Document of The World Bank FOR OFFICIAL USE ONLY Report No/ZM57368 PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR 19.1 MILLION (US$30 MILLION EQUIVALENT) TO THE REPUBLIC OF ZAMBIA FOR A MALARIA BOOSTER PROJECT NOVEMBER 10, 2010 Human Development Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective {October 31, 2010}) Currency Unit = Kwacha 4612.50 = US$1 USD 100 = SDR 19.1 FISCAL YEAR January 1 ­ December 31 ABBREVIATIONS AND ACRONYMS ACT Artemisinin Combination Therapy AF Additional Financing ITN Insecticide Treated Net AG Auditor General LLIN Long Lasting Insecticidal Net CAS Country Assistance Strategy M&E Monitoring and Evaluation COMBOR Community Malaria Booster Response MBP Malaria Booster Project CSR Country Status Report MDG Millennium Development Goals CP Cooperating Partners MOH Ministry of Health DHS Demographic and Health Survey NMCC National Malaria Control Centre FM Financial Management NMCP National Malaria Control Program GAP Governance Action Plan OAG Office of the Auditor General GDP Gross Domestic Product OP/BP Operational Policy/Business Policy GF Global Fund to Fight AIDS, ORAF Operational Risk Assessment Tuberculosis and Malaria Framework GRZ Government of the Republic of Zambia NGO Non-Governmental Organization HRIF Health Results Innovation Fund NTD Neglected Tropical Diseases IBRD International Bank for Reconstruction PAD Project Appraisal Document and Development IDA International Development Association PDO Project Development Objective IFMIS Integrated Financial Management RBF Results Based Financing Information System IFR Interim Financial Report RDT Rapid Diagnostic Test IFRA Independent Fiduciary Review Agency SIL Specific Investment Loan INT The Department of Institutional TOR Terms of Reference Integrity IPT Intermittent Preventive Treatment YLL Years of Life Lost Vice President: Obiageli Ezekwesili Acting Country Director: Olivier Godron Sector Manager: Eva Jarawan Task Team Leader: Monique Vledder Contents ADDITIONAL FINANCING DATA SHEET ................................................................................ i I. Introduction ............................................................................................................................. 1 II. Background and Rationale for Additional Financing .......................................................... 3 III. Proposed Changes ................................................................................................................ 4 IV. Consistency with the Country Assistance Strategy (CAS) .................................................. 8 V. Appraisal Summary ............................................................................................................. 8 VI. Risks................................................................................................................................... 13 VII. Financial Terms and Conditions for the Additional Financing ......................................... 14 Annex 1: Financial Management Improvement Plan ................................................................... 15 Annex 2. Revised Results Framework and Monitoring ................................................................ 16 Annex 3. Financing Table ............................................................................................................. 24 Annex 4. Procurement Plan .......................................................................................................... 26 Annex 5. Implementation Progress Governance Action Plan ...................................................... 29 Annex 6. Terms of Reference for Independent Fiduciary Review Agent (IFRA)........................ 33 Annex 7. Economic and Financial Analysis ................................................................................ 37 Tables Table 1. Key Outcome Indicators of the Zambia Malaria Booster Project ................................... 2 Table 2. Revised and Modified Project Outcome Indicator .......................................................... 4 Table 3. Project Costs by Component............................................................................................ 5 Table 4. Project Activities and Costs ............................................................................................ 7 REPUBLIC OF ZAMBIA THE MALARIA BOOSTER PROJECT ADDITIONAL FINANCING (CR.41260) ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) November 10, 2010 Sectors: Health (100%) Country Director: Olivier P. Godron Themes: Malaria (60%), Health Sector Manager/Director: Eva Jarawan System Performance (25%), Team Leader: Monique Vledder Participation and Civil Project ID: P120872 Engagement (5%) Administrative Expected Effectiveness Date: January 31, 2011 and Civil Service Reform (10%) Lending Instrument: Specific Investment Environmental category: B Partial Loan Assessment Additional Financing Type: Investment Expected Closing Date: January Lending 31, 2013 Joint IFC: Joint Level: Basic Information - Original Project Project ID: P096131 Environmental category: B Partial Assessment Project Name: Zambia Malaria Booster Expected Closing Date: January 31 Lending Instrument: Specific Investment Loan 2013 Joint IFC: Joint Level: AF Project Financing Data [ ] Loan X Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: Standard, with 40 years maturity, including a grace period of 10 years AF Financing Plan (US$m) Source Total Amount (US $m) Total Project Cost: 73.61 Cofinancing: 23.61 Borrower: Total Bank Financing: IBRD IDA 50.00 New 30.00 Recommitted 20.00 i Client Information Recipient: Republic of Zambia Responsible Agency: Ministry of Health Contact Person: Dr. P. Mwaba Telephone No.: 260-1-253512 Fax No.: 260-1-251078 AF Estimated Disbursements (Bank FY/US$m) FY 2008/09 2009/10 2010/1 2011/1 2012/ 1 2 13 Annual 18 1 11 15 5 Cumulative 18 19 30 45 50 Project Development Objective and Description Original project development objective(as revised in November 2009): To increase coverage of interventions for malaria prevention and treatment and other key maternal and child survival interventions Revised project development objective : N/A Project description: 1a: Strengthening the health system to improve service delivery; 1b: Improved National Health Care Waste Management; 2: Community Booster Response to Malaria 3: Program Management Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [X]Yes [ ] No Natural Habitats (OP/BP 4.04) [ ]Yes [X] No Forests (OP/BP 4.36) [ ]Yes [X] No Pest Management (OP 4.09) [ ]Yes [X] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [X] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [X] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [X] No