ensure the delivery ofadequate health care and to solve health provider shortages and other human resources issues in theparticipating districts. Particular attention will be paid to health facility waste management and to relatedEEC activities for health providers. As all these activities will be carried out at existing and operatinghealth facilities (and in addition, for the hospitals within the hospital compound) this sub-component willtherefore not necessitate land acquisition and will not cause any resettlement of the population orremoval of squatters.

It is worth mentioning that while maintenance and drug availability (procurement, stock management anddistribution) will be strengthened at the central level with the support of other MOHS's partners (AfDBand EU), IDA will contribute in a concrete manner in the four participating districts, by funding drugs,condoms and other contraceptives, consumables, vaccines, micronutrients and food supplements, spareparts and other non-salary recurrent expenditures. IDA will also rehabilitate and equip district drugstores and train the respective personnel. Likewise, IDA support at central level (see the secondsub-component) will only target some key technical and support programs (and not all of them, as severalhave already obtained assistance from other donors). However, in the four participating districts, IDAwill support, to the extent needed, the delivery of all essential preventive and curative care, thus beingable to contribute to the improvement and expansion of all major public health programs. For instance,because the Reproductive Health Program, including Safe Motherhood and Family Planning, Nutritionand Expanded Program of Immunization are already being supported by VWHO, UNICEF, UNFPA andseveral bilaterals, these programs were not included among the technical programs to receive IDAassistance at central level. However, if and when needed, IDA will support such activities in the fourparticipating districts.

1.2 Support to priority technical programs.The project will provide support to improve the performance of the following programs important for thereduction of three priority public health problems in Sierra Leone:(i) Malaria control activities consistent with the RBM strategy and focusing on the strengthening of casemanagement capacity in public and nongovernmental facilities, the promotion and distribution ofinsecticide-treated bed nets (to be distributed and re-treated with local NGO support), and strengtheningthe capacity for monitoring and supervision;(ii) TB control activities will include establishing/strengthening diagnostic laboratory capacity, trainingof health workers in case detection and appropriate treatment, and logistic support for the implementationof the DOTS strategy;(iii) Sanitation and environmental impact mitigation measures in the four districts supported by theproject. Regarding sanitation, a program of importance for all infectious disease control programs andfor prevention in general, the project will support activities to be contracted out with private providersand advocacy for involving the municipalities in the four districts and communes in waste management(thus redefining the task of the MOHS from a provider of services to contract management andenvironmental monitoring; the ultimate objective of this program will be to transfer sanitation

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responsibilities to municipalities and communes). Regarding environmental impact mitigation theproject will finance (a) medical waste management measures in the 12 health centers and, in particular, inthe four district hospitals to be rehabilitated (incinerators, lined pits, latrines, including support for theirmaintenance and functioning, training of relevant staff and of health providers), (b) TA for an adequateidentification and development of dump sites (which will also include liquid waste disposal) of the fourdistrict capital cities, (c) transportation means for solid waste and (d) supervision and monitoring byenvironmental inspectors of the district health teams of the four districts. The SHARP project will alsosupport environmental impact mitigation in the four districts by financing, among others, training ofhealth providers in medical waste issues and management.

All other priority technical programs of the MOHS will also be supported, to the extent needed, throughHSRDP assistance to the four priority districts (mentioned above under the sub-component 1.1).

Component 2: Strengthening Public and Private Sector Capacity.Under this component the HSRDP will support: (a) in all the districts of the country, the decentralizationprocess by strengthening the District Health Management Teams (DHMT), improving the decisionmaking process, and enhancing capacity for appropriate planning, management, financial managementand supervision; (b) essential sector management functions carried out by five key MOHS units (i.e.,Planning, Monitoring and Evaluation, Financial Management, Procurement, Donor & NGO Coordinationand Human Resources Development) to improve efficiency and improve the administrative performanceat the central level and at the periphery; and (c) initiatives to promote private sector and civil societyparticipation in the health sector and to develop mechanisms to increase the efficiency, ensure the equity,and improve the quality of services provided.

2.1 Promote decentralization and improve the performance of District Health Management Teams.

To support the reforms (currently underway) to decentralize budget management, the project wouldfinance training of district level financial officers and financial support to district operating costs to thequalifying districts (i.e., those meeting the criteria for adequate financial management). HSRDP fundingwill be channeled following an already existing mechanism for funding of operating expenditures in thedistricts established by the IHSIP (i.e., the districts meeting criteria of sound financial management areeligible, the funds ought to be used for unplanned activities for which the public budget is not sufficientsuch as supervision, emergency operations in case of infectious disease out-breaks, etc.). A total ofUS$0.4 million will be spent for the entire duration of the project for this type of funding, thissub-component is expected to greatly assist DHMT to make their own decisions and manage in ahands-on manner problems unforeseen at the planning stage.

2.2 Strengthen the key MOHS support services, i.e., Human resources development (HRD),Planning, monitoring and statistics, Financial management, Procurement and Donor/NGOcoordination. The Project would provide ongoing support for the improvement of staff skill andperformance, and for the implementation of activities of selected key support services of the MOHS.These key support services have been selected on the basis of their importance to improving sectorefficiency, insufficient funding from other sources, and the Borrower's intention to implement the projectusing MOHS's capacity (and not with a PCU).

Planning, monitoring and statistics. The Project would provide operational support to meet thedepartment's needs in equipment, transport, communications, training and technical assistance, andspecific support to: (a) revise and disseminate the national health policy; (b) reinforce the medium-termplanning and operational planning exercises as well as the annual sector review; and (c) strengthen bothroutine health information management and periodic surveys and research. With support from a PHRD

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grant, MOHS has revised the 1993 National Health Policy and adapted it to the current health status ofthe population and the situation in the sector. HSRDP will finance the dissemination and publicdiscussion of the final updated policy. The planning process would be strengthened by: (i) improving thePlanning Department's ability to collect and analyze information on health sector expenditures; (n)revising the planning guidelines to institute a Three-year Rolling Plan and improve the AnnualOperational Planning; and (iii) improving the planning capabilities of the District Health ManagementTeams and would continue to support the organization of the annual sector review. The project wouldalso provide financial support for (i) the improvement of health information systems at central anddistrict-levels; (ii) vital registration, and; (c) the execution of selected surveys and operational research tobe determined annually.

Donor/NGO Coordination. Within the framework of MOHS's intention to develop a new NGO policywith procedures and guidelines for effectively coordinating and monitoring the activities of NGOs, theHSRDP would finance TA, as well as equipment and modest operating costs. The project would alsosupport current work to involve and coordinate donors, technical agencies, financing institutions andinternational and national NGOs and to expand their participation in the decision-making, among others,capitalizing on the opportunity of annual sector review and planning exercises. In addition, the projectwould finance periodic meetings between MOHS and its partners as well as the collection andpublication of the annual inventory of donor and NGO interventions in the health sector.

Human Resources Development. The HSRDP would support a series of actions to strengthen humanresource management and reduce the shortage of health service providers. These actions will be closelycoordinated with and complementary to ongoing efforts by WHO and AfDB and particularly by theproposed EU-financed Health Sector Support Project. Specifically, the project would strengthen theoverall capacity of the Human Resource Department to implement the Government's Public ServiceReform Program, focusing specifically on providing technical and financial support for: (i) personnelmanagement through improved personnel record keeping and (ii) manpower planning throughformulation (and subsequent updating) and implementation of a comprehensive manpower developmentplan. HRSDP will also provide support for strengthening training institutions, introducing specialized orin-service training courses, or other activities as appropriate.

Finance. The HSRDP would provide TA and overall operational support for the Finance Department toimprove its performance, carry out its tasks related to the FM of the IDA project and effect improvementsin financial management and control. In addition, the Department will receive assistance to computerizefinancial management operations; complete installation of a system acceptable to the Bank, and trainstaff.

Procurement. To enhance the capabilities of the Procurement Unit of MOHS, the project would: (a)strengthen existing systems and procedures for procurement planning and implementation; and (b) extendthese methods for use in carrying out procurement with GOSL funds. To ensure the continueddevelopment of the Procurement Unit of MOHS, the project would finance TA (procurement andarchitect) and would support additional short-term training and improved working conditions for existingstaff (i.e., furniture, equipment and operating costs).

2.3 Promote development of the private sector and civil society participation in the health sector.The project would support initiatives in the following areas of particular importance to the MOHS:

Public sector/Private sector consultation and development of regulation to foster quality andparticipation. The project would finance consultations with the private Medical, Dental and

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Pharmaceutical Associations and meetings with the Traditional Medicine Association to discuss ways forstrengthening collaboration and registration and accreditation practices (and other measures to improvequality). Further to these consultations the project will support the issuance of regulation to promotequality of services, control tariffs and encourage the development of private health services and theinvolvement of pnvate providers in the solving of public health issues.

Contracting out. Contracting out of clinical and non-clinical services with the private sector is alreadyenvisaged by HSRDP in areas such as impregnated bed-nets, IEC services, and solid-waste collection bycomnmunities. Substantial financial support to contract out services has also been foreseen under theHSRDP Component 1, but additional support could be made available in case of insufficient funding.The project would also finance a study on contracting out other selected public services (clinical ornon-clinical), including drug procurement and distnbution, laboratory services, and laundry.

Incentives for private providers of health services. Given the importance of attracting the return ofreligious and other NGOs to develop and discharge hospital services and equitable cost recoveryarrangements (i.e., protecting the access to services of the poor individuals) in the under-servedgeographical areas, the project would finance specific incentives, which might include the provision of adrug stock to cover the needs of the respective facility for one year.

Support to the District Health Development Committees. To encourage the establishment andfunctioning of committees (at district and health facility levels) for involving the population, political andreligious leaders and, more generally, the civil society in the decision making on health matters, theHSRDP would provide financial resources for their operations. While the emphasis would be on the fourIDA-financed districts, the project would provide support to the PHC program of the MOHS to financesimilar activities in the remaining districts. These efforts to increase the involvement of the users ofservices and the civil society in the decisions made in the health sector will be synchronized with MOHSwork to regulate cost-recovery and will include mechanisms to protect vulnerable populations. HSRDPwould finance: (a) a feasibility study (to be carried out with consultant assistance and with theparticipation of MOHS and district staff) of approaches for establishing local financing mechanisms; (b)testing and consensus-building concerning these possible approaches (either by MOHS or through anNGO partner); and (c) preparation of the guidelines to establish such a system. An equity fund to pay forthe delivery of services for the benefit of the poor population in one of the facilities rehabilitated withHSRDP support will be tested. The project will also consider, at the time of the mid-term review,establishing two prepayment arrangements on an experimental basis to finance health care for thepopulation of one small urban and one rural community and test their feasibility (in economic terms andfrom an equity perspective).

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Indicative .. Bank- A° of-Cornponi '' Costs - - 6, of financiing -'Barik- -

. -, i.¢ : ~ - - -(US$Mj)...... T.oS:6 - (US$M) -:financlngRestoring Essential Health Services 15.02 71.5 14.24 71.2

Restonng health service delivery in priority districts 0.0 0.0Support to priority technical programs 0.0 0.0

Strengthening Public and Private Sector Capacity 5.98 28.5 5.76 28.8Promote decentralization and improve performance of 0.0 0.0DHMT

Strengthen the key MOHS support services 0.0 0.0Promote development of the private sector and civil 0.0 0.0society participation in the health sector

Total Project Costs 21.00 100.0 20.00 100.0Total Financing Required 21.00 100.0 20.00 100.0

2. Key policy and institutional reforms supported by the project:

The MOHS is currently updating the health sector policy to include both mid-term developmentobjectives and shorter term activities to restore the delivery of affordable and good quality primary healthservices. A greater role for NGOs, the private sector and civil society is envisaged. Other more specificreforms will aim inter alia at: (i) ensuring the quality of private services and promoting private sectordevelopment; (ii) human resource development including incentives for good performance and for workin difficult regions; (iii) decentralization to strengthen district teams' decision-making capacity andinvolve the users of services in the decision-making process in health facilities, and; (iv) cost-recoveryregulation including specific measures to ensure the affordability of services for the poor population.

With DFID funding, the Government is conducting management and functional reviews of four keyministries, including MOHS. Their recent (September 2002) report for MOHS provides more than fortyrecommendations encompassing a range of concerns including: development of legislation andregulation, reorientation of the ministry's roles and responsibilities, reorganization of the ministry'sfunctional units, and specific improvements for each of the units. The recommendations are sound andproposed HSRDP activities will provide financial and technical support to MOHS for their eventualimplementation.

3. Benefits and target population:

The entire population of one of the poorest countries in the world is expected to benefit. The indigentpopulation is expected to benefit comparatively more than the general population of the country becauseof the revision of the cost recovery arrangements to include specific measures to protect the affordabilityof services for the under-served groups, the financing of strategies such as primary health care andprevention offering a comparative advantage to the poor and the support to programs with largeexternalities such as Malaria, TB and Sanitation. Since the project will not support the rehabilitation ofinfrastructure in the capital city and will focus on mid-size rural districts, it is expected that the ruralpopulation will also benefit comparatively more than the urban inhabitants. Also, by promotingdecentralization of decision-making, the project will make the health delivery system more responsive tothe needs of these populations.

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4. Institutional and implementation arrangements:

The capacity created in the MOHS by the IHSIP project (in terms of planning, financial management andprocurement) proved to be a good investment. Using this capacity the MOHS succeeded inimplementing the previous credit satisfactorily in spite of the difficult conditions that prevailed in thecountry from 1995 to 2001. It is, therefore, proposed to continue strengthening MOHS capacity and useit to implement the proposed project without setting up a separate project unit. See also section E 4.1 and4.2 below on Institutional issues and the PIP.

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

Besides the alternatives described in section B3, the following project alternatives were discussed withthe borrower:

(a) The design of a project with a broader scope to provide support to the sector as a whole. Such aproject would support the entire service delivery system, including funding for overall sector reform (forwhich the Borrower has expressed interest) and for specific areas such as tertiary care, the central drugprocurement and maintenance services, quality assurance, and operational research. This alternative wasrejected due to: (i) the fact that more time is needed to strengthen donor coordination on the basis of asound sector strategy; and (ii) the need for the sector to solve its acute problems (with primary and firstreferral services, with personnel, and with the lack of reliable quantified information) before addressingthe relatively lower investment priorities of tertiary care, quality assurance, and operational research.Nonetheless, in the project's four districts the proposed project will finance drugs, vaccines,micronutrients and food supplements, contraceptives and maintenance services; it will also contribute toquality assurance by means of training and supervision, and through measures to motivate healthproviders. Similarly, the proposed project will help update the health sector policy and will support somereform activities to further decentralize decision making, strengthen the private sector, review costrecovery, propose measures to protect the affordability of services for the underserved, and involve theusers of services and the civil society in decision-making in the health sector.

(b) The design of a project relying exclusively on the private for-profit sector. Such an alternative wasrejected after thorough analysis because of the weak development of the private for-profit health sector inSierra Leone (practically nonexistent beyond the capital city), the magnitude of the public health issues,and the extreme poverty of the population. Instead, the project proposes (in its second component)regulation to foster private sector development, quality and affordability of care, and to expand"contracting" arrangements to obtain best returns on expenditures. It will also promote the return ofreligious NGOs (which previously provided good quality services, sustainable cost-recoveryarrangements, and adequate services for the poor). With support from the project, cost-recoverypractices will be reviewed and measures to protect affordability of services and drugs developed.

(c) The design of a modest, initial project to primarily address data and capacity issues followed (uponcompletion) by a larger investment. While such an option is appealing (as it would minimize risks), itwas felt that sufficient information already exists to allow investment to begin in some areas (withaccompanying support from the project for data collection and capacity-building). For instance, districthospital rehabilitation is an unequivocal priority as the sites are known and the need for investment isclear (e.g., to receive referred patients from and to provide technical support to health posts and healthcenters). Further, health center rehabilitation in the most important chiefdorns of the four participatingdistricts is also feasible since site selection can be determined during preparation using well-definedcriteria (such as population in the catchment area, accessibility to referral facilities, number of health

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posts supervised, etc.). Finally, efforts to resolve personnel shortages and to mitigate the effects ofdiseases such as malana and TB are also unquestionable and urgent priorities. While these priorities arebeing addressed, the project could also initiate more in-depth analysis, such as the mapping of healthfacilities and the development of an infrastructure development plan, a human resources policy, etc.