Safety of Dams (OP/BP 4.37) [ ]Yes [X] No Projects on International Waters (OP/BP 7.50) [ ]Yes [X] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X] No Does the project require any exceptions from Bank [ ]Yes [X] No policies? [ ]Yes [ ] No Have these been approved by Bank management? Conditions and Legal Covenants: Financing Agreement Description of Date Due Reference Condition/Covenant Article 4 Recruitment of a Fiduciary Project Review Agent Effectiveness Article 4 Adoption of a Project Project Procedures Manual Effectiveness ii REPUBLIC OF ZAMBIA Malaria Booster Project Additional Financing Project Paper I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional credit in an amount of US$30 million to the Republic of Zambia to support the Zambia Malaria Booster Project (Cr. 4126-ZA). In a letter dated May 21, 2010, the Government of the Republic of Zambia (GRZ) requested US$30 million of additional financing (AF) to support the implementation of the malaria program. These resources provided by the Bank are part of the US$200 million additional IDA funds to fight malaria in Africa. 2. The Additional Financing instrument governed by OP 13.20 will be used. The proposed AF is necessary to finance activities to: (i) address the recent increase in malaria cases in some provinces in the country; (ii) sustain the achievements of the malaria program in other areas of the country; and (iii) scale-up activities to contribute to the GRZ's target of 80% population coverage of preventative and treatment interventions. The project will build on existing implementation arrangements while adding more stringent fiduciary safeguards in response to the governance challenges in the health sector. 3. There are no changes to the main components of the project. The Project Development Objective (PDO) will remain the same and minor changes will be made to the project component description1. The PDO indicators have been revised to reflect the additional financing. The project closing date will be extended from January 31, 2012 to January 31, 2013. 4. An in-depth financial review of the original Malaria Booster Project was carried out in July 2010. The review concluded that there are ineligible expenses amounting to US$1.3 million. Repayment of the ineligible expenditures took place on November 4, 2010. Several measures have been taken to ensure the strengthening of the fiduciary environment in the Ministry of Health going forward. II. Background and Rationale for Additional Financing 5. The Zambia Malaria Booster Project (MBP) was approved on November 15, 2005 and became effective on March 13, 2006. It was a US$20 million IDA credit with an original closing date of January 31, 2010 subsequently extended to January, 31, 2012. The PDO of the project is "to increase 1 The Project components consist of Component 1a: Strengthening the health system to improve service delivery; Component 1b: Improved Environmental Management. Component 2: Community Booster Response to Malaria; and Component 3: Program Management. iii coverage of interventions for malaria prevention and treatment and other key maternal and child health interventions". The project has achieved the PDO indicators and it has made a significant contribution to the increased coverage of key malaria prevention activities in Zambia that took place between 2006 and 2009. As of September 23, 2010, US$19.44 million has been disbursed and US$0.69 million is remaining from the original credit. The malaria achievements in Zambia have been widely disseminated as a success story in Africa and the MBP has frequently been featured as an IDA success story within the Bank because of its extraordinary results in a short period of time. The Implementation Status and Results Report (ISR) ratings of the project have been satisfactory. The main outcomes of the project are summarized in table 12. Table 1: Key outcome indicators of the Zambia Malaria Booster Project3 Indicator Baseline Status at Current mid-term status (2006) (2008)4 (2010) Percentage of children under 5 years of age who 24% 41% 50% slept under an insecticide treated net last night Percentage of pregnant women who took 2+ doses of 59% 66% 70% intermittent presumptive treatment (IPT) for malaria Percentage of households that have at least one 38% 62% 64% insecticide treated net (ITN) Source: (a) based on the 2006, 2008 and 2010 Malaria Indicator Surveys. 6. As a result of these achievements, Zambia was successful in raising additional resources for the Project through a Trust Fund from the Russian Federation (US$6.85 million). The focus of this grant is to complement IDA financing to increase the coverage of key malaria interventions. As of October 13, 2010, US$4.92 million of this grant was disbursed and US$1.93 million is remaining. 7. The successful scale up of the malaria program in the period 2006-2008 made a significant contribution to the recent positive trend in health outcomes in Zambia. The annual number of malaria deaths in the country decreased by at least 50 percent during the period 2000-2008, during which the population rose by 30 percent, implying a reduction in the death rate of over 60 percent. These outcomes contributed to the reductions in under-five (29 percent) and infant mortality (26 percent) observed between 2002 and 2007. During the years 2006-2008 (when IDA was a major financier of the National Malaria Control Program [NMCP]), under-five malaria deaths decreased from 3,235 to 2,680 (17 percent reduction). These were substantial and important steps towards achieving the health-related Millennium Development Goals (MDGs). 8. In November 2009, the project was approved for a Level 1 restructuring. The main reason for the restructuring was to accommodate an opportunity for Zambia to receive co-financing resources from the Health Results Innovation Trust Fund5. Through a competitive selection process, Zambia was awarded a US$17 million grant from this trust fund to finance results-based financing (RBF) approaches to improve the delivery of maternal and child health services. The original MBP was restructured and the following changes were approved by the Board: (i) the scope of the project was 2 During the design phase of the Malaria Booster, mid-term targets were defined for 2008. Data are collected biannually. The last Malaria Indicator Survey took place in April-May 2010. 3 This reflects the progress on the outcome indicators from the original Malaria Booster project that became effective in April 2006. 4 The PDO targets were fully achieved. 5 This is a multi-donor trust fund primarily supported by the Norwegian and British governments that support a results-based approach to health sector development. 2 broadened to include other key maternal and child health interventions; (ii) the closing date of the project was extended from January 31, 2010 to January 31, 2012; and (iii) the project components and the results framework were modified to reflect the revised PDO. 9. In June 2009 a major corruption allegation was made and later substantiated in the MOH. The main vehicle for corrupt practices was the pooled funding mechanism (basket funding) in the health sector. A forensic audit of the expanded basket, led by the Office of the Auditor General (OAG), concluded that funding from several Cooperating Partners (CP) were affected and the government subsequently reimbursed the affected partners a total amount of US$3.28 million. A total of 32 MOH staff were suspended and 11 of those, as well as 2 individuals working in the private sector, are under prosecution. To strengthen the weak internal control environment exposed during the audit, the Government and CPs adopted a Governance Action Plan (GAP). The government has made significant progress in implementing a majority of the proposed actions and as a result several donors have restarted disbursements to the sector. 10. Alerted by the outcome of the forensic audit, the Bank undertook a focused in-depth financial transactions review of the MBP special account as well as project disbursements to the pooled account. This review was completed in August 2010 and identified ineligible expenditures due to: a) a fund transfer that could not be traced through the account; b) duplicate payments; and c) payments made to unauthorized accounts. The Ministry of Finance has repaid these ineligible expenditures, totaling US$1.3 million, under the original Credit. It was agreed that the Office of the Auditor General (OAG) would complete a reconciliation exercise of missing documentation to address other issues flagged by the in-depth financial transactions review as well as complete a forensic audit on the balance of the special account. The Department of Institutional Integrity (INT) will provide any necessary support to the OAG. 11. Project preparations have focused on ensuring that the fiduciary safeguards are in place to protect and account for the Bank's funding. The following measures have been taken to ensure financial management safeguards are in place: (i) financial management action plan was developed to strengthen the fiduciary environment in the MOH and the implementation of the plan has been completed (Annex 1); (ii) An Independent Fiduciary Review Agent (IFRA) will be contracted to review all future financial management and procurement transactions and provide capacity building; (iii) World Bank supervision will be intensified and the team composition has been strengthened; (iv) the pooled funding mechanism will not be supported with IDA funds; and (v) direct payments are encouraged. Furthermore, the Bank is providing technical support to the implementation of the joint governance action plan in the sector, which is supported by the CPs. More details are provided in the appraisal section of this document. 12. The governance challenges in the MOH adversely affected the implementation of the MBP. The grant agreement for the RBF co-financing could not be processed until; (a) reimbursement of the ineligible expenditures took place; and (b) fiduciary systems were strengthened in the MOH. The Bank executed preparation grant from the Health Results Innovation Trust Fund ensured that technical pilot activities could continue and the MOH has shown a strong commitment to this approach by integrating the RBF reforms in the new National Health Strategic Plan and by developing a RBF implementation manual. Implementation of the grant will now be accelerated and the RBF program is expected to be fully operational in January 2011. 13. Under the malaria program, fluctuations in donor financing, partly as a result of the suspension of financing during the corruption investigations, caused disruptions in the implementation of many of the preparation activities for the 2009/2010 malaria season. Because of the specific nature of malaria 3 interventions, with continuous annual investments6 needed to avoid resurgence of malaria, these disruptions have already resulted in serious consequences for the population in certain provinces. For instance, in Luapula province, malaria incidence rates increased from 12 percent to 51 percent between 2008 and 2010. During the same period, severe anemia7 in children increased from 3 percent to 11 percent in the same province. 14. In response to this situation, the GRZ raised concerns regarding the financing gap of the malaria program and requested the Bank for AF for the MBP. The financing gap between 2010 and 2013 has been estimated to be US$38 million in total. The MBP AF will cover a large part of the financing gap (US$30 million), while other partners will cover the remaining US$8 million. The AF will be allocated to the following key program areas: US$17.5 million for Long Lasting Bed nets and supplies, US$7.0 million for the Indoor Residual Spraying campaigns, US$4.2 million for malaria case management, including the supply of pharmaceuticals and diagnostics8, US$1.2 million for program management, fiduciary strengthening, operational research and monitoring and evaluation and US$0.1 million for environmental management. 15. There are no other unresolved procurement, environmental, social or safeguards problems in the project. The recipient has deep commitment and sufficient capacity to smoothly process and implement the AF package, as evidenced by the remarkable results produced by the project to date, the satisfactory overall programmatic performance, and continued substantive contributions by the government of financial and human resources. III. Proposed Changes 16. Changes in the project outcome indicators: The project development objective will remain the same: "To increase coverage of interventions for malaria prevention and treatment and other key maternal and child survival interventions." The project outcome indicators will be revised to reflect realistic targets that take into account 1) new data from the 2010 malaria indicator survey, 2) current challenges in maintaining previous coverage levels due to erratic funding in recent years, and 3) the available resource envelop for malaria. Table 2 shows the revised and modified project outcome indicators (the complete Results Framework is attached in Annex 2). 