2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).

Latest SupervisionSector Issue Project (PSR) Ratings

(Bank-financed projects only)Implementation Development

Bank-financed Progress (IP) Objective (DO)

HNP Integrated Health Sector S SInvestment Project

Social Protection Community Reintegration & S SRehabilitation Project

Social Protection National Social Action Project(LEN)

HIV/AIDS HIV/AIDS Multi-sectoral S SResponse Project

Education Rehabilitation of BasicEducation (LEN)

Other development agenciesUNICEF EPI, Safe Motherhood, District

Health Care, NutritionWHO National Health Policies and

Program Management, Org.and Manag. of Health Systemsof PHC, Child and AdolescentHealth Development, Essentialdrugs and other medicines,Extemal Cooperation andPartnership, Repro. Health andPartnership, Protection ofHuman Development,Communicable diseasessurveillance and response,disease prevention and control,Nutrition for health anddevelopment, Blood Safety andClinical Technology, HealthPromotion, Health InformationManagement andDissemination

SAPA (Social Action and Poverty Health Services RehabilitationAlleviation) and ReconstructionNCRRR (ERSF Support) Health Sector Support (CW)

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ADB Health Services RehabilitationEU Support to the health sectorIDB Rehab., reconstr., equip and

provide drugs for 20 PHUsGLRA (German Leprosy Relief National Leprosy / TB ControlProgram) ., ProgramEC/SL Resettlement and Rehabilitation Health Sector Support ProjectProgramMSF (Belgium, France, Holland) Emergency support to PHU's

and district hospitals

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

The current project (IHSIP) as well as the first IDA credit to the health sector in Sierra Leone (HealthServices Development Project) helped identify a number of positive features such as: the sector's abilityto develop a transparent program; the increasingly satisfactory level of performance in planning,financial management and procurement; and the sector's willingness to collaborate with NGOs. At thesame time, the sector was less successful in implementing technical programs and in decentralizingdecision making; this was due not only to difficulties linked to the war and instability but also toconflicting donor policies (e.g., reproductive health and mother/child health), insufficient capacity to leadthese programs, and delays in public sector reforms (such as decentralization, computenzation offinancial management in the public sector, simplification of procurement operations which involve theCentral Tender Board in the approval process of minor transactions, etc.) which have hindereddevelopments in the health sector. Based on these lessons, HSRDP is proposing to capitalize on capacityalready developed in the MOHS to implement the project without creating a Project ImplementationUnit. Moreover, to avoid the above mentioned drawbacks, project preparation has been carried out withthe full participation of other donors, and the Borrower has agreed to evaluate bids using the MOHStender board (which will include representation from the Central Tender Board).

The analysis of the experience in implementing technical programs led to other project features such asan emphasis on.NGOs for social marketing of impregnated bed-nets and condoms, more attention tocontracting out activities (clinical and non-clinical) with the private for-profit and not-for-profit sector,increased preoccupation with demand raising activities (in particular for bed-nets).

The most successful feature of the IHSIP project (i.e., its capacity to plan taking into account changes inhealth status and in the overall situation in the country by using a participatory annual review andplanning process) was also included in the proposed project's design. While the HSRDP resources werefully allocated during project preparation, implementation arrangements include the possibility ofquestioning the pertinence of these allocations annually and of making adjustments during the annualparticipatory program review and planning process.

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4. Indications of recipient comiitment and ownership

The Government of Sierra Leone has been undertaking reforms and attempting to rehabilitate the healthsector since 1986. Especially during the last ten years the reform process has been carried out in aparticipatory manner and has included representation of all stakeholders: district, central levels, donorsand NGOs. Previous experience with the Borrower has convincingly demonstrated its commnitment to thesocial sectors and to health in particular. Regarding the proposed project (seen by the Borrower as anessential means for resuming the most vital functions of the health service delivery system and furtherdeveloping the sector), the Borrower has clearly committed itself to review and update the health sectorpolicy, has substantially contributed to the project design, and is participating in the project preparationactivities by handling 2/3 of the activities financed from the PHRD Grant received for projectpreparation.

5. Value added of Bank support in this project:

The Bank's contnbution to the health sector in Sierra Leone is much praised by the Borrower and itsdevelopment partners. Besides the Bank support during the war, the Bank has uniquely contributed tosector policy formulation, sector planning, and capacity-building at both MOHS and decentralized levels.Very importantly, the Transitional Support Strategy for Sierra Leone defines clearly the Bank support tothis country and also makes projections on the economic growth in the years to come. The proposedproject would allow this assistance to continue and to grow. It would also contribute to povertyreduction in Sierra Leone through HSRDP focus on the poor and under-served populations. IDA fundingwould complement other donors' funding to the programs dealing with major public health problems andof a greater benefit to the poor population such as PHC, malaria, TB, and sanitation. The HSRDP wouldalso help achieve some of the reform and development objectives of the IHSIP project (as mentioned,IHSIP was restructured to better respond to the crisis situation in the sector and could not achieve someof its initial objectives as for instance to develop health services outside the Western Region and tosubstantially contribute to the reform process).

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):O Cost benefit NPV=US$ million; ERR = % (see Annex 4)0 Cost effectivenessi Other (specify)Given that: (a) the proposed project will only invest in programmatic areas with well-documented costeffectiveness ratios (such as primary health care and first referral health facilities, human resourcesdevelopment, support to programs addressing important infectious disease epidemics e.g., Malaria andTB); (b) empirical data from Sierra Leone to further explore the soundness of such spending are notavailable, and; (c) Annex 7 of the Staff Appraisal Report of the IHSIP (credit 2827-SL) has alreadypresented analysis on the cost effectiveness of this type of interventions, it was agreed that an economicanalysis of this new project would not be required.

Instead a health sector Public Expenditure Review was carried out during project preparation. On theone hand, the PER suggests that: (i) the ratio between salaries and non-salary expenditures comparesfavorably with most other West African countries; and (ii) expenditures for the most cost effectiveprograms with large externalities such as PHC, infectious diseases control, and sanitation and preventionin general were significant and compare well with other expenditures for secondary and tertiary care. Onthe other hand, it shows that recent expenditures in the sector financed by the public budget and IDAwere very modest. MOHS' recurrent non-salary expenditures as a share of the Government's total

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non-salary budget increased from 4.8% in 1999 to 7.1% in 2001, a proportion that remains low (and isprojected to decline over the period 2002-2004). In addition, the PER showed that, understandably,insufficient resources had been channeled to the districts and that little was known in regard to theexpenditures made by NGOs and donors. As a result of these findings it was agreed with the Borrower toregularly monitor expenditures during the annual review meetings against benchmarks established by thePER and consistent with the sector policy.

It was also recognized that until economic development takes off, the funding of the health sector willlargely depend upon donor funding and that the present project will not be sustainable until there issubstantial macroeconomic development and increase in revenues.

Cost effectiveness considerations:This project's main thrusts are:

(a) the prevention and management of two major conditions that represent major economuc burdens inSub-Sahara Africa in general and in Sierra Leone: malaria and tuberculosis. The economuc burden hastwo major dimensions: (i) low productivity of the workforce affected; and (ii) the continuing cost oftreatment due to the lack of complementary efforts in cost-effective prevention.

The methods of prevention to be used in this project have favorable cost-effectiveness ratios documentedby the Bank. Secondary prevention - an efficient complement - is also part of the program. There are nodata that can be used to measure the precise disease burden of Sierra Leone or to assess cost-benefit inthe Sierra Leone context but there is ample literature documenting the cost effectiveness ratios of: theRoll Back Malana strategy and the DOTS strategy to curb TB.

Moreover, a recent survey conducted by the Central Statistics Office of Sierra Leone points to theparamount role played by malaria in the disease burden of Sierra Leone. This disease has a significantimpact on the productivity of food-growing workers in rural areas, a major economic issue infood-importing Sierra Leone.

Diarrheal diseases also contribute significantly to the disease burden of Sierra Leone. There are relatedeconomic losses due to the impairment of human capital through poor nutrition and related lesserintellectual and physical development of children. The project through the support of cost-effectivesanitation will diminish the economic burden posed by these conditions.

(b) the improvement of basic-health services in four districts that are among the poorest in Sierra Leone.The services supported by the project are those designated by the Bank as a cost-effective package forlow-income countries. This basic package should reduce the burden of disease in the four selecteddistricts and through it improve food production and other economic activities.

(c) the strenetheninz of the capacity of MOHS to manage the existing health system by making moreefficient use of resources in the public and private sector. It also supports enhancements in ability toallocate and distnbute resources to proven cost-effective services and to districts where resources arelikely to get the highest retums per dollar (Leone) spent. Further, the project aims to foster theprocurement and financial capacity of MOHS that will address bottlenecks and delays in securing serviceproduction from investments made.

(d) the mitigation of existing productivity issues in a number of areas that, according to the PER, needimmediate attention. This includes better financial management that will ensure more efficient use ofcapital through a greater balance between capital and operating expenses. In view of the improving but

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still poor fiscal capacity of the country, the project will make a contribution by ensuring a level ofoperating expenses commensurate to the capital expenditure being undertaken by the project. Theproposed decentralization of decision making to district level and improved financial management at thislevel should also improve efficiency in operations and fiscal accountability. In addition, the civil worksactivities generated by the project should increase much needed employment and have a positivemultiplier effect on the economy.

2. Financial (see Annex 4 and Annex 5):NPV=US$ mullion; FRR = % (see Annex 4)Financial issues such as fees for health services and recovery of the costs of drugs, measures for ensuringfinancial accountability and management of funds generated from cost recovery will only be addressedduring project implementation, although some studies and the revision of the sector policy have beencamed out durnng project preparation.

External audit reports and financial management analysis of the ongoing project implemented by theMOHS have been unqualified; a project-specific financial management assessment was performed atPre-Appraisal; and the Bank is planning to conduct a Country Financial Accountability Assessment inSierra Leone. Finally, based on these findings and using funding from a PPF and from the grant itself(through the HSRDP second component on capacity building), all key MOHS departments (including thefinancial one) and all district health teams will be strengthened.

Fiscal Impact:

A number of features of the project should have a beneficial impact on employment and workerproductivity leading to potential increases in government revenue. The PER also identified somepotential revenue sources that could be tapped to improve revenues and the fiscal balance. These includea more systematic and equitable approach to fees for services and charges for drugs that currentlycomprise rather arbitrary measures.

The project requires about US$1 million in counterpart funds over the five-year period of the project.This represents about a 2% annual increment of MOHS current and capital expenditure funded fromdomestic sources during 2001. Therefore, it will not impose a substantial additional burden on theGovernment's fiscal situation. However, there are some generic fiscal aspects that require attention.Some aspects of the project will have to rely on public infrastructure that is currently inadequatelyfinanced. Therefore, during negotiations this issue will be openly discussed to ensure that Governmentpolicy of improving the budgetary situation of MOHS is reflected by the adequate and timely allocationof funds to MOHS. The PER pointed to the need for increments in MOHS current expenditurecomrnensurate with investments being made. Although the project has made provision for operatingexpenses in relation to most of the investments being made, the future sustainability of the facilitiesbeing funded by the project remains an open question. The Bank's macroeconomic dialogue with theGovernment will be addressing this issue towards which HPIC/PRSP funds could also have a positivecontribution.

3. Technical:The project technical design is consistent with best practice examples from similar countries inpost-conflict situations. The project will only fund activities with well-known cost effectiveness ratios.In order not to delay IDA support to the sector and to respond to Borrower's immediate needs, thetechnical design includes data collection activities and studies which, under more normal conditions,would had been performed at the preparation stage. This was deemed necessary for the reasonsmentioned above but also because of cost and human resources considerations.

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4. Institutional:

4.1 Executing agencies:

The MOHS will be the overall executing agency of the grant. Some activities will be executed by NGOsas the project will encourage contracting out of public services to pnvate not-for-profit providers willsupport district health teams and MOHS selected technical programs and key management/administrativeservices. These programs and services will implement the activities financed by HSRDP under thecoordination of the Planning department and the direction of the Director General of Medical Services.

4.2 Project management:

The project has been prepared by the Borrower with financial support from a PHRD Grant from theJapanese Government and a Project Preparation Facility. The MOHS has appointed a focal point and aproject preparation team. During project preparation, and especially during the project's first years,important capacity-building activities will be carried out. At the preparation stage technical assistancewas provided for the following studies: (a) Health Sector Priority Issues and Strategic Approaches; (b)Social Assessment; (c) Project Implementation Plan/Operational Manual; (d) Environmental Assessment;(e) Public Expenditures Review for the Health Sector; (f) Health Facility Inventory; (g) HumanResources Assessment; (h) Update of the Health Sector Policy, and; (i) National and Distnct HealthPlans and a Three-Year-Rolling Plan. As mentioned, HSRDP will be implemented without appointing aPCU following the same arrangement used for the IHSIP project. This includes the appointment of: (a)the Director General of Medical Services as HSRDP project director and (b) the Director of Planning asHSRDP Project coordinator, (c) the use of the existing "Top Management Team" as a mechanism tocoordinate the activities carried out by the units reporting to the Director General of ManagementServices (Permanent Secretary) such as Financial Management, Procurement and Internal Audit, with theones carried out by the units reporting to the Director General of Medical Services (such as the technicalprograms and the District health Teams), (d) the use of the Annual Review and Planning process and (e)regular project reporting and supervision (the latter with the participation of MOHS units, distncts andrelevant internal and external partners). In addition, important strengthening of the support departmentsinvolved in HSRDP management is planned under the second component of the project. This includesthe use of TA (locally recruited for longer assignments) in case of failure to fill essential posts (inparticular in areas such as planning, procurement, financial management, human resources development)with civil servants. Monitonng and evaluation indicators (see Annex 1 and the PIP) have been designedand MOHS capacity in this area will be strengthened. A very important project design feature is theHSRDP built-in flexibility, using the Annual Review and Operational Planning exercise (during theseexercises MOH together with external partners and stake holders will take stock of progress in the sector,review the relevance of HSRDP funded activities for the next year, adjust activities as needed (and takingdue account of the HSRDP development objectives), and include IDA funded activities into therespective Sector Annual Operational Plan). PAD section B 1 on Strategic context describes three agreedTSS scenarios stating how a deterioration of the political environment, conflict and instability wouldaffect Bank operations in general and the HSRDP implementation, in particular.

4.3 Procurement issues:

Procurement issues will be handled by the MOHS procurement unit (established in 1996 under theIDA-financed IHSIP project). This unit's capacity will be further strengthened. Among projectnegotiations conditionalities were Borrower's agreement to using the MOHS Tender Board to speed upthe evaluation and contract award process. The last Country Procurement Assessment dates back to1985.

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4.4 Financial management issues:

As mentioned, the performance of the Finance Department of the MOHS (strengthened with supportfrom the current project) had been assessed as satisfactory by the external auditor and Bank supervisionmissions. This capacity was reassessed at the Pre-Appraisal and was judged adequate. The onlypotential financial management issue known at this stage is the award of funds to support eligibleunplanned activities to be developed by District health teams. Adequate financial management capacityin districts (such as the presence of a trained accountant and the possibility to open an account in aprivate Bank) would be a condition for disbursement of such funds under the proposed grant.

Funding resources for the project consist of an IDA Grant of US$20.0 million. In addition, theGovernment will make available about US$1 million in counterpart funds. The MOHS has theaccounting system documented in a recently updated manual, trained and experienced accounting staff,adequate reporting systems and auditing arrangements and have previous experience in managing Bankfunded projects. The MOHS has also committed to automate the preparation of the FMRs under theproject through the use of a reliable and robust accounting software. There are no outstanding audits oraudit issues.

5. Environmental: Environmental Category: B (Partial Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

The Environmental Assessment has established that there are no significant environmental issues and thatpotential impacts will be manageable. The overall environmental impact is expected to be favorable asthe project will finance a sanitation component and activities to mitigate a possible environmental impactof medical waste of the health facilities to be rehabilitated with financial support from the project. Thiswill include building of incinerators and lined pits within hospital compounds for health-facility waste,rehabilitation of essential staff quarters and of latrines and water supply systems; existing water wellswithin the hospital compounds will be deepened to increase current yields. The sanitation componentwill finance contracts with local providers to collect and transport solid waste in the four district capitalcities and also, transportation means, TA for adequate dump sites identification and the development ofdump sites for solid and liquid waste disposal, and also staff training (in collaboration with the SHARPproject) and IEC activities in communities. The project will not finance insecticides and/or larvicides(but will help strengthen malaria control by expanding the use of impregnated bed nets).