6 E.g. replacement of bednets, Indoor Residual Spraying Campaigns, etc 7 Many African children die because they develop severe anemia. As many as 5 million cases of severe malarial anemia occur in African children every year, and 13% of these cases are fatal. Expressed differently, more than half of young children in African countries where malaria is endemic are anemic. Nutritional deficiencies and various infections account for some of this disease burden, but malaria is one of the most important factors contributing to anemia. The malaria parasite destroys red blood cells as part of its life cycle, releasing hemoglobin (Hb)--an iron-containing protein that carries oxygen around the body--into the circulation. Free Hb can cause oxidant stress, which is itself associated with anemia in malaria. 8 These are all activities under part 1a of the project components. 4 Table 2: Revised and Modified Project outcome indicators Revised after restructuring in 2009 Modified* PDO To increase the percentage of children To increase the percentage of children indicator 1 under 5 years of age who sleep under an under 5 years of age who slept under an insecticide treated bed net from 41% to insecticide treated net last night from 50% 55% by 2012. to 55% by 2013. PDO To increase the percentage of pregnant To increase the percentage of mothers indicator 2 women who receive a complete course of who took 2+ doses of intermittent intermittent presumptive treatment for preventive treatment (IPT) for malaria malaria from 66% to 75% by 2012. from 70% to 75% by 2013. PDO To increase the percentage of people in To increase percentage of households indicator 3 IRS-eligible district who sleep in reported sprayed within the previous 12 appropriately sprayed structures from months from 23% to 26% by 2013**. 40% to 60% by 2008. PDO To increase the percentage of women To increase the percentage of women indicator 4 delivering in facilities by a skilled birth delivering in facilities by a skilled birth attendant from 34% to 50% by 2012. attendant in RBF eligible districts from 31% to 36% by 2013***. Core Direct Project Beneficiaries, 8,000,000 by 2013 indicator Of which female 60% female *The revised results framework is attached in Annex 2. ** The IRS indicator collected in the Malaria Indicator Survey has been modified from only collecting data on sprayed households in IRS-eligible districts to collecting data that is representative at the national level. The reduction in coverage level in the modified indicator reflects this change. *** This indicator relates to the RBF grant. It has been corrected to adequately reflect the geographical area for which the RBF interventions will be implemented and for which data will be collected. The data provided in the table above assumes that RBF eligible districts on average have the same skilled delivery rate as the rural average. The baseline and target will be modified once the RBF baseline study has been completed. 17. Proposed interventions: The original project components comprise: Component 1a- Strengthening the health system to improve service delivery; 1b-Improved Environmental Management; Component 2- Community Booster Response to Malaria; and Component 3-Program Management. Component 3 was mistakenly omitted from the legal amendment of the project restructuring that took place in November 2009. This will be corrected in the AF. No further changes to the components of the project are proposed with similar interventions being financed as under the original project. The interventions will be targeted towards geographic areas where gaps exist. They will also be focused on sustaining and scaling up malaria control activities that are continuous (routine distribution of LLINs, IPT, diagnosis and treatment) or periodic (IRS and campaign distribution of LLINs). The IDA allocation per project component is presented in Table 3. Table 3: Project Costs by Component Component Allocation 1a Strengthening the health system to improve US$28.7 service delivery 1b Improved Environmental Management US$0.1 2 Community Booster Response to Malaria9 US$0 3 Program Management US$1.2 Total US$30 Note: This table covers the allocation of the additional financing only. 9 COMBOR will be financed from the remaining funds of the Russian Trust Fund. 5 18. Closing date extension: The project closing date will be extended from January 31, 2012 to January 31, 2013, which is within the allowed 3 year limit of extensions to the original project. 19. Implementation arrangements: The MOH will be the implementing agency for the additional financing, as in the original project. The technical performance of the NMCC/ MOH has been very strong. More stringent fiduciary measures have been put in place to strengthen the financial management and procurement capacity. 20. Financial Management and Disbursement Arrangements: To address the weaknesses identified in the financial management of the MOH, the project has put in place several measures to ensure strong fiduciary management of the project's resources. These measures include: a) the use of a Designated Account and exclusion of the use of pooled funding arrangements; b) the recruitment of an Independent Fiduciary Review Agent to provide oversight for the financial management and procurement transactions that take place under the project; c) intensified Bank supervision; and d) support from INT for capacity building of the internal audit function to carry out forensic audits and allocation of project resources for governance strengthening of the health sector more widely. More details on the financial management safeguards are provided in the appraisal section of this paper. An overview of the original allocation of the credit and the allocation of the AF is provided in Annex 3. 21. Procurement: The procurement plan for the additional financing has been finalized (Annex 4). Procurement for the project would be carried out in accordance with the World Bank's "Guidelines: Procurement under "IBRD Loans and IDA Credits" dated May 2004, revised in October 2006 and May 2010); Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 revised in October 2006 and May 2010; and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank and are outlined in the Procurement Plan. 22. Procurement capacity has recently declined in the MOH since some procurement staff were suspended during the corruption investigations in 2009. Under the original project arrangement, the Bank funded a procurement consultant to support the MOH's implementation capacity. This consultant has since left to take on larger responsibilities in the procurement unit of the MOH and a replacement has been selected. Given the weakened capacity, this position is essential to strengthen the capacity of the MOH to process the necessary procurements as part of this project. Furthermore, the IFRA will monitor the procurement process and provide support to the MOH to adhere to the Bank's procurement guidelines. 