5.2 What are the main features of the EMP and are they adequate?

The environmental impact assessment conducted for the HSRDP identified potential environmentalissues and included an environmental management plan (EMP) to control/mitigate any environmentalnegative impact in the proposed project. The HSRDP will finance environmental impact mitigationactivities needed as a result of its component 1 (i.e., (a) Medical waste management in the facilities to berehabilitated with HSRDP support in the four participating districts and (b) Solid waste management inthe district capital cities of the four participating districts). Thus, the environmental mitigation activitiessupported by HSRDP would consist of: US$226,000 for supporting dumpsites development bymunicipalities (plus US$10,000 equivalent from community participation to each of the 4 dumpsites) inthe four district capital cities; US$40,000 for making incinerators and lined pits in the facilities to berehabilitated of the same districts; US$25,000 for TA to advise municipalities on dumpsites identificationand development and on other environmental issues, training on operating and maintenance ofincinerators; US$19,000 to contribute towards the operating cost of monitoring and supervision activitiesby environmental inspectors in 4 districts; US$20,000 to support to empty septic tanks and lined pits infour district hospitals US$20,000 (or a total amount of US$350,000 (additionally 40,000 will be provided

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by community participation)). The SHARP project will also contribute, as it will finance the training ofenvironmental inspectors and health providers of the four districts in medical waste management.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: November 1, 2002

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describemechanisms of consultation that were used and which groups were consulted?

The District Health Management Teamns of Moyamba, Bombali, Koinadugu and Kono districts incollaboration with Regional Environmental Officers based in Kenema in the east and Port Loko in thenorth respectively facilitated consultations with communities in the Moyamba, Koinadugu, Bombali andKono districts. Structured questionnaires were used to obtain information for the environmental analysis.

The team conducting the Environmental Analysis visited the headquarter town of Moyamba, Koinadugu,Bombali and Kono plus each of the three rural communities (sites for community health centers) in eachof the target distncts. The EA team presented the project and described the potential adverse andbeneficial effects. It was stressed that the objective of the meeting was to inform and gather informationand that participants should feel free to come forward with their concerns so that they can be integratedin the EA report. General discussions were concluded with "Question and Answer" sessions to clanfyand note the respective issues and concerns.

Analysis of responses to the administered questionnaires showed that:1. An appreciable number of those interviewed in the vanous districts expressed the desire to seethe strengthening of their local capacities to handle environmental mitigation plans and activities.2. The perceptions on environmental impacts of the project amongst the interviewed varied slightly.The majority view seems to be that the project poses little or no threat to the environment. Therewere those who agreed that some degree of environmental degradation is associated with the project,however they were of the view that these impacts are manageable.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

A monitoring plan has been prepared as part of the Environmental Assessment. The monitonngindicators reflect the objectives of the Environmental Management Plan. Institutional arrangements andcost estimates for implementation of the monitoring plan are included in the plan.

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

With PHRD grant resources, a social assessment was carned out during project preparation. The socialassessment highlighted a range of issues constraining health care in the country and recommended thatgovernment make a concerted effort to ensure that health care is provided to all citizens by increasingcommunity participation and involvement to ensure that the care provided uses appropnate technologyand is acceptable, accessible and affordable. Equally important is the availability of: sufficientlyqualified, committed and accountable health care personnel working under favorable conditions;adequate supplies of essential drugs of acceptable quality and available to all who need them; andmeasures to ensure provision of basic health services to the most vulnerable and needy groups.

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The project aims at improving health outcomes with an emphasis on the underserved groups (i.e.low-income groups and women in the districts affected until very recently by war). This will be carriedout through a set of strategies that will protect the accessibility to health services of the lowest incomegroups; the proposed project will support: development of health facilities in rural areas; andimplementation of strategies offering a comparative advantage to the underserved such as prevention,primary health care, control of infectious diseases and reproductive health. Moreover, and veryimportantly, the project will: (a) assess cost recovery arrangements and fees for services and drugs, (b)promote regulation that will exempt preventive services and protect the accessibility to services of thepoor population, (c) support the establishment of risk sharing schemes, and (d) establish mechanisms forfunding (e.g., from equity funds premiums) the costs of fees and/or drugs for low-income groups.Increased utilization of health services by low-income groups and women will be measured by indicatorsdealing with the utilization of outpatient services, utilization of hospital services and patient satisfaction.A future DHS will be designed to allow the breakdown of data per income groups.

6.2 Participatory Approach: How are key stakeholders participating in the project?

The MOHS has already established a large participatory review and planning process which includesdistrict personnel, donors, international and local NGOs. This process will continue in the future andwill be used to reach agreement on the new project and also to assess its performance and allocate fundsduring project implementation.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

See point 6.2 also. Dunng and immediately after the conflict, intemational and local NGOs haveprovided health services in districts not accessible to donors and to Govemment. While the public sectorinitially doubted the quality of NGO services, this perception has rapidly changed. The MOHS hasestablished a unit in charge with donor and NGO coordination and is executing some of the activities(e.g., condom and bed-net distribution) contracting out with NGOs and the private sector. Overall, theMOHS procedures are transparent and well shared with a large array of stakeholders. The HSRDP willsupport the MOHS Donor/NGO coordination unit, will help involve NGOs in the annual sector reviewand planning exercise and in decision making, and will finance activities to be contracted out with NGOsand for-profit service providers. Similarly, the project will help strengthen the participation of the usersof services and of the civil society in health facility management and policy decisions in the healthsector.

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

Routine project supervision and annual project review and planning sessions will be carried out by theMOHS (especially by the Planning, Monitoring and Statistics unit, the Primary Health Care Unit, theDistrict Health Management Teams and the Donor and NGO liaison unit) and will be used to monitor theprogress in the achievement of social development outcomes. A DHS scheduled to take place in 2003will be designed to allow the breakdown of data per income groups. The following DHS, probablytaking place only in 2008, will also provide useful information (although, probably, too late to be used inthe proposed project's ICR). The DHMT and health committees in the four districts supported by theproject will also involve the users of services and of the civil society in decision-making at health facilitylevel (such users should include women) and the decentralization of decision-making to district teams (aprocess which will increase the participation of religious and political leaders and of the civil society ingeneral in decisions relevant to the health sector).

6.5 How will the project monitor performnance in terms of social development outcomes?

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Available data do not allow the monitoring of health outcomes and of the mobility of the populationduring the last years, instead, project performance will be monitored using input and output indicators.Should reliable baseline data on health outcomes per income and/or gender groups become available, theindicators to be derived from these data will be included among the project's performance indicators.

7. Safeguard Policies:7.1 Are any of the following safeguard policies triggered by the pr ect?

m,--' -17. so Triggered, - -

Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) S Yes (7No

Natural Habitats (OP 4.04, BP 4:04, GP 4.04) (U Yes * No

Forestry (OP 4.36, GP 4.36) (9 Yes * No

Pest Management (OP 4.09) (9 Yes S No

Cultural Property (OPN 11.03) (U) Yes * NoIndigenous Peoples (OD 4.20) (U) Yes O No

Involuntary Resettlement (OPIBP 4.12) _I Yes (U) No

Safety of Dams (OP 4.37, BP 4.37) (U) Yes _No

Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) Yes No

Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* ( Yes * No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

To ensure compliance with the applicable safeguard policies, an environmental analysis has been camedout (see paragraphs 5.1 to 5.5 over) and a Resettlement Policy Framework has been prepared.

Involuntary Resettlement: The HSRDP includes a sanitation component that will finance contractswith local providers to collect and transport solid waste in the four districts selected as well as thedevelopment of dumpsites. The supported dumpsite development is small in scale and is expected tocause little or no significant adverse impacts. Nonetheless, since all sites have not yet been identified,experience shows that such activities sometimes do cause loss of land or loss of access to other resources.Therefore, any land acquisition associated with dumpsite development will be undertaken in accordancewith an agreed Framework for Land Acquisition Policy and Procedures. The Framework defines termsand provides guidance for involuntary acquisition of land or other assets (including restrictions on assetuse), and establishes principles and procedures to be followed to ensure equitable treatment for, andrehabilitation of, any persons adversely affected. The Framework was disclosed in Freetown onNovember 7, 2002.

F. Sustainability and Risks

1. Sustainability:

The sustainability of the HSRDP is linked to the success of the Government's implementation of itsrecovery and reform program, within a sound macro-economic framework. The PER listed a number ofissues which must be addressed to ensure sustainability of the health care system in the longer term andwhich are of relevance for the sustainability of the project. Services cannot be delivered withoutadequate numbers of trained and motivated personnel, either in the public and private, and this implies alarger capacity to train and adequate current expenditures to pay personnel. Proposed budgetaryallocations show imbalances between present' capital expenditure (mostly external sources) and futureoperating expenditures from domestic sources. In the medium term there will be need to overcomecurrent dependence on external funds through increased domestic revenues.

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At this time, there are still districts in which Government control has only recently been restored and inwhich electricity, telephone and other communication, transport and banking facilities do not operatefully. While recent macroeconomic projections predict growth of more than 5% for the next few years,the projected increases in revenue seem rather modest. In other words, until this situation is changed, inSierra Leone more than in other developing countries, the funding of the health sector will be highlydependent on external sources. Therefore, within the limits of prudent fiscal management, as themacroeconomic situation improves, there is urgent need to (a) increase the share of the budget allocationto the health sector to reasonable levels and also (b) seek domestic sources of funds that will ensure thefuture sustainability of the health delivery system with a lower dependence on external sources. Theseissues ought to be one of the priorities in the Bank's dialogue with the Government (including the PRSPdialogue).

Nonetheless, reforms of the public health system supported by the project will improve performance andmake the public sector more credible to consumers of services. They will also promote efficiency in theprovision of more effective and relevant services. Improvements in the country's economic situationshould also enhance the capacity to pay for services of greater relevance and quality. These conditionsshould increase the potential for revenue collections from fees for services and charge for drugs suppliedprovided that appropnate financial management at local level is improved.

While the above is likely to happen in the midium term, immediate prospects are less clear as thepopulation is generally poor and the underserved groups, in particular in the distncts supported byHSRDP, are numerous. For this reason, the project has included measures not only to improve sectorfinancing and efficiency but also to reinstate cost recovery with appropriate safeguards to assureaffordability of services for the underserved groups.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):

Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveUnstable political situation S Sound demobilization process, successful

peace negotiation, democratic electionsWeak capacity to implement sector S The project includes a first phase supportingreform with priority capacity building and data

collection to enable the implementation of thereform

Insufficient political determination to M The Bank and other donors will pursueeffect the decentralization policy. decentralization in public sector in general.

The health sector work with district teams willbe supported. Civil society involvement willbe increased.

From Components to OutputsImplementation capacity will remain S Capacity building will be one of the majorweak and donor programs will not be thrusts of the Bank policy. Programs of allwell coordinated partners will be annually reviewed and will be

planned in a transparent manner to insureconsistency with policy objectives of the healthsector. The NGO coordination unit of theMOHS will be strengthened to also encompass

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Donor programs coordination. The planningunit will work more closely with the externalpartners and the financial department will beinvolved in the monitoring of donor's financialinputs.

Some districts will remain unstable and S The project will expand activities to allinvestment and provider re-deployment districts in parallel with the improvement of thewill not be feasible. situation. NGOs will be encouraged to assist in

less safe zones. Agreements will be reached toallow critical interventions (such asimmunizations) in areas without Governmentalcontrol.

Human resources development will not S Human resources development will be pursuedbe paced adequately and health facilities in all the sectors and will become a policywill be rehabilitated and equipped but priority for the public sector. In the healthwill not be properly staffed. sector, all donors will be mobilized and human

resources planning will be harmonized withinfrastructure planning.

Budget allocation to the health sector will S Government will pursue macroeconomicremain insignificant and donor "fatigue" objectives and more resources will be mademight diminish TA and other donor/NGO available to the social sectors from debtsupport received by the sector. relief/PRSP operations.

Overall Risk Rating s

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects:

None.

G. Main Loan Conditions

1. Effectiveness Condition

(a) Counterpart funding covering the first quarter of the project and equivalent to US$25,000 is depositedin the account established for this purpose.(b) The Borrower has selected an independent Auditor.

2. Other [classify according to covenant types used in the Legal Agreements.]

Conditions for Negotiations were met. They included:(a) The Borrower has agreed with the principle of using the MOHS Tender Board for the evaluation ofbids for contracts financed from the project and other sources including the MOHS own budget.(b) The Borrower has confirmed that GOSL policy to exempt from taxes the goods purchased under IDAfinancing also applies to HSRDP.(c) The Borrower has improved the accounting and financial system in a manner satisfactory to IDA.(d) The Borrower has strengthened the MOHS Procurement unit in a manner satisfactory to IDA.

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(e) The MOHS has issued a Procurement Plan, an Accounting Manual and an Operational Manualacceptable to the Association.

Other Covenants(a) By September 30, 2005, the MOHS will conduct a Mid-term review.

H. Readiness for Implementation

0 1. a) The engineering design documents for the first year's activities are complete and ready for thestart of project implementation.

1 1. b) Not applicable.

1 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

D 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies

Z 1. This project complies with all applicable Bank policies.O 2. The following exceptions to Bank policies are recommended for approval. The project complies

with all other applicable Bank policies.

Astrid Helgeland-Lawson Adexandre V. Abrantes Mats KarissonTeam Leader Sector Manager/Director Country Manager/Director

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Annex 1: Project Design Summary

SIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT: . - . <. ' ,: - | ' ~.;Ke'4erfob man'ce . :~..EffData-Cbll,ecti6n-Strat'g;~-'-. .. r '-L'

.Hir cho,,,,,j cive,, _- ,J,ndicato'rs. .*.; . ,' ,.,-,;- >;, Crt,_,,___ u'_ptio_s--

Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)Recovery and rehabilitation Input/process . General macroeconomnic data . Increased political and social

and gradual pursuance of . Share of GDP allocated to Sector reports (HMIS) stability

long-term development health. . Sector inventory of . Successful refugee and

objectives through: . Number of health facilities providers and infrastructure internally displaced people

Support to rebuild human rehabilitated. . Annual review and planning programs

capital by irmproving health . Number of health providers documents. . Successful beginning of

status of the population in public and private health . DHS and other specialized macroeconomic development

Reduction of negative impact facilities., surveys. : Full recognition of the health

of infectious disease . Improved distribution of sector role in theepidemics and malnutrition on health providers. normalization of the political

social and economic . Increased numbers of district and social situation, peace and

development health administrations fully development.Provision of health and operational. . Successful development of

education services to the Outcomes/impact the private sector and

population of districts affected . Infant mortality rate especially of private

by war. decreases from 170/1000 in not-for-profit health services2000 to 150/1000 in 2005 and

to 125 in 2007.. Under-five mortality ratedecreases from 286/1000 in

2000 to 250/1000 in 2005 andto 230/1000 in 2007.. Maternal mortality rate

decreases from 1800/100,000in 2000 to 1400 in 2005 and1200 per 100,000 live births in

2007

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M - i--i', - KeyPerformance'- Data CollectionStrategy. --..-. V '. Hlerarchy-of O bj cFves- i. - . A,ndlc Itrs' * - , ... '|.: -: - . - -Critical Assumptions,

Project Development Outcome / Impact Project reports: (from Objective to Goal)Objective: Indicators:Restore the most essential 1. Larger proportion of Health sector reporting Successful implementation offunctions of the health sector districts with district health human resources policy anddelivery system. teamns operating fully. action plan

2. Larger proportion of Annual sector review Increased implementationpopulation having access to documents capacity in the sectoressential health services.3. Larger proportion of Annual sector review Good progress indistricts with district hospitals documents decentralization of decisionfully functional. making to districts4. Improved utilization rates of Annual sector review Successful development ofoutpatient and inpatient health documents roads and transportationfacilities in the four meansparticipating districts and inall districts.5. Improved user of service Health Sector Reporting Improvements in foodsatisfaction with health security, services provided byservices provided by the other sectors such as water andpublic sector in the four electricity.participating districts and inall districts.