23. Effectiveness Conditions: In addition to the standard conditions, the following effectiveness conditions have been agreed upon: (i) the hiring of an independent fiduciary review agent; and (ii) the adoption of a Project Procedures Manual. 24. Russian Trust Fund: The Trust Fund agreement will be amended through a separate document. The closing date of the grant will be extended to coincide with the closing date of the additional financing. The remaining US$2.4 million will be reallocated to category 3; community sub-grants (Annex 3 Project Costs). 25. RBF Trust Fund: Details on the trust fund are summarized in the financing agreement and will be further outlined in a separate grant agreement. All operating costs for the MBP, including those related to the RBF, will be covered by the additional financing. 6 26. Proposed Additional Financing Activities: The following activities will be funded under the additional financing: Part 1(a) Strengthening the Health System to Improve Service Delivery 1. Procurement and distribution of Insecticide Treated Nets (ITNs), Rapid Diagnostic Tests (RDTs), insecticides and other equipment and supplies for the Indoor Residual Spraying (IRS) campaign; and 2. Scaling up access to malaria drugs and Rapid Diagnostic Tests through procurement of goods and strengthening the logistics and supply chain management. Part 1(b) Improved National Health Care Waste Management Support for improved environmental safeguards through the National Medical Waste Plan. Part 3 Monitoring and Evaluation and Program Management Support 1. Monitoring and evaluation of the malaria program achievements; 2. Program Management Support including capacity strengthening in procurement, financial management, and internal audit as well as recruitment of a IFRA to provide fiduciary oversight to the project; and 3. Operational Research. 27. Table 4 provides an overview of project activities and costs. Table 4: Project activities and costs Component* Activities Allocation 1a: Strengthening the Procurement and distribution of Insecticide US$17.5 health system to improve Treated Nets (ITNs) service delivery Rapid Diagnostic Tests (RDTs) US$1.0 Operational costs and equipment and US$7.0 supplies for the Indoor Residual Spraying (IRS) campaign Strengthening the logistics and supply US$3.2 chain management 1b: Improved National Support for improved environmental US$0.1 Health Care Waste safeguards through the implementation of Management the Environmental Activity Plan. 3: Program Management Monitoring and evaluation of the malaria US$0.5 program achievements Program Management Support including US$0.6 capacity strengthening in procurement, financial management, governance strengthening and internal audit as well as recruitment of an IFRA to provide fiduciary oversight to the project Operational Research US$0.1 Total US$30 *Component 2: Community Malaria Sub-grants will be funded from the remaining resources under the Russian Trust Fund and the original IDA credit. 7 IV. Consistency with the Country Assistance Strategy (CAS) 28. The proposed AF is fully aligned with the CAS through the "Improving health performance, education, and training" pillar. There are three main goals for health under this pillar: 1) Health policy and planning: mobilize resources and ensure efficient use of resources to promote equity of access to cost-effective and quality health care; 2) Integrated reproductive health: to reduce Maternal Mortality Rates by 3/4: and 3) malaria control and prevention: to reduce morbidity and mortality due to malaria in the general population. The related outcome under this pillar is CAS outcome 4.1- improved health programming. The CAS recognizes that health is one of the Bank's comparative advantages in Zambia, and one of the GRZ's priority areas and the proposed AF directly contributes to the achievement of these goals. V. Appraisal Summary Technical 29. The high human impact of malaria, the burden it places on health systems, the constraint that it imposes on economic growth and its association with poverty provided the rationale for the World Bank and other donors' investments in malaria control in Zambia over the past five years. 30. Zambia made dramatic progress in its fight to control malaria between 2002 and 2008. In only two years, between 2006 and 2008, there was a sharp increase in coverage of key malaria interventions and, concomitantly, the malaria parasite prevalence in children under five years was reduced by 54 percent, and severe anemia was reduced by 69 percent. This contributed to a drop in the all-cause mortality rate for children under five years by 29 percent between 2002 and 2008 --meaning an estimated 75,000 lives saved over the period. The scale up of access to preventive interventions, such as long lasting insecticidal nets and indoor residual spraying is largely responsible for the improvements. However coverage of these interventions still falls short of Zambia's targets and the potential total human and economic benefit that could be realized.10 31. Moreover, recent data from the Zambia National Malaria Indicator Survey 2010 are sobering and underline the fragility of these early achievements and the need to ensure critical targets for intervention coverage are met. Between 2008 and 2010, Zambia experienced resurgence in malaria and severe anemia -- most notably in three provinces: Luapula, Northern and Eastern. There were also slight increases in Western, Central and Copperbelt. Most of the increase was in rural areas in these provinces where about half of the decrease in malaria cases seen between 2006 and 2008 was lost by 2010. In Luapula and Northern Provinces there were marked drops in household net ownership and use between 2008 and 2010, which alone could explain the increased parasitaemia and anemia. 32. However in Eastern Province the explanation is more elusive and subtle. In this province household net ownership and use remained high between 2008 and 2010, yet parasitaemia and severe anemia increased over this period. This seeming paradox can possibly be explained by the age of the nets in these households. The majority of nets were distributed in 2007 and contributed to the dramatic decrease in malaria and anemia observed between 2006 and 2008. Unfortunately nets need to be replaced periodically as they become progressively less effective over time due to decreases in the potency of the insecticide and the physical condition of the nets themselves. Even long-lasting 10 The government's target for "percentage of children 0-59 months who slept under an ITN the previous night" is 80 percent; in 2008 the actual percentage was 41.1 percent. Similarly the "percentage of pregnant women who slept under an ITN the previous night" was 43.2 percent in 2008 while the target is 80 percent. 