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.Key;Perfo rrc.-= -DataCollection Strategy t - -, y --

HlHierarohyo-t Objectives -s Indicators. - - .;.-.. - Crit sOutput from each Output Indicators: Project reports: (from Outputs to Objective)Component:1. Essential health services a) Increase in number of Annual sector review Programs of other donors areprovided. health centers rehabilitated documents implemented as planned.

and functional Field supervision Budget allocation is consistentb) Increased budget allocation with sector policy.to primary health services Other sectors make reasonablec) Decreased number of progress in their programsdistricts in which district staff NGOs continue to supportcannot supervise health health care delivery.centers and posts due to Drug procurement andsecurity restrictions distribution activities fundedd) Malaria and TB epidemics by other donors areare declining in terms of implementedincidence and number of Integration of technicaloutbreaks (as appropriate). programs takes place.e) Improved performance:-Immunization coverage willincrease from 46% in 2000 to60% in 2005 and 65% in 2007-Contraceptive prevalence ratewill increase from 3.9% in2000 to 8% in 2005 and 10%in 2007-Percentage of children under5 years of age sleepingregularly underinsecticide-treated bed netswill increase from 1.5% in2000 to 20% in 2005 and 40%in 2007-Delivenes assisted byqualified personnel willincrease from 42% in 2000 to55% in 2005 and 60% in 2007

-Percentage of smear-positivecases successfully treatedunder DOTS strategy willimprove and reach 85% in2007

2: MOHS capacity is a) Increased number of MOHS Annual sector review Decentralization in the publicstrengthened; a substantial part key units staffed with documents. sector makes progress.of decision making is appropriate personnel, fully Inventory of health personnel Government employment andtransferred to district health equipped and functional. Health provider survey. remuneration policy reviewedteams. The availability and the b) Recurrent non-salary Annual district health plans. and implemented.distnbution of health budget allocation of the Education sector outputpersonnel is improved MOHS increases. increases.

c) Infrastructure development On site training becomesplan is adopted. feasible.d) Number of districts healthteams benefitting from budget

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support from the creditincreases and the audit ofthese funds finds theutilization adequate.e) Number of health providersof all categories and ofspecialized doctors, familydoctors, nurses and midwifesincreases.f) Smaller inter-districtvariations m staffing.g) Improved satisfaction inhealth providers with workconditionsh) Increased recurrent salarybudget in the health sector.i) Human resourcesdevelopment plan adopted

3. Private sector capacity is a) Increased in number of Annual sector review Privatization becomes a mainstrengthened. The civil private health pr.pviders documents thrust of the Governmentsociety is involved in health outside the capital city and in Surveys. policy.matters. the four participating districts. Government bills and reports. Contracting out is more often

b) Legislation to regulate used across the sectors.quality and prices and to foster Democratization processprivate sector development advances convincingly in theenacted. public sector and in particularc) Number of activities in the health sector.contracted out (clinical and IHSIP project is implementednon-clinical services) by the in a satisfactory manner.public sector to the privateproviders increases.d) Number of religious NGOsoperating in health increases.e) Participative decisionmaking in health facilities(involving users, women andreligious and political leaders)takes place in an increasednumber of district hospitals.

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- . r .'-. -it, .- l-.-:Key Performianc _ -Data Cb oIectroiSateg |_ - --...,LHier rchy-of Objectiv s.-s - --: . indicators . . . rtica l-Assunptipns.-

Project Components / Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1) Restoring essential health US$15.04 million Project supervision reports Updated overall sector policyservices. Annual review documents adopted and endorsed by all1 1 Restoring health service Annual operational plans partners.delivery in four priority Audit reports Effective implementation ofdistricts. Epidemiological Surveillance the HSRDP in the four1.2 Support key technical System reports participating districts.programs: Malaria and TB and Disease specific surveys District capacity and revenuesSanitation. DHS are improved substantially

Progressive and effectiveintegration of technicalprograms.Effective coordination ofpartners operating in healthand between these ones and allother partners involved inpeace and rehabilitationprocessAll districts become safe andcountry-wide data collectionbecome possible.

2) Public and Private sector US$5.98 million Health Infrastrucutre The importance of the healthcapacity development Development Plan. development for the2.1 Strengthen district teams Human Resources Strategy consolidation of peace andcapacity to plan, evaluate and and Plan. successful demobilizationimplement. Annual Operations Plans and programs is fully recognized.2.2 Strengthen MOHS Evaluation Reports. Health program activities areplanning, budgeting, financial Project supervision reports. well coordinated with themanagement, coordination and Annual review documents. programs of other sectorsprogram implementation Annual operational plans. Decentralization is pursued incapacity. This includes the Audit reports. the public sector and properstrengthening of information legislation enacted.for sector management and Updated human resourceplanning. policy adopted and endorsed2.3 Improved HRD including by all partners.support to medical, nursing Developments in other sectorsand mrdwifery training and the make re-deployment of healthdevelopment of a reward providers feasible.system to promote good Other partners recognize thisperformance and motivate priority issue and invest inhealth providers, human resources.

All districts become safe andcountry-wide data collectionbecome possible.Other donors agree on thescope of and support majorsurveys (such as the DHS andthe population census).

2.3) Strengthen private sector Project supervision reports. Privatization becomes ancapacity and civil society Annual review documents. important thrust ofparticipation. Annual operational plans Government policy.

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Audit reports. MOHS changes its mandateLegislation and GOSL policy from a deliverer of services todocuments and reports. contract management and

quality assurance.All districts become safe.Democratization is pursuedacross the sectors.Economic development issuccessful.

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Annex 2: Detailed Project DescriptionSIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

By Component:

Project Component 1 - US$15.02 millionRestoring Essential Health Services.This component will: (a) provide assistance to four priority districts to deliver adequate health servicesand (b) support three key technical programs to improve their performance and control infectiousdiseases of public health importance in Sierra Leone (i.e., Malaria, TB and Sanitation).

1.1 Restoring health service delivery in four priority districts (Bombali, Koinadugu, Kono andMoyamba). The project will finance equipment, drugs, vaccines, furniture, training and supervisionneeded for the adequate functioning of 50 health posts built with support from the IDA fundedCommunity Reintegration and Rehabilitation Project and other social fund projects. The project will alsofinance civil works (to rehabilitate and expand health facilities and essential staff quarters) equipment,rehabilitation and upgrading of water distribution and medical waste disposal systems, communicationand transportation means (motorcycles and ambulances) for 12 health centers of the most importantchiefdoms and the four first referral hospitals located in the capital city of the respective districts.Finally, it will also provide support to these districts to ensure the delivery of adequate health care,including measures to foster private services development and to solve health provider shortages andother human resources issues. A particular attention will be paid to health facility (medical in particularbut also solid and liquid) waste management and to related IEC activities for health providers. As allthese activities will be carried out at existing and operating health facilities (and in addition, for thehospitals within the hospital compound) this sub-component will not cause any resettlement of thepopulation nor removal of squatters. The selection of the four districts to receive financial assistancefrom the project, carried out during project preparation, was based on the following criteria: importancefor demobilization, resettlement and peace, magnitude of the public health problems, degree of damage tohealth infrastructure, existing or potential support from donors. Regarding the health centers, theselection of the 12 facilities took into account the following criteria: more than 15,000 inhabitants in thecatchment area, degree of damage, lack of access to a private or public similar facility in a radius of 15Km, receiving referred patients from more than four health posts and proximity to an important road.While the sub-component 1.1 aims at providing a comprehensive package (a "package" includes a largearray of support measures such as civil works, equipment, water, latrines, incinerators, essential staffquarters, training, communication means and ambulances) to all four districts, it was clearly agreed toadapt this package to the actual situation of each site. This was needed since, for instance, somerehabilitation works have already been carried out in selected facilities, the needs of the distncts varyand, also, in a few cases some equipment was already provided by GOSL or NGOs.

Moreover, the component will also support, to the extent needed, the delivery of all essential preventiveand curative care in all the health facilities of the four districts. Thus, through the assistance providedunder this component, the project will also contnbute in these four districts to the implementation of theactivities of: (a) all major technical health programs (and not only the three programs included in thesub-component 1.2) and (b) all MOHS support programs (and not only the five key MOHS supportprograms included in the component 2.2).

Thus, while the project will only support five technical programs at central level (and notOnchocerciasis, HIV/AIDS, Reproductive Health/Safe Motherhood/Family Planning, EPI, and Nutrition,which already benefit from substantial assistance made available from grants and by WHO, UNICEF,UNFPA and some bilaterals), HSRDP will support these programs, to the extent needed, as part of

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project support to the four participating districts. The HSRDP will continue to support the integration of"vertical programs" and the development of an epidemiological surveillance system (with focus on butnot restricted to Malaria and TB). It is worth noting that in spite of a seemingly "verticalization" atcentral level (since MOHS maintains oversight and develops appropriate policies through its technicalprograms) all technical programs are part of the MOHS Program 7 (Primary Health Care) and are: (a)coordinated by the Director of PHC/Deputy Director General of medical services and (b) executed in anintegrated manner by the district health teams.

Likewise, the maintenance and drug procurement, stock management and distribution programs will bestrengthened at the central level with the support of other MOHS' partners (e.g., the Central MedicalStores and the MOHS drug and maintenance programs will be assisted by AfDB and EU). Nonetheless,HSRDP will contribute to these programs in a concrete manner, in the four participating districts, byrehabilitating drug stores, funding drugs, condoms and other contraceptives, consumables, vaccines,micronutrients and food supplements, spare parts and other non-salary recurrent expenditures.

1.2 Support to priority technical programs, i.e., Malaria, TB, and Sanitation, targeting the mostimportant public health problems. The project will finance:

(i) Malaria control activities, focusing on the strengthening of case management, and on the promotionand distribution of insecticide-treated bed-nets (to be distributed and re-impregnated with local NGOsupport). Several activities are planned to strengthen case management including (a) development andproduction of guidelines for appropriate case management, (b) training of health workers in appropriatecase management and in Integrated Management of Childhood Illness (IMCI), (c) establishment of asentinel surveillance system for monitoring antimalarial drug treatment efficacy, (d) strengthening oflaboratory diagnostic capacity at health facilities through provision of equipment and supplies andtraining of laboratory staff, (e) supervision of clinical staff, including the provision of a vehicle forcentral level supervision, (f) procurement of reserve stocks of drugs, and (g) operational research onapproaches to improve case management (e.g., use of pre-packaged drugs). Promotion and distributionof insecticide-treated bed nets (ITNs) will be a collaborative effort between the malaria control programand designated NGO(s). Policy and guideline development, standard setting, oversight, and genericpromotion activities will be carried out by the malaria control program. Activities for promotion ofsale/distribution of bed nets and insecticides for reimpregnation will be carried out through contractingwith NGOs. The monitoring and supervision capacity of the national malaria control program will alsobe strengthened through procurement of office equipment and supplies, and training of staff in statisticalmethods.

(ii) TB control program will be supported by strengthening laboratories, training, and logistics for theimplementation of the DOTS strategy. Diagnostic capacity will be strengthened through training ofclinical, both facility and community-based, and laboratory staff in case detection and management.Laboratory capacity will also be expanded through the procurement of equipment, supplies, andfurniture. Community awareness campaigns will be carred out, including the development andproduction of EEC materials. Operational research activities will be carried out including approaches forexpansion of the DOTS strategy into the community and surveys to monitoring the prevalence of drugresistance.

(iii) Sanitation and environmental impact mitigation measures in the four districts supported by theproject (as opposed the IHSIP support which targeted the Freetown area). Regarding sanitation, aprogram of importance for all infectious disease control activities and for prevention in general, theproject will support activities to be contracted out with private providers (e.g., solid waste management,

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following the model successfully used in the Western region and in Guinea) and advocacy for involvingmunicipalities and communes in waste management (thus redefining the task of the MOHS from,,aprovider of services to contract management and environmental monitoring; the ultimate objective of thisprogram will be transfer sanitation responsibilities to municipalities and commnunes). The HSRDP willalso (i) strengthen the capacity in environmental monitoring by training environmental inspectors, andproviding support for environment supervision and (ii) help carry out IEC activities for the benefit ofhealth providers, the personnel involved in medical waste management and users of health services (incollaboration with the SHARP). Regarding environmental impact mitigation the project will finance (a)waste management measures with emphasis on medical waste in the 12 health centers and, in particular,in the four district hospitals to be rehabilitated (incinerators, lined pits, latrines, including support fortheir maintenance and functioning, training of relevant staff and of health providers), (b) dump sitedevelopment by municipalities (additional support will be provided from community participation) in thefour district capital cities (dump sites will include liquid waste), (c) building incinerators and lined pits inthe facilities to be rehabilitated of the same districts, (d) TA to advise municipalities on dump siteidentification and development, and on other environmental issues, training on operating andmaintenance of incinerators, (e) the operating cost of monitonng and supervision activities byenvironmental inspectors in 4 districts, (f) private providers to empty septic tanks and lined pits in fourdistrict hospitals and (g) transportation means for solid waste for the four district capital cities. TheSHARP project will also contribute, as it will finance the training of environmental inspectors and healthproviders of the four distncts in medical waste management.

Project Component 2 - US$5.98 millionStrengthening Public and Private Sector Capacity

Under this component, HSRDP would support measures to improve performance and increase efficiencyin the health sector by: (a) strengthening the program and resource management capabilities of keyservices within the District Health Management Teams (DHMT) and MOHS; and (b) promoting pnvatesector and civil society participation in the health sector and developing mechanisms to increase theefficiency, ensure the equity, and improve the quality of services provided.

2.1 Foster decentralization and improve the performance of District Health Management Teams.As part of the decentralized budget reforms currently underway, MOHS has: (a) established some 60 costcenters (including the 13 DHMT), which prepare annual budgets and disburse authorized GOSL funds;and (b) instituted a mechanism financing district operating expenditures which has been successfullyimplemented in seven of the thirteen districts. The project would finance training of cost center financialofficers (particularly at district level) and will provide funds supporting operating costs in the qualifyingdistricts (i.e., those meeting the cnteria for adequate financial management).

Technical assistance to district health teams will be provided, among others, by the MOHS Planning,monitoring and evaluation and the Financial departments, and by the other MOHS support programs.HSRDP funding will be channeled following an already existing mechanism for support of operatingexpenditures in the districts established by IHSIP (i.e., the distncts meeting critena of sound financialmanagement are eligible, the funds ought to be used for unplanned activities for which the public budgetis not sufficient such as supervision, emergency operations in case of infectious disease outbreaks, etc.).The DHMT will decide on the necessity of using such funds (more detailed criteria for eligibility offunding for certain activities such as the ones mentioned above had been developed and agreed upon withthe MOHS). Upon spending of the allocation, replenishment will be conditioned on proof of spendingpresented by distncts. Although, only up to a total of US$0.4 million will be spent for the entire durationof the project for this type of funding, this subcomponent is expected to greatly assist DHMvIT to maketheir own decisions and manage in a hands on manner local health and planning and managementproblems. It is worth mentioning that support to districts would also be granted through the annual

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planning exercise (to which the district plans are expected to increase their contribution).

2.2 Strengthen the MOHS key support programs, i.e., Human resources development (HRD),Planning, monitoring and statistics, Financial management, Procurement and Donor/NGOcoordination. The HSRDP would provide ongoing support for the continued improvement of staffcapabilities and support programs at MOHS level (including Planning, monitoring and statistics,Financial management, Procurement and Donor/NGO coordination). These support programs have beenselected on the basis of their importance to improving sector efficiency, insufficient funding from othersources, and HSRDP's intention to implement the project with MOHS' capacity (and not with a PCU).

Planning, monitoring and statistics unit. The Project would provide overall operational support to thedepartment for personnel, equipment and transport, and training and technical assistance and specificsupport to: (a) revise and disseminate the national health policy; (b) reinforce the medium-term planningand annual planning and programming exercises as well as the annual sector review; and (c) strengthenboth routine health information management and periodic surveys and research.

Health policy. With support from a PHRD grant, MOHS has revised the 1993 National Health Policy,and a final, formally approved National Health Policy should be ready by early 2003. HSRDP wouldsupport the dissemination and public discussion of the final policy through: (a) publication of the finaldocument; and (b) organization of national and regional workshops for health personnel, localauthonties, and public opinion leaders. In addition, the project would include consultant and workshopsupport for future revision of the policy at the end of the project period.