8 insecticidal nets, which can remain effective for 3-5 years in controlled conditions, may have a shorter longevity in "real world" conditions. 33. Experience from these three Provinces, underlines the challenge of maintaining effective prevention of malaria with insecticide treated nets: communities need to retain and use the nets that are distributed and those nets need to be replaced regularly, perhaps more often than every three years to prevent the resurgence of malaria. 34. Although the 2010 MIS provides sobering data for some provinces on malaria prevention, it also provides clear evidence of an improvement in the management of childhood febrile illness. Overall, since 2008, more children with fever are being seen by a health worker within 24 hours of onset of symptoms. Fewer of those children are being treated presumptively for malaria, as parasitological confirmation of malaria with Rapid Diagnostic Tests (RDTs) or microscopy is more widely available. Of the febrile children treated for malaria, they are treated sooner and significantly more often with Coartem, an artemesinin-based combination treatment (ACT) than any other antimalarial medication. By further increasing access to effective diagnosis and treatment, Zambia could reduce malaria mortality to near zero and potentially mitigate the adverse effects of fluctuations in net coverage. When preventive measures fail due to reductions in use or loss of efficacy, it is vitally important that the safety net of prompt diagnosis and treatment of malaria are in place. 35. The AF will assist the government in addressing the declines shown in certain provinces while maintaining and scaling up the successes that have been achieved earlier during the first phase of the project in other areas of the country. The National Malaria Control Centre has a track record of strong implementation. The project provides an opportunity to provide complementary resources required to fill the country's malaria control intervention resource gap. 36. In this context, the AF will support the procurement and distribution of commodities for LLIN distribution and the IRS program. The additional financing will also help strengthen capacity in fiduciary management in the health sector and support the key complementary health systems interventions to ensure adequate implementation and sustainability of the program. The additional financing is an important opportunity to scale up diagnostic interventions and improve access to malaria drugs through effective supply chain interventions. The additional financing will also support the scale up of the Community Malaria Booster Response (COMBOR) and provide resources for program management support and monitoring and evaluation. All activities will be within the identified gaps and complementary to the support from other partners within the national program. 37. The immediate key objectives that have been identified for the program are: a. Re-establish high ITN ownership and use in Luapula and Northern provinces and encourage continued ITN uptake among all households and household members, especially in Eastern Province. This is an urgent requirement. b. Expand case management, including diagnostics for parasitologic confirmation of suspected malaria cases, and consider that screening populations and treating those with infection may be important to further curtail malaria transmission. This latter effort would be especially appropriate in areas with continued and persistent high levels of malaria parasitaemia and transmission to supplement existing malaria prevention interventions. c. Attend to the other provinces (Lusaka, Central, Southern, Western, and North-Western) to assure that their current coverage and use of malaria prevention interventions remains high. This is an important need so that they do not find themselves with resurgent malaria during the next transmission season. Fiduciary Arrangements 9 38. Procurement: The procurement aspects of the original MBP were well implemented. However, there is a clear indication that the capacity in the MOH has decreased over the last year. The key weaknesses in the procurement capacity are: (i) lack of clear rules and guidelines; (ii) weak internal control environment; and (iii) reduced staffing levels since some staff members were suspended and prosecuted. To address these weaknesses, the MOH is in the process of finalizing a project procedures manual11 with a procurement section, for review by the World Bank, which highlights the procurement institutional arrangements and accountability systems of the MOH. The manual will also incorporate the changes to the country procurement systems resulting from the need to incorporate provisions of the new Public Procurement Law No 12 of 2008 and the Procurement Regulations (subsidiary law) which will be finalized in 2010. 39. Furthermore, the internal procurement governance will need to be strengthened to ensure existence of sufficient controls that obligate staff at all levels involved in procurement to adhere to provisions of the procurement law, guidelines, bidding documents and contracts. To support this process a Fiduciary Review Agent will be contracted to complement the existing implementation arrangements and procedures. The agent will provide on the job procurement training and guidance as well as review documentation for the key procurement steps. Finally, a new long term MBP procurement specialist has been appointed for replacement. The majority of project funding will be for the procurement and distribution of malaria commodities through large value contracts paid through direct payments. The procurement plan for the additional financing has been approved on November 3, 2010 and is attached in Annex 4. 