Health planning and programming. With the return to normalcy, MOHS shifted from quarterlyemergency planning to annual planning and began to undertake other longer term planning activities. For2003 and beyond, MOHS has as objectives to strengthen the planning process and to improve the annualsector reviews. The planning process would be strengthened by: (a) improving the PlanningDepartment's ability to collect and analyze information on health sector expenditures; (b) revising theplanning guidelines to institute a Three-year Rolling Plan and improve the Annual Operational Planning;and (c) improving the planning capabilities of the District Health Management Teams. The projectwould finance a full-time health economist, preparation of planning and budgeting guidelines, and reviewof proposed planned expenditures by the different cost centers. Additional short-term training to staff inthis unit will be provided based on identified needs.

The HSRDP would continue IHSIP's support for the organization of an annual sector review andplanning exercises to bring together stakeholders active in the health sector to: (a) review sectoralachievements (on the basis of agreed-upon indicators as well as previously planned activities andexpenditures); (b) discuss the updated, comprehensive annual and three-year rolling plans integrating theproposed contributions of all stakeholders; and (c) adopt the Annual Operational Plan of the next year(incorporating planned GOSL, donors and NGO activities in the Annual Operational Plan).

Health infornation collection and analysis. The project would support improvement of the variousinformation and monitoring systems at all levels, as well as development of capabilities at central level tomonitor project implementation and evaluate program performance. The project would finance: (a)training and operating costs associated with the improvement of health information systems for centraland district-level staff; (b) operating costs for vital registration; and (c) selected studies, surveys, andoperational research to be determined. As soon as a DHS is available, in all likelihood not beforeHSRDP's Mid-term review, the respective data will be immediately used in the health sector planningand HSRDP evaluation.

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Donor/NGO Coordination. Within the framework of MOHS's intention to develop a new NGO policywith procedures and guidelines for effectively coordinating and monitoring the activities of NGOs, theproject would finance incremental staff salaries, as well as equipment and modest operating costs. Theproject would support current work to involve and coordinate international and national NGOs and willexpand NGO participation in the decision-making strengthened with the opportunity of annual sectorreview and planning exercises. In addition, the project would finance periodic meetings between MOHSand its partners as well as the collection and publication of the annual inventory of donor and NGOinterventions in the health sector.

Human Resources Development. The project would support a series of actions to strengthen humanresources management and reduce the shortage of health service providers. These actions will be closelycoordinated with and complementary to ongoing efforts by WHO and AfDB and particularly by theproposed EU-financed project. Specifically, HSRDP would strengthen the overall capacity of the HumanResource Department to implement the Government's Public Service Reform Program, -focusingspecifically on providing technical and financial support for personnel management, manpower planning,and training.

Personnel management. To improve the manual use of personnel records, the project would: (i) renovateexisting space to improve storage (particularly for retired personnel); (ii) provide the office with basicfurmiture (filing cabinets) and equipment (typewriters); and (iii) train staff in modern filing andrecord-keeping techniques.

Manpower planning. The Project would strengthen manpower planning within MOHS by supporting theformulation and subsequent updating of a comprehensive manpower development plan. In addition, theproject would finance implementation of measures and recommendations of the manpower plan; withproposed activities for project funding to be identified and agreed-upon during the annual planningexercise.

Human resource trainin . HRSDP will also provide support for strengthening training institutions,introduce specialized or in-service training courses, or support other activities as appropriate.

Finance department. MOHS has successfully integrated financial management of GOSL funds anddevelopment resources, and the accounting policies, systems, and procedures have been favorablyreviewed. The project would provide TA and overall operational support for the Finance Department toimprove its performance, carry out its tasks related to the FM of the IDA project and effect improvementsin financial management and control. In addition, the Department will receive assistance to computerizefinancial management operations; complete installation of a system acceptable to the Bank, and trainstaff.

Procurement unit. Project procurement within MOHS has been improved, but current procedures arerelatively rudimentary; recent reviews detected several problems, which have been resolved and thesystems judged adequate. To enhance the capabilities of the Procurement Unit of MOHS, the projectwould: (a) strengthen existing systems and procedures for procurement planning and implementation;and (b) extend these methods for use in carrying out procurement with GOSL funds. To ensure thecontinued development of the Procurement Unit of MOHS, the Project would finance TA (procurementand architect) and would support additional short-term training and improved working conditions forexisting staff (i.e., fumiture, equipment and operating costs). Consultant assistance is being provided tohelp the unit prepare the PIP, the operations manual and the project procurement plan.

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2.3. Promote development of the private sector and participation of civil society in the health sectorAfter a decade of war and civil unrest which weakened the country's public and private health sectors, theproject would seek to capitalize on the emerging pnvate sector and regulate its development in a mannerthat will ensure its development and foster the provision of affordable, good quality, services. In additionthe project would build on the country's past institutional arrangements with the NGO community(through the Donor/NGO Coordination Office) and on the successful experiences with religious NGOsand (more recently) international NGOs. Finally, this component will promote incentives for privatehealth providers (focusing on not-for-profit providers) to develop and provide services in the fourdistricts supported by the project. It will also include contracting out of services to private providers andsupport for a wider participation of the civil society in decision-making on health matters.

The project would support initiatives in five areas of particular importance to the MOHS: (a) publicsector/private sector consultation and development of regulation to foster quality and participation; (b)contracting out; (c) incentives to encourage religious and other NGOs to provide services in under-servedareas; and (d) support for civil society participation in health matters.

Public sector/Private sector consultation. The project would finance consultations with the pnvateMedical, Dental and Pharmaceutical Associations and meetings with the Traditional MedicineAssociation to discuss ways for strengthening collaboration and registration and accreditation practices(and other measures to improve quality). The meetings will be prepared and run with international andnational consultant support. Further to these consultations the project will support the issuance ofregulation to promote quality of services, control tariffs and encourage the development of private healthservices and the involvement of private providers in the solving of public health issues.

Contracting out. Contracting out of clinical and non-clinical services with the private sector is alreadyenvisaged by HSRDP in areas such as impregnated bed-nets, EEC services, and solid-waste collection bycommunities. These areas have been costed in Component 1, but additional funding could be madeavailable in case-of insufficient funding. The project would also finance a study on contracting out (orprivatizing) other, selected public services (clinical or non-clinical), including drug procurement anddistribution, laboratory services, and laundry.

Incentives. Given the importance of attracting the return of religious and other NGOs to develop hospitalservices in the under-served geographical areas, provide hospital services and organize equitable costrecovery (i.e., protecting the access to services of the poor individuals) in the under-served geographicalareas, the project would finance specific incentives, which might include the provision of a drug stock tocover the needs of the respective facility for one year.

Support to civil society participation in health matters. To encourage the establishment and functioningof committees (at distnct and health facility levels) for involving the population, political and religiousleaders and, more generally, the civil society in the decision making on health matters, the project wouldprovide financial resources for their operations. -While the emphasis would be on the four IDA-financeddistricts, the project would provide support to the PHC program of the MOHS to finance sirnilaractivities in the remaining districts. These efforts to increase the involvement of the user of services andthe civil society in the decisions made in the health sector will be synchronized with MOHS work toregulate cost-recovery and will include mechanisms to protect vulnerable populations. HSRDP wouldfinance: (a) a feasibility study (to be carried out with consultant assistance and with the participation ofMOHS and distnct staff) of approaches for establishing local financing mechanisms; (b) testing andconsensus-building concerning these possible approaches (either by MOHS or through an NGO partner);and (c) preparation of the guidelines to establish such a system. An equity fund to pay for the delivery of

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services for the benefit of the poor population in one of the facilities rehabilitated with HSRDP supportwill be tested. The project would also consider, at the time of the mid-term review, establishing twoprepayment arrangements on an experimental basis to finance health care for the population of one smallurban and one rural community and test their feasibility (in economic terms and from an equityperspective).

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Annex 3: Estimated Project Costs

SIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

' -.±.- --;-- -~,~- - ; -- -- .-- ..':. - -.Local ..... ,' :- --Foreign- .' -- Total-jPject CositBy Compmonentn':.- -US $fii11iii'; `US-nmilio' . --

0.00 0.00 0.00Total Baseline Cost 13.80 5.29 19.09

Physical Contingencies 0.28 0.29 0.57Price Contingencies 1.27 0.22 1.49

Total Project Costs' 15.35 5.80 21.15Total Financing Required 15.35 5.80 21.15

-s.t-;- ~ ~ ~ . - -- , . ............. '-Loc6al'' ' Foreign,-:' K'.' T'otl-1;,:

,, -,,ij ,'* P'- rojelit Cost EylCateg-ory sm.i-. US .. lUS'$milon, F; Us $. !finGoods 1.88 5.12 7.00Works 4.52 0.00 4.52Services 2.87 0.45 3.32Training 1.22 0.23 1.45Operational costs 3.34 0.00 3.34Unallocated 1.52 0.00 1.52

Total Project Costs 15.35 5.80 21.15Total Financing Required 15.35 5.80 21.15

Identifiable taxes and duties are 0 (US$m) and the total project cost, net of taxes, is 21 (US$m) Therefore, the project cost shanng ratio is 0% of total

project cost net of taxes

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Annex 4Cost-Effectiveness Analysis Summary

SIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECTIntroduction:Given that: (a) the proposed project will only invest in programmatic areas with well-documented costeffectiveness ratios (such as primary health care and first referral health facilities, human resourcesdevelopment, support to programs addressing important infectious disease epidemics e.g., Malaria andTB); (b) empirical data from Sierra Leone to further explore the soundness of such spending are notavailable; and (c) Annex 7 of the Staff Appraisal Report of the IHSIP (credit 2827-SL) has alreadypresented analysis on the cost effectiveness of this type of intervention (see the table at the end of thisannex), it was agreed that an economic analysis of this new project would not be required.

Instead a health sector Public Expenditure Review was carried out during project preparation. On theone hand, the PER suggests that: (i) the ratio between salaries and non-salary expenditures comparesfavorably with most other West African countries; and (ii) expenditures for the most cost effectiveprograms with large externalities such as PHC, infectious diseases control, and sanitation and preventionin general were significant and compare well with other expenditures for secondary and tertiary care. Onthe other hand, it shows that recent expenditures in the sector financed by the public budget and IDAwere very modest. While MOHS's recurrent non-salary expenditures as a share of the Government's totalnon-salary budget increased from 4.8% in 1999 to 7.1% in 2001 this proportion remains low (andprojected to decline over the period 2002-2004); the proposed grant would establish a legal conditionalityto increase this share to an acceptable level (i.e., at least 10% starting in 2004). In addition, the PERshowed that, understandably, insufficient resources had been channeled to the districts and that little wasknown in regard to the expenditures made by NGOs and donors. As a result of these findings it wasagreed with the Borrower to regularly monitor expenditures during the annual review meetings againstbenchmarks established by the PER and consistent with the sector policy.

It was also recognized that until economic development takes off, the funding of the health sector willlargely depend upon donor funding and that the present project will not be sustainable until there issubstantial macroeconomic development and increase in revenues.

Consistenct of the project with Government and Bank Transitional Support Strategy (TSS) for2002-2003.The TSS presents the Bank's business plan to support the implementation of the Sierra LeoneGovernment's Interim Poverty Reduction Strategy (I-PRSP) which was launched in September 2001. Themain objective of the TSS is to support the transition from post-conflict reconstruction to sustainablepoverty reduction. In the transitional phase, the focus on the TSS is on: (i) consolidating peace, (ii)resettlement and reconstruction, (iii) improving governance, and (iv) maintaining a macroeconomicframework conducive to economic recovery. In the medium-term Government will increasingly addresslonger-term development issues to be elaborated in the full PRSP. The provision of health services inrural and underserved areas is one priority of the TSS, and a means to help mitigate the risk of renewedconflict and lay the foundation for sustained poverty reduction. In the case of renewed conflict andpolitical instability the HSRDP will operate in accordance with the 3 scenarios of the TSS (whichoutline, among others, Bank's exit strategy in case of deterioration of the security and political situationin the country).

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Cost effectiveness considerations:This project's main thrusts are:

(a) the prevention and management of conditions that represent major economic burdens in Sub-SaharaAfrica in general and in Sierra Leone in particular: malaria, and tuberculosis. The economic burden hastwo major dimensions: (i) low productivity of the workforce affected; and (ii) the continuing cost oftreatment due to the lack of complementary efforts in cost-effective prevention.The methods of prevention to be used in this project have favorable cost-effectiveness ratios documentedby the Bank. Secondary prevention - an efficient complement - is also part of the program. There are nodata that can be used to measure the precise disease burden of Sierra Leone or to assess cost-benefit inthe Sierra Leone context but there is ample literature documenting the cost effectiveness ratios of: theRoll Back Malaria strategy; the DOTS strategy to curb TB.

Moreover, a recent survey conducted by the Central Statistics Office of Sierra Leone points to theparamount role played by malaria in the disease burden of Sierra Leone. This disease has a significantimpact on the productivity of food-growing workers in rural areas, a major economic issue infood-importing Sierra Leone.

Diarrheal disease also contributes significantly to the disease burden of Sierra Leone. There are relatedeconomic losses due to the impairment of human capital through poor nutrition and related lesserintellectual and physical development of children. The project through the support of cost-effectivesanitation will diminish the economic burden posed by this condition.

(b) the improvement of basic-health services in four districts that are among the poorest in Sierra Leone.The services supported by the project are those designated by the Bank as a cost-effective package forlow-income countries. This basic package should reduce the burden of disease in the four selecteddistricts and through it improve food production and other economic activities.

(c) the strenatheninz of the capacity of MOHS to manage the existing health system by making moreefficient use of resources in the public and private sector. It also supports enhancements in MOHS'sability to allocate and distribute resources to proven cost-effective services and to districts whereresources are likely to get the highest returns per dollar (Leone) spent. Further, the project aims to fosterthe procurement and financial capacity of MOHS that will address bottlenecks and delays in secunngservice production from investments made.

(d) the mitigation of existing productivity issues in a number of areas that, according to the PER, needimmediate attention. This includes better financial management that will ensure more efficient use ofcapital through a greater balance between capital and operating expenses. In view of the improving butstill poor fiscal capacity of the country, the project will make a contribution by ensuring a level ofoperating expenses commensurate to the capital expenditure being undertaken by the project. Theproposed decentralization of decision making to district level and improved financial management at thislevel should also improve efficiency in operations and fiscal accountability. In addition, the civil worksactivities generated by the project should increase much needed employment and have a positivemultiplier effect on the economy.

Financial considerations:Financial issues such as fees for health services (cost recovery) measures for ensuring financialaccountability and management of funds generated from cost recovery will only be addressed duringproject implementation, although some studies and the revision of the sector policy will be carried out

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during project preparation.

External audit reports and financial management analysis of the ongoing project implemented by theMOHS have been unqualified; a project-specific financial management assessment was performed atPre-Appraisal; and the Bank is planning to conduct a Country Financial Accountability Assessment inSierra Leone. Finally, based on these findings and using funding from a PPF and from the grant itself(through the HSRDP second component on capacity building), all key MOHS departments (including thefinancial one) and all district health teams will be strengthened.

Fiscal impact:A number of features of the project should have a beneficial impact on employment and workerproductivity leading to potential increases in government revenue. The PER also identified somepotential revenue sources that could be tapped to improve revenues and the fiscal balance. These includea more systematic and equitable approach to fees for services and charges for drugs that currentlycomprise rather arbitrary measures.

The project requires about US$1 million in counterpart funds over the five-year period of the project.This represents about a 2% annual increment of MOHS current and capital expenditure funded fromdomestic sources during 2001. Therefore, it will not impose a substantial additional burden on theGovernment's fiscal situation.However, there are some generic fiscal aspects that require attention. Some aspects of the project willhave to rely on public infrastructure that is currently inadequately financed. Therefore, dunngnegotiations this issue was openly discussed to ensure that Government policy of improving thebudgetary situation of MOHS is reflected by the adequate and timely allocation of funds to MOHS. ThePER pointed to the need for increments in MOHS current expenditure commensurate with investmentsbeing made. Although the project has made provision for operating expenses in relation to most of theinvestments being made, the future sustainability of the facilities being funded by the project remains anopen question. The Bank's macroeconomic dialogue with the Government will be addressing this issue.

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Cost Effectiveness Analysis

Health system level/NHAP In NHAP In In BHA In WDR93 PackagePrograu/ (Y/N) NHAP Package (Y/N)Intervention or Service Core and/or Y-C Clin

Program Priorities Y-P Pub(Y/N) (Y/N) and/or

WDR PrioritiesTECHNICAL PROGRAMSA. PRIMARY CARE1. Maternal and child health _ _

Anti-natal Y Y Y Y-CDelivery Y Y y Y-CPost-natal Y Y Y Y-CMicro-nutrient supply Y Y Y y-PFamnly planning Y Y V Y-CSchool health V Y y y.pORT Y Y Y Y-CGrowth monitoring and Y V Y NpromotionBreast feeding Y Y Y Y-P

2. Common ailmentsTreatment/Referral Y 1-2 Y 1 2Drugs/Supplies Y Y V VFirst Aid/Referral Y 1-2 Y Y 2Education on food selection V V V V-Pand preparationPublic and patient Y Y Y Y-Pinformation

3. Communicable diseasecontrolImmunization

BCG V Y y yEPI Y Y Y yYellow Fever Y Y N VHepatitis B N N3 N Y

Preventive servicesOnchocerciasis spray Y Y4 Y NTB Chemo. Y Y ?Blood bank safety Y Y3 Y5 NAIDS/STDs N Y Y N

Curative servicesTB Y Y Y YLeprosy V N6 N NSTD Y Y Y YARI V V V VHelniinths Y Y Y Y

4. Water sanitationWell digging Y V Y NLatrine construction Y Y Y NPiped water system Y7 N N NSewage system Y6 N N NSolid waste YI-2 N N N

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5. Nutrition & dieteticsNutrition education Y Y Y Y-PNutrition rehabilitation Y Y Y Y-C (0-5 yrs)Diet therapy Y N8 N NMicro-nutrients

Vitamin A N N9 Y Y-PIodine Y Y Y Y-P

6. Health education ancommunicationCommunity health education Y Y Y Y-PioPrinted materials Y Y ? ?Drama and songs Y Y ? ?Mass media Y Y Y ySchool health education Y Y Y y

B. Secondary Care Y Y4 Y NGeneral In-patient services Y Yl 1 Y Y12Mental health care Y Y13 N NLimuted care for chronic Y N Y YdiseaseTB treatment Y Y Y Y

SUPPORT OF PROGRAMSA. Drugs and Supplies

Selection/Qualification Y Y .y Y-P17Procurement Y Y Y Y-PStorage/Inventory Y Y Y Y-PDistribution Y Y Y Y-PRational drug prescription Y Y Y y-pand useCost recovery/Pricing Y _ Y Y Y-PQuality control Y__ y y.pDrug regulation/Control Y Y Y Y-PNGO, private sector N Y18 Yy -P

B. National Food Environmentand Clinical Lab ServiceAdvice to clinicians and Y N N Npolicy makersAnalysis of lab samples Y N N NTraining lab staff Y Y N NQuality control of lab Y N N NservicesPromotion of safe blood Y Y19 Y20 NForensic analysis Y N N NRegulation and enforcement Y N N N

C. Maintenance and Repair(M&R)DOH-level unit Y Y Y NDistrict unit Y Y Y NNormns for M&R skills N Y Y NPlanning & M&R skills N Y Y N

D. Humnan ResourceManagement (HRM)Long-term planning Y Y Y N

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Training plans Y _ N NCoordinating mechanism for Y Y Y Ntraining/managementdevelopmentDevelopment HRM capacity Y Y Y NEmployee relations Nstrategy/payComputerized PMIS _ _ _ N NChanging mix of staff N Y21 Y YRedeploying staff N Y y yChanging training curricula N Y y yLeadership/Supervision N Y Y N

E. PMISUTraining staff in info. Y Y Y NmanagementEstablish district M&E Y Y Y Ncapacity, including athospitalsOperational research Y y y yCollection /dissemunation Y N N Ninfo./reportsAssist in district health plans Y Y Y YEpidemiological data N Y y yMonitoring/health finance N Y22 Y YSupport community N Y Y Ymanagement

I Basic trauma, malana, diarrhea, local infection.2. Assessment, advice, alleviation of pain, treatment of infection and minor trauma.3. Cost and feasibility in Sierra Leone to be reviewed4 Maintenance after devolution5. Not imply 100% testing.6. To be further review for relative cost-effectiveness; not clear whether costs included in NHAP.7. Responsibility of Department of Works.8 Dietetics & diet therapy to be moved to secondary care, as non-care interventions.9. To be reviewed for relevance in Sierra Leone10. Health education and communication interventions were included in the WDR interventions for alcohol,tobacco, and school health11. Resources unlikely to permit more than 12 below.12. Assessment, advice, alleviation of pain, treatment of infection and minor trauma, other treatment as resourcespermit.13. Mental health services at all levels merit further reflection, there is no consensus in the NHAP Task Force onthem.14. Future needs for specialist staff merit careful review, as many existing staff are soon to retire.15 Mental health services at all levels merit review.16. Public health monitonng and surveillance, provided outside tertiary care17. Drugs and supply services were included implicitly as par of the WDR essential care package.18 Private sector roles in marketing and distribution of drugs merit review.19. Quality control under lab services; promotion belongs under health education20. May not be a lab service; NHAP foresees provision of safe blood BHA encourages promotion of safe blood,but does see provision of safe blood as pnority intervention21. Task Force endorsed a Y, but urges that the subject be approached with care

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Annex 5: Financial SummarySIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

Years Ending12/31

Y Year 1| Year 2 | Year 3 | Year 4 | Year 5| Year 6 | Year7Total Financing Required

Project CostsInvestment Costs 0.2 3.5 4.3 5 6 3.1 0.9 0.0

Recurrent Costs 0.0 0.4 0.8 0.7 0.9 0.6 0.0

Total Project Costs 0.2 3.9 5.1 6.3 4.0 1.5 0.0Total Financing 0.2 3.9 5.1 6.3 4.0 1.5 0.0

FinancingIBRD/IDA 0.2 3.8 4.8 6.0 3.8 1.4 0.0Government 0.0 0.1 0.3 0.3 0.2 0.1 0 0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0 0User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0Total Project Financing 0.2 3.9 5.1 6.3 4.0 1.5 0 0

Main assumptions:References are for calender years. Each year is financed for 12 months with the exception of the first year(2002) which is financed for six months with a PPF.Totals may not tally due to rounding.

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Annex 6: Procurement and Disbursement Arrangements

SIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

Procurement

Procurement Environment

1. The last World Bank Country Procurement Assessment Report (CPAR) for Sierra Leone wascarrmed out in 1985. The conflict that gripped the country over the last ten years eroded the effectivenessof public sector management and destroyed the efficiency of public institutions as well publicprocurement systems. The current procurement practices for goods, works and services as described inthe Finance Act 1963 are obsolete and are inadequate to meet the country's modem needs. A modempublic procurement system is required to ensure value for money, ensure adequate competition,accountability and transparency in the procurement/selection process and to check against corruptionand fraudulent practice in procurement and contract execution.

2. The Government of Sierra Leone (GOSL) with the assistance of private consulting firms hasconducted some studies of public procurement practices in the country. These reports cite (i) lack of acomprehensive legal framework for public procurement, (ii) lack of a uniform and codified procurementprocedures and regulations, (iii) weak capacity of procurement staff, and (iv) loose institutional andorganizational arrangements for collective decision making in awarding of contracts, as major factorscontributing to weaknesses in the public procurement practices. Some of the unacceptable featuresidentified by Bank staff in the on-going Bank financed projects are (i) extensive use of sole sourcemethod for selection of consultants, (ii) extensive and repetitive use of shopping procedures, oftenincluding the same firms, (iii) unclear procedures for opening of bids and criteria for bid evaluation andcontract award, (iv) post contract negotiations, (v) weak internal control systems, and (vi)over-centralization of procurement in the Central Tender Board, Ministry of Finance (CTB). With a fewexemptions, current regulations require that contracts for all Ministries, Departments and Agenciesestimated to cost above SLL 12,000,000 (about USD 6,000) must be procured by the CTB. The CTB isresponsible for preparation of bidding documents, advertising for bids, opening bids, evaluating bids andconsequently awarding contracts. The sheer volume of work as well as the limited capacity of the CTBmake the current arrangements unworkable. Government Ministries are already complaining aboutprolonged processing delays for procurement carried out by the CTB. The role of the CTB should belimuted mainly to reviewing procurement strategy and plans and bid evaluation reports for very largecontracts for compliance with agreed procedures. During Appraisal, GOSL agreed to waive its currentrequirement of executive procurement by the CTB. The role of the CTB will be limited to the review ofevaluation reports and recommendations for the award of works and goods contracts exceeding USD500,000; and consulting contracts exceeding USD 200,000 for firms and USD 100,000 for individuals. Inaddition, the standard processing time for CTB clearance will not exceed 14 days. If no response isreceived from CTB, within 14 days, approval will be deemed to have been given. The thresholds andprocessing times may be reviewed when a new public procurement law has been enacted.

3. The Government has realized the need for the country to review and reform its publicprocurement practices. The World Bank has agreed to support public procurement reforms with fundsfrom the Transport Sector Project. Consultants will be selected to prepare (in consultation withstakeholders in public and private sectors) Procurement Reform Proposals for submission to Governmentpossibly by mid 2003. It is expected that a new procurement code and law would be implemented latest2004.

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4. In the absence of a national procurement code, the procurement procedures to be followed forthis project would will be fully described in the Project Operational Manual. A Project OperationalManual exists for the predecessor project, the Integrated Health Sector Investment Project. The manual isbeing updated for the new project.

Use of Bank Guidelines

5. All works and goods financed under the IDA project would be procured in accordance with theGuidelines: Procurement under IBRD Loans and IDA Credits, January 1995 and as revised in Januaryand August 1996, September1997 and January 1999. Consultants will be selected in accordance with theGuidelines: Selection and Employment of Consultants by World Bank Borrowers, January 1997 and asrevised September 1997, January 1999 and May 2002. National Competitive Bidding (NCB) procedureswill include: (a) an explicit statement to bidders of the evaluation and award criteria; (b) nationaladvertising with public bid opening; (c) award to the lowest evaluated responsive and qualified bidderand (d) foreign bidders would not be precluded from participation in NCB.

6. The Bank's Standard Bidding Documents (SBD) will be used for all ICB (and with appropriateamendments for all NCB) for works and goods. The Bank's Standard Request for Proposals (SRFP)would be used for all consulting assignments. MOHS should ensure that each time the most currentversion of the appropriate SBD/SRFP is used in bids/proposals. Less competitive bidding and selectionprocedures should not be used as an expedient to by-pass more competitive methods and fractioning oflarge procurements into smaller ones should not be done solely to allow the use of less competitivemethods. The detailed procedures to be followed will be described in the Project ImplementationManual. Domestic preference will be allowed for ICB.

Advertising

7. A General' Procurement Notice (GPN) for the project has already been published in the UNDevelopment Business as provided under the Guidelines. The GPN would be updated on a yearly basisand would show all outstanding ICB and all consulting services estimated to cost USD 200,000 or more.Specific Procurement Notices (SPN) will be required for contracts to be procured under ICB and NCBprocedures and for consultant contracts with an estimated cost of USD 200,000 or more to obtainexpressions of interest (EOI) prior to the preparation of the shortlist. SPNs will as (a minimum) bepublished in a newspaper of wide national circulation. Consultancy contracts estimated to cost USD200,000 or more will be advertised in Development Business. Sufficient time would be allowed (not lessthan six weeks for ICB and not less than 30 days for NCB and not less than 14 days for EOI) to allowadequate time for bidders and consultants to obtain documents and respond appropriately.

Procurement Capacity

8. Procurement under the project will be managed by the Procurement Unit, Ministry of Health andSanitation. The mission carried out a procurement capacity assessment of the Ministry of Health andSanitation (MOHS) and a summary of the findings of the assessment is included. The main weaknessesfound were poor intemal control systems; deliberate fractioning of procurement; failure by managementto insist and ensure compliance with agreed procedures; and poor record keeping. MOHS has addressedthese issues and already there is marked improvement in procurement practice in MOHS. The Ministry isstaffed with capable professional staff who are knowledgeable in Bank procurement/consultants selectionpolicy and procedures having implemented the predecessor project, the Integrated Health SectorInvestment Project. The findings of the capacity assessment indicate a "medium risk" for this project.

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9. The project launch workshop will include a session on Bank/Public procurement. The focus willbe to reinforce the principles of good public procurement practice. Special emphasis will be placed onthe correct use of shopping procedures, ethics, corruption and fraudulent practice. Several officials inMOHS have already participated in courses in procurement under Bank financed projects organized bythe Bank. Under the project provision has been made for at least four MOHS officials, including theAssistant Procurement Manager and the Assistant Architect to attend the Bank's regionalprocurement/consultants selection training courses at the Ghana Institute of Management and PublicAdministration (GIMPA) or the East and Southern Africa Management Institute (ESAM). The Ministryhas initiated the process to select an individual consultant to fill the vacant position of Works Manager.When the workload is heavy, MOHS may hire procurement agents (including UN Agencies) and/orinspection agents to provide procurement support in accordance with paragraph 3.10 of the ProcurementGuidelines.

Procurement Plans

10. MOHS will prepare an indicative Global Procurement Plan (GPP) for the whole project, aProgram of Work (POW) and a Detailed Procurement Plan (DPP) for the first year of the project showingcontract packages, and for each package its estimated cost, procurement method and processing times forkey activities till completion. The GPP and the DPP for the first year will be part of the ProjectImplementation Manual which was completed before negotiations. The Manual will contain the projectworkplans from which the procurement strategies and schedules would be derived. The plans will beagreed with IDA. Two months prior to the start of each subsequent fiscal year, MOF will submit up-datedversions of the GPP, and the annual POW and DPP in respect of the following year. Each quarter, MOHSwill submit to the Bank a procurement monitoring report and a contract expenditure and progress reportas part of the Financial Management Report (FMR).

Procurement Implementation Arrangements

11. Procurement of Works and Goods and the selection of consultants, includingprocurement/selection planning will be the responsibility of the Procurement Unit of MOHS. TheProcurement Unit will ensure that any procurement is carried out in accordance with the procurementstrategy and plan formally agreed with IDA.

Scope of procurement and procurement methods

12. Works (estimated to cost USD 5.0m) will consist of construction/rehabilitation/maintenance forthe restoration of essential health services in 4 district hospitals, 12 health centers and various healthposts. Works contracts estimated to cost USD 500,000 or more will be procured using ICB procedures.When the estimated cost for the works contract is less than USD 500,000 or more than USD 30,000 themethod of procurement will be NCB. Very small contracts estimated to cost less than USD 30,000equivalent may be procured by way of soliciting quotations through written invitations from not less thanthree qualified contractors. Registration/Classification of contractors may be used to identify contractorsfor such very small contracts. The invitation shall include a detailed description of the works, basicspecifications, the required completion date, a simple form of agreement acceptable to the Bank, andrelevant drawings [where applicable]. In all cases the award of contract shall be made to the contractorwho offers the lowest price for the required work, and who has the experience and resources tosuccessfully complete the contract.

13. Goods, Equipment & Printing (estimated to cost USD 7.Om ) will consist of health sector goods

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(pharmaceuticals, vaccines, contraceptives, nutritional supplements and medical & support equipment),ambulances, vehicles, computers and office equipment, and printing of EEC materials and various healthforms. To the extent possible, goods that could be procured under one supplier would be grouped intocontract packages, and packages estimated to cost the equivalent of USD 100,000 or more would beprocured under ICB procedures. Procurement of goods packages estimated to cost more than USD30,000 but less than USD 100,000 would be procured using NCB procedures. Goods packages estimatedto cost less than USD 30,000 would be procured by shopping on the basis of comparison of quotationsfrom at least three eligible and qualified suppliers or from LAPSO where appropriate. Requests for suchquotations will include a clear descnption and quantity of the goods; incidental services required (if any);specifications and warranty requirements; requirements for delivery time and point of delivery as well asthe basis of bid. The Procurement Unit should ensure that prices obtained are reasonable and representthe best value for money. Goods including health sector goods may be procured from or through UnitedNations Agencies in accordance with paragraphs 3.9 and 3.10 of the Procurement Guidelines. Healthsector goods estimated to cost less than USD 100,000 may, with the concurrence of IDA, be procuredthrough LIB procedures in accordance with paragraph 3.2 of the Procurement Guidelines.