40. Financial Management, Disbursement and Governance Strengthening: Project preparation had a strong focus on ensuring that the fiduciary safeguards are in place to protect and account for the Bank's funding to the sector. The key weaknesses identified at MOH from the forensic audit by the OAG following the fraud and corruption allegations in the health sector, the annual external audits, the In-depth Financial Transactions Review and the supervision missions are: (i) lack of compliance to internal control procedures; (ii) weak internal audit function; (iii) lack of capacity in financial management and procurement; and (iv) poor filing of documentation. Several mitigating actions have been taken to strengthen the fiduciary environment in the MOH: a. Governance Action Plan: IDA is working collaboratively with other donors to the health sector to address the financial management weaknesses at the MOH. Since June 2009, an agreed Joint Governance Action Plan (GAP) between the donors and the government has been implemented. The successful implementation of the plan was a condition for restarting donor funding to the sector. The plan focused on actions to strengthen the financial management, procurement and internal audit functions at the MOH. Ineligible expenditures have been reimbursed to the affected donors. The first phase of the plan was completed in December 2009 and resulted in release of the first tranche of funds to MOH by the Swedish, Dutch and Canadian Governments. The MOH is in the process of implementing activities under the second phase of the plan and this is expected to be completed by December 2010. More details on the implementation progress of the GAP are in Annex 5. b. Financial Management Action Plan: a financial management action plan for the project was developed in March 2010 and implementation has been completed. The action plan included capacity building for staff, recruitment of a senior accountant to strengthen the MOH capacity, installation of Navision accounting software, improvements to the project fixed assets register, revision of the financial management procedures manual to incorporate guidelines to the identified weaknesses in the operation of the internal 11 The project procedures manual will include implementation arrangements for the Malaria, RBF and procurement and financial management aspects of the project. The adoption of the manual is an effectiveness condition. 10 controls and reimbursement of ineligible expenditures. The complete framework is attached in Annex 1. c. Recruitment of an Independent Fiduciary Review Agent: To address the weaknesses in compliance and filing, MOH will hire an IFRA to ensure increased transparency and accountability in managing the resources under the AF. Specifically the IFRA will undertake: (i) compliance verification of financial management and procurement rules and regulations for each transaction; (ii) procurement monitoring through spot checks and physical verification of outputs; (iii) post review of each expenditure claim on the Withdrawal Application before submission to the Bank. This would certify eligibility as well as compliance with prescribed procedures and report formats; (iv) periodic physical verification of assets and other goods (on a sample basis) procured from project proceeds including the intended use of the same by beneficiaries; and (v) certify the accuracy of the interim unaudited financial reports. (See TOR in annex 6 for more details). d. Exclusion of Pooled Funding Arrangements: to reduce fiduciary risk the project will not disburse funding to the pooled fund in the MOH. The additional financing will exclusively use a designated account. e. Direct Payments: the majority of funding for the project by is for large procurements of commodities and payments for these contracts will be made by IDA to the supplier through direct payments. f. Intensified Bank Supervision and INT support: The Bank supervision of the project will be intensified. The Bank team composition has also changed to include a Lead Financial Management Specialist to provide support to the MOH on specific FM issues. The INT team has also agreed with the government to provide on the job training and support to strengthen the internal audit function at the MOH and the OAG. g. Allocation of Project Resources for Governance Strengthening in the Sector: project resources have been reserved for building capacity and strengthen systems in Procurement, Financial and Internal Audit Management functions in the MOH. Specifically, the Project will provide resources for: (i) on the job and formal training to improve the skills of the Financial Management and Procurement teams; and (ii) strengthening of the Internal Audit Unit to increase operation efficiency. This will entail providing resources to introduce quarterly post audit exercises and strengthen the governance structures of the MOH Audit Committee. Further, the project will support a gradual migration from the traditional pre-audit approach by internal audit to a risk based approach; and (iii) the introduction of an Integrity Committee within the MOH to promote demand side governance in the management of the resources in the health sector. 41. Reporting requirements: MOH is up to date with its reporting and the external audit obligations. There are no quarterly interim financial reports (IFRs) and external audit reports outstanding. The AF will be subject to the same reporting and external audit oversight arrangement as the original Credit. For reporting purposes, quarterly IFRs using the existing agreed formats will be required for submission to IDA within 45 days after the end of the quarter. SOEs will be used for documenting eligible expenditures paid from the designated account and/or to reimburse the government for pre- financed expenditure. The project financial statements will be subject to external audit oversight by the OAG on terms of reference acceptable to the Bank. 42. The finalization of the project procedures manual satisfactory to the Bank and the recruitment of the IFRA are effectiveness conditions. 11 43. The overall conclusion is that MOH meets the Bank's OP/BP 10.02 minimum requirements. 44. Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 shall apply to the project. Projects in countries and in sectors that are deemed to be vulnerable to fraud and corruption as a result of the findings of previous INT investigations should include Anti-Corruption action plans. 45. Environmental Safeguards: The original credit was classified as Category B due to the planned procurement of DDT for the Indoor Residual Spraying campaign. More recently, the National Malaria Control Centre has started to restrict the use of DDT. During appraisal of the AF, it was agreed to focus solely on the procurement of other insecticides (pyrethyroids) as part of the support under the additional financing. The Health Care Medical Waste Plan was updated during the restructuring of the project in November 2009 and was disclosed in December 2009. 