14. Software, spare parts and accessories which are of proprietary nature may with the concurrenceof IDA be procured under contracts negotiated directly with the manufactures/suppliers or theirauthonzed agents.

15. Consulting Services and Training (estimated to cost USD 5m) will consist of, engineering andarchitectural services for the design and construction supervision of health facilities, vanous studies andtechnical assistance as well as workshops and group discussions. As a rule, consulting firms for allassignments will be selected though Quality and Cost Based Selection (QCBS) methodology.Assignments estimated to cost the equivalent of USD 200,000 or more would be advertised for EOI inDevelopment Business (UNDB) and in at least one newspaper of wide national circulation prior to thepreparation of the shortlist. In addition, EOI for specialized assignments may be advertised in anintemational newspaper or magazine. The shortlist of firms for assignments estimated to cost less thanUSD 100,000 may be made up entirely of national consultants if at least three qualified firms areavailable at competitive costs in the country. However, foreign consultants who wish to participateshould not be excluded from consideration. Consultant services estimated to cost less than the equivalentof US$ 100,000 may be contracted using Least-Cost-Selection (LCS) or Selection Based on Consultants'Qualifications (SBCQ) procedures in accordance with paragraphs 3.1, 3.6 and 3.7 of the ConsultantsGuidelines. Auditors would be selected using LCS procedures. In case of assignments requiringindividual consultants, the selection will follow the procedures stipulated in Section V of the ConsultantsGuidelines.

16. Training programs and workshops would be packaged in the project's workplans and budget anditems therein procured using appropriate methods.

IDA Review

17. All works and goods contracts estimated to cost USD 100,000 or more will be subject to theBank's prior review in accordance with the procedures in Appendix I of the Procurement Guidelines. Allcontracts awarded on basis of direct contracting or sole source basis will require prior review andclearance of the Bank.

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18. All Direct Contracting and Single-Source Selection will be subject to Bank prior review.Consultancy contracts with firms with estimated value of USD 100,000 or more, and consultancycontracts with individuals estimated value of USD 50,000 or more will be subject to pnor review by theBank in accordance with the procedures in Appendix I of the Consultants Guidelnes.

19. All training programs, seminars, workshops etc. would be subject to the Bank's prior review.

20. Contracts which are not subject to prior review will be selectively reviewed by the Bank duringproject implementation and will be governed by the procedures set forth in paragraph 4 of Appendix I tothe relevant Guidelines.

Contract Management and Expenditure Reports

21. As part of the FMR, MOHS will submit contract management and expenditure information inquarterly reports to IDA.

Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

,, 1 ; ; -- -' S FP6ocur irentMethod ' --Expeiditure,Categor :CoBs t- F - ' l o_ t

_ _y_ _ _ _N__ _ FC;- T tall C s1. Works 3.07 1.85 0.19 0.00 5.11

(2.76) (1.65) (0.17) (0.00) (4.58)

2. Goods 4.02 0.70 1.62 0.00 6.34(4.02) (0.50) (1.56) (0.00) (6.08)

3. Services 0.00 0.00 5.32 0.00 5.32Consultants and Training (0.00) (0.00) (5.32) (0.00) (5.32)4. Operating Costs 0.00 0.00 2.95 0.00 2.95

(0.00) (0.00) (2.67) (0.00) (2.67)

5. Unallocated 0.00 0.00 1.50 0.00 1.50(0.00) (0.00) (1.35) (0.00) (1.35)

Total 7.09 2.55 11.58 0.00 21.22(6.78) (2.15) (11.07) (0.00) (20.00)

"Figures in parenthesis are the amounts to be financed by the Bank Grant. All costs include contingencies.21Includes civil works and goods to be procured through national shopping, consulting services, services of

contracted staff of the project management office, training, technical assistance services, and incrementaloperating costs related to (i) managing the project, and (ii) re-lending project funds to local governmentunits.

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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)

* : 2 - - ~ ~ ' r .t, Q^-: - :- -! ~ / ; - . ,~i Se e toi^Mto - --E::_.

C =- - .a , -u I ta n :',-.Expenditure Categor . -iCBS . ,QBS, - SFB.- -CS C C Other r,til Cost

A. Firms 1.05 0.00 0.00 0.08 0.17 1.62 0.00 2.92(1.05) (0.00) (0.00) (0.08) (0.17) (1.62) (0.00) (2.92)

B. Individuals 0.00 0.00 0.00 0.00 0.00 2.40 0.00 2.40(0.00) (0.00) (0.00) (0.00) (0.00) (2.40) (0.00) (2.40)

Total 1.05 0.00 0.00 0.08 0.17 4.02 0.00 5.32(1.05) (0.00) (0.00) (0.08) (0.17) (4.02) (0.00) (5.32)

1\ Including contingencies

Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants Guidelines), CommercialPractices, etc.N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Grant.

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Prior review thresholds (Table B)

Table B: Thresholds for Procurement Methods and Prior Review

. i- Cotact Value u , - - ,Cotra ject to,

'.'- Threshold .- 'IP r- ,t ' :PilorReview1E.xoek itdfeate-, ory- '-1. Works US$500,000 or above ICB All

>= US$ 30,000 - <US$ NCB Contracts above US $500,000 100,000

Below US$ 30,000 Price Comparison None

All values Direct contracting All contracts

2. Goods US$ 100,000 or above ICB/UN Agency All contractsEquipment & Printing

>=US$ 30,000 - <US$ NCB/LIB/UN Agency All LIB100,000

Below US$ 30,000 Shopping/UN Agency/LIB None

All values Direct contracting All contracts3. Services US$ 100,000 or above, QCBS All contracts

firms

Below US$ 100,000, firms QCBS/LCS/SBCQ None

US$ 50,000 or above, Individual All contractsindividuals

Below 50,000, individuals Individual None

All values Single source All contracts4. Miscellaneous5. Miscellaneous6. Miscellaneous

Total value of contracts subject to prior review: US$m 520%

Overall Procurement Risk Assessment

Average

Frequency of procurement supervision missions proposed: One every 6 months (includes specialprocurement supervision for post-review/audits)

Thresholds generally differ by country and project. Consult OD 11.04 "Review of ProcurementDocumentation" and contact the Regional Procurement Adviser for guidance.

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Disbursement

Allocation of grant proceeds (Table C)

Table C: Allocation of Grant Proceeds

xExpendlture Cateoory. C IP-i%oyntrin-USSmii'on _ ; FiicinPr ce e1. Civil Works 4.58 90 %

2. Goods and Equipment 2.78 100% (foreign expenditures)________________________________ 0.99 90% (local expenditures)

4. Pharmaceuticals 2.31 100%5. Consultants 3.65 100%5. Training 1.67 100%

6. Operating Costs 2.67 90%7. Unallocated 1.35 100%

Total Project Costs 20.00

Total 20.00

Explanatory Notes:(a) the tern 'foreign expenditures" means expenditures in the currency of any country other than that ofthe Borrower for goods or services supplied from the territory of any country other than that of theBorrower.(b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods orservices suppliedfrom the territorv of the Borrower.(c) the term "operating costs" means non-salary operating costs at both central and local levels and areexpenses incurred on account of Project implementation, management and monitoring, including officesupplies, expenses related to communications and utilities, maintenance of vehicles and office equipment,fuel, spare parts, office rentals, travel and supervision.

Use of statements of expenditures (SOEs):

22. Disbursements for all expenditures would be against full documentation, except for items ofexpenditures under contracts and purchase orders below US$ 100,000 equivalent each, for works, goodsand consulting firms, and US$ 50,000 for consultant services (individuals), training and incrementalcosts for which disbursements would be based on statement of expenditures (SOEs). Supportingdocumentation for SOEs would be retained by the MOHS and where applicable its district health officesof the Government of Sierra Leone for review by IDA missions and external auditors.

Special account:23. To facilitate disbursements, one Special Account for the Ministry of Health and Sanitation wouldbe established, and operated in US$ at a commercial bank, under terms and conditions satisfactory to theIDA. Upon Project effectiveness, a sum of US$500,000 would be deposited by the IDA into thisaccount. Further deposits would be made into the account, against withdrawal applications supported byappropriate documentation.

Financial Management Assessment ReportExecutive Summary

24. The Ministry of Health and Sanitation (MOHS) has previous experience in the management of

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IDA funds, in the implementation of the Integrated Health and Sanitation Project. The Ministry has acomponent under the Sierra Leone HIV/AIDs Response Project (SHARP) and is expected to manage its

own special account. During the preparation of SHARP, the Bank conducted a financial managementassessment of the Ministry. The assessment, which was comprehensive, was however limited to theoperations at the head office, and did not involve any assessment at any province or district healthoffices. Given that Sierra Leone is now emerging from conflict, we are unable to extend our assessmentto the district/province health offices.

25. The assessment for this project was therefore limited to reviewing our earlier assessmentdocumentations, records and reports under the SHARP project, and ensuring that all arrangements agreedwere still valid and where need be recommend changes. No new internal control questionnaire wasadministered, since one had been issued and reviewed less than one year ago.

26. MOHS's organizational chart for the finance division was reviewed in detail. The approvalsystems within the Ministry, accounting and financial procedures manuals, the job descriptions ofaccounting and finance staff and previously completed internal control questionnaires were all reviewedin detail.

27. The finance unit of the MOHS is headed by a Finance Director who has responsibility for allfinancial management issues in the Ministry. He is assisted by a deputy responsible for managementaccounting and project accounts. They are both assisted by a principal accountant in charge of financialaccounting. The Director and his two key assistants have several years experience in financial andaccounting work including Bank financed projects. They are currently managing the on-going IntegratedHealth Sector Improvement Project (IHSIP) and have responsibility for the health component of the

SHARP project.

28. The procedures for processing financial transactions, which includes the stages of approvals, andthe required support documents have all been documented in a system chart. These procedures werefound to be adequate for the on-going IHSIP, but will need some updates and improvements to ensureadequate coverage for the SHARP and the new Health Sector Reconstruction and Development projects.

29. Under IHSIP the Ministry has been preparng the PMR manually through the use of spreadsheets(excel), which is very tedious. These reports have been simplified and changed to Financial MonitoringReports (FMR) and the contents and formats were agreed during appraisal and would be included in thenegotiation documents.

Conclusion

30. The MOHS has the accounting system documented in a manual, trained and experiencedaccounting staff, adequate reporting systems and auditing arrangements and have previous experience inmanaging Bank funded project. Based on the assessment and all information gathered, the financialmanagement system of the MOHS, meets the minimum requirements of the bank.

31. However there is the need to modify and update their accounting manual and take steps toautomate the preparation of the FMRs under the new project through the use of a reliable and robustaccounting software. As a result of an agreed action plan with the MOHS, their accounting manual wasupdated and the preparation of the FMRs automated.

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Summary of Project Description

32. The project's overall development objective is to help restore the most essential functions of thehealth delivery system. The project will also help achieve the more specific objectives of:

(a) Increasing access to affordable essential health services by improving primary and first referral healthfacilities in four districts of the country.(b) Improving the performance of key technical programs responsible for coping with the country's majorpublic health problems.(c) Strengthening health sector management capacity to improve efficiency and further decentralizedecision-making to the districts.(d) Supporting development of the private health sector and involvement of the civil society indecision-making.

33. These objectives are expected to be achieved through 2 main components;

I) Restonng Essential Health Services. This component will: (a) provide assistance to four prioritydistricts to deliver adequate health services and (b) support three priority technical programs (TB,malaria and sanitation) to improve their performance and control infectious diseases of high public healthimportance in Sierra Leone; and

ii) Strengthening Public and Private Sector Capacity. This component will enable the HSRDP toprovide support: (a) in all the districts of the country, the decentralization process by (i) strengthening theDistrict Health Management Teams (DHMT) and creating capacity for appropriate planning,management, financial management and supervision and (ii) improving the decision making process; (b)five key support programs of the MOHS (i.e., Planning, Monitoring and Evaluation, FinancialManagement, Procurement, Donor & NGO Coordination and Human Resources Development) toimprove efficiency and improve the administrative performance at the central level and at the periphery;and (c) activities to strengthen the private sector and the participation of the civil society in the healthsector.Country Accountability Issues

34. The Bank has carried out a Country Financial Accountability Assessment (CFAA) for SierraLeone. The report documents the public financial management system architecture, identifiesweaknesses and makes recommendations to address them. The work was completed and issued to theGovernment of Sierra Leone in March 2002. The summary risk analysis is based on this work and ourFM assessment of the Ministry of Health and Sanitation (MOHS).

Summary of Risk Analysis

Risk Risk Rating Risk Mitigation MeasureInherent Risks:Country

a) Weakness in legislative scrutiny Mof Budget and Audited Accounts.Chairman of ParliamentaryFinance committee (Budget) is thesame as Chairman of Publicaccounts commnittee (audit).

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b) Weakness in the Banking sector S Bulk processing will be done at the HQ andleading to large movement of cash lk troctins at the HQ andfrom the center to the provinces limit transactions at the provincial level towith the risks associated with cash mnor activities through petty cash.holdings. Most banks are locatedin the capital, Freetown.

c) Inadequacy of remuneration ofpublic sector financial staff. S If there is need for it, the project will

supplement by recruiting and fundingqualified staff to address this weakness.

Overall Inherent Risks: S

Implementing Entities:

a) Adequate formal rules, but inpractice they are not strictly M Intensify monitoring and review processes.followed.

b) Inadequacy of trained andqualified staff. M The present staff are paid under the existing

project and the new project continues tofinance cost of the qualified staff recruitedto help manage the project.

Control Risk:

Accounting system and Procedures M The project will use PPF funds from IDA toManual not Updated develop and update financial accounting

manual and improve FM systems requiredunder the project.

Funds Flow

Delays in accounting for funds sent S Initial advance for Imprest accountingto the Provinces. system will be funded from GOSL

counterpart funds. Second and subsequentreleases, from the SA, will be based onreceipt of accounting returns from theprovinces as outlined in the revised fundsflow arTangements.

Internal Audit

MOHS has an intemal audit (IA) M The project will strengthen the IA throughdepartment whose functions are the development of audit manuals (includingmostly limited to pre-auditing. It audit programs etc) and training of staff.needs modernization to add value.External Audit

It is not expected that the Audit report willMOHS had previously submitted M be late, but to ensure its timely submission,their audit reports on time. the selection of independent auditors would

be an effectiveness condition.Information Systems

Accounting system at MOHS is not MOHS will be assisted to computerize its

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computerized. accounting system.All reports are done manually with Sthe help of spreadsheet.Overall Control Risk. M

MOHS Accounting System

35. MOHS has previous experience in the management of Bank funded project and is presentlymanaging the Integrated Health Sector Investment Project (lHSIP). The financial managementarrangement under this project will be strengthened and used to manage this new project. The Directorof Finance has overall responsibility for financial management in the MOHS, and will extend to the newproject. He is assisted by two key deputies; a deputy responsible for management accounting and amanager in charge of financial accounting. The Director and his assistants are professionally qualifiedaccountants with several years of experience and are presently responsible for the on-going IHSIP.

36. In addition to these three key staff, the finance division has a pool of accounting staff, mostlyfrom the controller and accountant general's department, with varying levels of qualifications, includingHIND, and degree holders.

37. The MOHS will operate a cash accounting system in line with GOSL accounting practices, withadditional information on all outstanding commitments at any point in time. The finance division willoperate a centralized payment system at the head office. All major payments under the projects will beprocessed and paid for at the head office, with provisional offices' activities limited to the use of cashimprest for operating expenses. The system and the procedures to be adopted will be reflected in therevised accounting manual which will detail out the administrative set up of the finance division, theaccounting system of the MOHS, job description of the staff and the budgeting arrangements.

38. The accounting system is manually maintained, with the aid of spread sheets and other manualrecord books. The Ministry has indicated its willingness to computerize its system. The project willprovide some resources to help the Ministry undertake this task. The Bank will review the TOR for theassignment, and advise the ministry to have an effective computerized system for its accounting andfinancial functions.

Funds Flow Arrangements

39. It has been agreed that the funds under the project will be centrally managed, and all majorpayments will be effected from the head office. However there will be some funds sent to theparticipating provinces for their operating activities. There will therefore be no elaborate flow of fundsarrangements under the project, and releases will only be limited to monthly or quarterly imprest cashallocations.

40. Based on the provinces operating cost budget for activities under the project, the center willrelease funds from the project accounts (i.e counterpart funds allocated to the project) to each province tomeet its operating cost activities for a quarter. The quarter funds will become the ceiling of the imprestfor the province.

41. The provinces will submit monthly returns to the head office, for any amount spent forre-imbursement. The monthly returns will consist of statement of all eligible expenditures, a

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reconciliation statement fully reconciled with the original amount received, and a copy of the bankstatement. The statements should be reviewed and signed by the head of MOHS at the province and theaccounts officer. The head office finance division will review the statements to ensure that all listedexpenditures are eligible, and reimburse the province for all eligible expenditures.

Auditing Arrangements

42. Independent and qualified auditors acceptable to the Bank would carry out the audit of theproject. The selection of auditors shall be on competitive basis in accordance with the Bank's guidelinesand would be in place by effectiveness of the project. There will be one audit required under this project.

43. The project financial statements, SOEs and the special account would be audited by the selectedindependent auditors. The auditors' reports and opinions in respect of each of these statements ofaccounts would be furnished to the World Bank within six months of the close of each fiscal year.Auditors will be expected to comment on the reliability of the FMIRs which have been prepared byproject management in each particular year and whether they are supported by the underlying records.

Financial Monitoring Reports

44. The Bank has introduced a new initiative, the Financial Management Irutiative (FINM). FRNMIrequires projects to prepare quarterly financial monitoring reports (FMRs) in the areas of finance,procurements including contract details and project progress.

45. These FMRs which will be prepared on quarterly basis and submitted to the Bank, will consistof;i) sources and uses of funds;ii) uses of funds by project components and activities;iii) contract monitoring reports;iv) Procurement report;v) Physical progress;

46. The contents and formats of these reports were discussed and agreed during appraisal were partof the documents for negotiations. Although the MOHS is capable of producing such reports manually,steps were taken to automate it to make the data more reliable and acceptable. The chart of accounts andcoding system to be put in place allows a meaningful summarization of transaction and consequentlyprovide these reports.

Disbursement Arrangements

47. The proceeds of the Project would be disbursed over a four year period. A period of four monthsafter closing date would be allowed to make disbursements for expenditures incurred until the closingdate of the Project.

Use of Statement Of Expenditures (SOlEs)

48. Disbursements for all expenditures would be against full documentation, except for items ofexpenditures under contracts and purchase orders below US$ 100,000 equivalent each, for works, goodsand consulting firms, and US$ 50,000 for consultant services (individuals), training and incrementalcosts for which disbursements would be based on statement of expenditures (SOEs). Supporting

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documentation for SOEs would be retained by the MOHS and where applicable its distnct health officesof the Government of Sierra Leone for review by IDA missions and external auditors.

Special Account (SA)

49. To facilitate disbursements, one Special Account for the Ministry of Health and Sanitation wouldbe established and operated in US$ at a commercial bank, under terms and conditions satisfactory to theIDA. Upon Project effectiveness, a sum of US$ 500,000 would be deposited by the IDA into thisaccount. Further deposits would be made into the account against withdrawal applications supported byappropriate documentation.

Action PlanPre-Negotiations Actions

Action Step Due Date Responsibility or ActionAction By Completed

1. Agree on TOR for revising the MOHS October 2, 2002 Director of Finance Yes-ActionAccounting Manual (DOF) -MOHS Completed

2. Consultant to revise Manual hired October 7, 2002 DOF -MOHS Yes-DoneOcL 3, 2002

3. Draft revised Manual submitted to the November 5, 2002 DOF - MOHS YesMOHS

4. Draft revised Manual submitted to the November 10, 2002 DOF - MOHS YesWorld Bank Nov. 13, 2002

5. World Bank review comments sent to November 15, 2002 FMS - AFTFM YesMOHS Nov. 22, 2002

6. Finalized Revised Manual submitted to November 22, 2002 DOF - MOHS YesMOHS Nov. 25, 2002

7. RFP for the selection of Auditors submnitted October 5, 2002 DOF - MOHS Yesto the Bank Oct. 15, 2002

8. Auditors selected November 29, 2002 DOF - MOHS

9 Agree on Formats and Contents of October 11, 2002 WB (TTL) and YesFinancial Monitoring Reports (FMR) MOHS (DOF) Oct. 15, 2002

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Other Actions Required

Action Step Due Date Responsibility or Date ActionAction By Completed

10. TOR for Computerization of MOHS October 21, 2002 DOF - MOHS Completedaccounting system agreed

11. P for Computerization of accounting October 28, 2002 DOF - MOHS Completed, Bankystem submnitted to Bank. has issued its No

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __'_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ O b je c tio n12. Bank issues its No Objection on RFP. November 1, 2002 TTL Completed

Jan. 22, 2002

13. MOHS request for Proposals from Short January 27, 2002 DOF - MOHS NYDlisted firms.

14. OHS Evaluates Technical Proposals February 10, 2002 DOF - MOHS NYDom firms and evaluati on report

submitted to the Bank.15. Bank's No Objection issued to MOHS. February 17, 2002 TTL NYD

16. MOHS Evaluates financial Proposals, February 26, 2003 DOF - MOHS NYDnegotiates with the combined 1st (top)anked firm and submits evaluation reportlus minutes of negotiations and draft

contract to Bank for No Objection17. Bank issues No Objection for award and March 1, 2003. TTL NYD

signing of contract.

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Annex 7: Project Processing Schedule

SIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

Piofrc,tScheule -. -;-- - . ., Pianned.--- 4. f i-:!- *- p -, --Actuj.--

Time taken to prepare the project (months) 15

First Bank mission (identification) 10/18/2001 10/18/2001

Appraisal mission departure 09/22/2002 11/06/2002

Negotiations 10/22/2002 12/02/2002

Planned Date of Effectiveness 01/15/2002

Prepared by:Ministry of Health and Sanitation (MOHS)

Preparatlon assistance:

A PHRD Grant (TF026871 and TF026794) from the Japanese Government of US$ 400,000 was receivedand used for consulting services to conduct studies such as: (a) Social Assessment; (b) ProjectImplementation Plan/Operational Manual; (c) Environmental Assessment; (d) Public ExpendituresReview for the Health Sector; (e) Health Facility Inventory; (f) Health Sector Priority Issues andStrategic Approaches; (g) Human Resources Assessment; (h) Update of the Health Sector Policy; (i)National and District Health Plans and a Three-Year-Rolling Plan.

This grant was of particular importance as it provided the resources to quickly launch essential

studies and activities necessary for project design and preparation. All planned outputs were

completed and consulting performance was successful. Reports produced were of good quality.

Bank staff who worked on the project included:

Name Speciality

Astrid Helgeland-Lawson Task Team Leader

Minneh Kane Legal Advisor

Kofi Awanyo Procurement Specialist

Fred Yankey Financial Management Specialist

Lawrence Barat Infectious Disease Specialist

Barbara B. Machado Language Program Assistant

Sheila Braka-Musiume Legal Advisor

David Webber Sr. Financial Management Specialist

Roxanne Hakim Anthropologist

Irene Xenakis Operations Advisor

John May Sr. Reproductive Health Specialist

Sergiu Luculescu Consultant - Public Health Specialist

Peter Bacharach Consultant - Planning Specialist

Christian Hurtado Consultant - Implementation Specialist

Jo Martins Consultant - Economist

John Tommy Consultant - Environmental Health Specialist

Haddy Jatou Sey Consultant - Anthropologist

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James Monday Consultant - Resettlement Policy/Sanitation

Anne M. Pierre-Louis Lead Health Specialist

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Annex 8: Documents in the Project File*

SIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT

A. Project Implementation Plan

1. Identification Mission Aide Memoire, May 2001.2. Preparation Mission Aide Memoire, October 2001.3 Pre-appraisal Mission Aide Memoire, April 2002.4. Technical Mission Aide-Memoire, October 2002.4. Draft Project Implementation Plan, April 2002.

B. Bank Staff Assessments

1. Financial Management Assessment Reports (2002)2. Procurement Capacity Assessment (2002)

C. Other

Social Assessment on Health in Sierra Leone (2002)Sierra Leone: Health Sector Environmental Assessment (2002)Sierra Leone: Public Expenditures Review (2002)Survey Report on the Status of Women and Children in Sierra Leone at the End of the Decade(2002-MICS1I)Sierra Leone Resettlement Policy Framework (2002)HSRDP Project Implementation Plan (2002)Institutional Capacity (DIFD) (2002)Draft Health Facility Inventory (2002)Draft Human Resources Assessment (2002)Draft Health Sector Policy (2002)MICS II (2002)*Including electronic files

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Annex 9: Statement of Loans and Credits

SIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECT12-Dec-2002

Difference between expectedand actual

Original Amount in US$ Millions disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel Undtsb Orig Frm Revd

P074642 2002 ERRCII 000 5000 000 000 000 2330 -1016 000

P073883 2002 HIV/AIDS RESPONSE PROJECT 000 1500 000 000 000 1614 103 000

P070201 2001 Second Public Sector ManaQement Support 000 3 50 0 00 000 000 2 28 0 90 0 00

P040649 2000 COMIMUNrY REINTEGRATION & REHAiNLrrA 000 2500 000 000 000 3477 1 11 000

P002420 1998 TRANSPORT SECTOR PRO 000 3500 000 000 000 449 778 239

P002422 1996 HEALTH SECTOR 000 20 00 000 0 00 000 0 33 2 44 -6 78

P002428 1995 URBAN WATERSUPPLY 000 3600 000 000 000 014 329 000

Total 000 184 50 0 00 000 000 61 45 6 39 -4 39

SIERRA LEONESTATEMENT OF IFC's

Held and Disbursed PortfolioJun 30 - 2002

In Millions US Dollars

Commnitted DisbursedIlFC IFC

FY Approval Company Loan Equity Quasi Panic Loan Equity Quasi Pantic

2001 MSICIH 11 Sierra 4.00 0.00 0.00 0.00 0.00 0 00 0.00 0.00

Total Portfolio: 4.00 0.00 0.00 000 0.00 0.00 0.00 0.00

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Panic

Total Pending Comnumtent: O.M0 0.00 0.00 0.00

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Annex 10: Country at a Glance

SIERRA LEONE: HEALTH SECTOR RECONSTRUCTION AND DEVELOPMENT PROJECTSub-

POVERTY and SOCIAL Sierra Saharan Low-Leone Africa Income Development dlamond-

2001Population, mid-year (millions) 5 1 674 2,511 Life expectancyGNI per capita (Atlas method, US$) 130 470 430GNI (Atlas method, US$ billions) 068 317 1,069

Average annual growth, 1995-01

Populabon (%) 2 2 2 5 19 GLabor force (I%) 2 3 2 6 2 3 GNI Gross

per pnmaryMost recent estimate (latest year available, 1995-01) capita ,,' enrollment

Poverty (% of population below national poverty line)Urban population (% of total population) 37 32 31Life expectancy at birth (years) 39 47 59Infant mortality (per 1,000 live births) 154 91 76Child malnutntion (% of children under 5) Access to Improved water sourceAccess to an improved water source (% of population) 28 55 76Illiteracy (% of population age 15+) 37 37Gross pnmary enrollment (%of schoolage population) 52 78 96 SieraLeone

Male 61 85 103 Low-income groupFemale 42 72 88

KEY ECONOMIC RATiOS and LONG-TERM TRENDS

1981 1991 2000 2001Economic ratlos,

GDP (US$ billions) 1 1 0 78 064 068Gross domestic Investment/GDP 19 1 9 3 8 0 7 9Exports of goods and services/GDP 23 0 22 7 17 3 171 TradeGross domestic savIngs/GDP 8 5 -8 4 -12 3Gross nabonal savings/GDP 5 0 -1 8 -7 6

Current account balance/GDP -16 6 -1 2 -10 7 -17 2 Dorr'iS i

Interest payments/GDP 0 9 0 2 11 savings InvestmentTotal debt/GDP 53 0 154 5 184.9 1736 savings I tTotal debt service/exports 421 6 3 38 2 63 9Present value of debVGDP 124 9 109 5Present value of debt/exports 709 3 625 0

Indebtedness1981-91 1991-01 2000 2001 2001-05

(average annual growth)GDP 0 4 -4 3 3 8 5.4 66 -Siera LeoneGDP per capita -1 7 -6 5 1 8 3 1 4 3 Low-income groupExports of goods and services 0 5 -34 8 7 0 13 2 22 1

STRUCTURE of the ECONOMY1981 1991 2000 2001 Growth of Investment and GDP (%)

(% of GDP)Agricufture 343 45 1 47 3 501 10Industry 18 2 27 7 33 6 29 8 o

Manufacturing 5 7 3 7 4 7 5 0 9e 00 01Services 47 5 27 2 19 0 201 10iVPnvate consumption 90 7 81 9 93 8 951 2-Generalgovemmentconsumption 70 96 146 172 -GDI ti GDPImports of goods and servIces 39 7 23 6 33 4 37 3

(average annual growth) 1981-91 1991-01 2000 2001 Growth of exports and Imports (%)

Agnculture -0 6 -2 6 2 2 3 8 100loIndustry 01 -41 51 5 6 s0e

Manufacturing 6 9Services -57 -54 40 51 o,s,

Pnvate consumption -2 0 -19 10 4 10 0General govemment consumption -5 1 -4 2 41 3 27 9 -100Gross domestic Investment -0 6 3 0 5 0 - Ex,orts e rImportsImports of goods and services -2 2 -15 1 85 0 61 3

Note 2001 data are preirrinary estimatesThe diamonds show tour key indicators in the country (in bold) compared with its income-group average It data are missing, the diamond Arli be incomrplete

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Sierra Leone

PRICES and GOVERNMENT FINANCE1981 1991 2000 2001 Inflation

Domestic prices(% change) 40Consumer prices 16 7 102 7 -0 9 3 0 30

Implicit GDP deflator 8 7 128 8 6 2 6 1 20

Govemment finance 10(% of GOP, includes current grants) 0 .Currentrevenue 112 182 178 -10 Be 97 98 99 00 01

Current budget balance -5 8 -4 5 -7 1 -G DP detlator '-0CPIOverall surplus/deficit -10 4 -10 6 -12 3

TRADE

(USS millions) 1981 1991 2000 2001 Export and Import levels (USS mill.)Total exports (fob) 147 176 75 78 40

Rutile 72Diamonds (recorded) 32 10 21 300Manufactures

Total imports (cif) 317 158 161 303 200Food 53 66 72 100Fuel and energy 26 29 36Capital goods 38 18 22 0

Export pnce Index (1995-100) 90 86 87 as 9s 07 e8 Be 00 0

Import price index (1995--100) 93 93 92 0 Exports OirrportsTerms of trade (1995=100) 97 93 94

BALANCE of PAYMENTS

(USS millions) 1981 1991 2000 2001 Currenl account balance to GDP (%)Exports of goods and servlces 163 244 110 116 oImports of goods and services 349 226 212 252Resource balance -186 18 -102 137

Net Income -28 -60 -18 -20Net current transfers 29 34 52 40 -10

Current account balance -185 -9 -68 -117 -15

Flnancing Items (net) 116 9 91 140Changes In net reserves 69 1 -23 -24 20 -

Memo:

Reserves Including gold (US$ mIllions) 1 8 10 44 52Conversion rate (DEC, locaUUSS) 1.2 2953 2,0921 2,200 0

EXTERNAL DEBT and RESOURCE FLOWS1981 1991 2000 2001

(US$ millions) Conipositlon of 20D1 debt (USS mIll.)Total debt outstanding and disbursed 591 1,205 1,176 1,174

IBRO 13 10 0 0 F S G 30IDA 31 81 354 552

Total debt service 69 15 43 76IBRD 2 1 0 0 E 362IDA 0 1 4 5

Composition of net resource flows . 4Official grants 41 34 53 73Officlalcreditors 18 14 69 113Privag creditors 12 0 0 -1n t 4 32Foreign diredinvestment 4 3 2 2 D 1 Portfolio equity 0 0 0 0

C 120World Bank program

Commitments 29 0 55 54 A -IBRD E -EilaieralDisbursements 2 0 70 70 B -IDA D -Other rnultilateral F -PnvatePrincipal repayments 1 0 2 2 C -IMF G -Short-termNet flows 1 0 68 67Interest payments 1 1 2 3Net transfers 0 -1 66 65

ueveiopmenr -conomics

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SEPTEM^BER 2002

Report No., 24217 SLType: PAD