46. During the implementation of the original project, IDA financed activities to improve environmental safeguards in the Indoor Residual Spraying program. During regular supervision missions, including participation from a Senior Environmental Specialist, progress on the implementation of the environmental activities was reviewed. Implementation has been consistently rated as satisfactory. The additional financing will contribute to the implementation of the Healthcare Waste Management Plan for which US$100,000 has been allocated. Updated Economic and Financial Analysis 47. The original economic and financial analysis has been updated to reflect recent developments as well as new evidence on the economic impact of malaria control in the country. There remains a strong economic rationale for investments in malaria prevention and treatment activities. The economic impact of malaria is well documented. It is estimated that malaria endemic countries suffer a growth penalty of 1.3% per year. The Copenhagen Consensus 2008 estimates that providing the combination of malaria prevention and treatment yield a benefit ratio of US$20 for every US$1 spent12. 48. The project is supporting highly cost-effective measure with a well documented impact on health outcomes. Increasing access to malaria treatment through strengthening of the national supply chain for malaria drugs for example averts more than 770,000 Years of Life Lost during a 5 year period and is highly cost-effective (US$22 per YLL averted)13. The requirement for repeated investments in malaria because of yearly spraying campaigns and the need for regular replacement of nets cause a concern for financial sustainability of the malaria program. The increased government allocation to the health sector in the 2011 budget shows the government's commitment to improved financial sustainability of the program. For more details on the economic analysis please refer to Annex 7. 49. There are no changes in the beneficiary and social assessment from the original credit. 12 Jamison DT. Jha P, Bloom D, 2008. Disease Control, Copenhagen Consensus Challenge Paper, April 2008. Copenhagen Consensus Center. Available on the internet at: www.copenhagenconsensus.com). 13 Zambia Improving Supply Chain Management Policy Note 12 VI. Risks 50. The following risks have been identified with mitigation measures and risk ratings. A full ORAF will be prepared and submitted with the next ISR of the project. Risks Risk Mitigation Measures Risk Rating Institutional and implementation The NMCC's capacity was strengthened by the Malaria L capacity constraints result in Booster Project and as a result the likelihood of successful bottlenecking of programs and implementation of the Additional Financing is very high. project implementation Human resources crisis limits Prioritization of support for human resources is linked to M capacity to deliver services malaria control as district level. The parent project is also supporting a Results Based Financing scheme to catalyze the existing health workforce. The handling, collection, disposal Currently, the MOH is successfully implementing the L and management of health care National Health-Care Waste Management Plan waste and other infected materials The original project has rated the implementation of the is the most significant National Health Care Waste Management Plan as environmental issue associated with satisfactory. this proposed restructuring. The additional medical waste expected The MOH is currently underway to update the plan and to be generated is that related to the reinforce their commitment to it through the review of diagnosis and treatment of malaria indicators, budget, and plan outcome since its adoption (needles and syringes, gloves, and under the original project. glass slides). This material may be co-infected with HIV, viral Support to strengthening the medical waste management hepatitis, etc, and needs to be capacity of the MOH at all levels is included handled with care. Lack of a robust financial The MOH has successfully installed the Navision M management system for monitoring accounting package and the system is operational. Within resources. the next year the MOH will install IFIMUS to strengthen support in this area. Volatility in financing of the Borrower does not represent a risk because the proposed L malaria program by other donors additional financing has been designed in close coordination with the national counterparts. The borrower has also successfully implemented in the parent project and has already built the capacity to implement the project. Ongoing dialogue and coordination with partners on the ground through the Cooperating Partners Mechanism. There has been documented Governance Action Plan was developed last year in H corruption in the sector collaboration between the Cooperating Partners and Government. Most of the agreements under the Plan have been implemented under Phase I. As part of Phase II, some of the AF resources are committed to drive forward 13 the implementation of Phase II of the Governance Action Plan. The majority of donors have been paid back resources. The Bank conducted a forensic audit and found that there were ineligible expenditures and unsubstantiated claims. The Government repaid the Bank in the agreed amount of US$1.3 million in resources. INT is working closely with the Government to ensure that the Auditor General's Office has sufficient capacity to carry out periodic audits of the sector. The independent Fiduciary Review agent will be contracted by the MOH to provide the following: i) compliance verification of financial management and procurement rules and regulations for each transaction;, (ii) procurement monitoring through spot checks and physical verification of outputs - (iii) a pre-audit of each expenditure claim (withdrawal application) submitted to the Bank to certify eligibility or otherwise as well as compliance with prescribed formats and procedures; and (iv) periodic physical verification of assets and other goods (on a sample basis) procured out of project proceeds including the intended use of the same by beneficiaries. The capacity of the MOH over the The Bank will increase supervision to quarterly M last year has been reduced due to supervision missions for the project. the corruption in the sector. Several staff have been implicated and/or The project has hired consultant support for procurement prosecuted during the course of the and FM. investigation. In addition, some members of the project staff have The IFRA will provide onsite training and support to been streamlined in to MOH ensure that all steps fiduciary processes are implemented operations given the high capacity accurately. of those individuals. 51. The overall risk is considered to be moderate. VII. Financial Terms and Conditions for the Additional Financing 52. The financial terms and conditions of the credit are standard IDA terms. 14 Annex 1: Financial Management Improvement Plan # Agreed Action By Whom Status 1. Install the Navision Accounting Software and MOH Chief Software installed and get it operational Accountant operational 2. Train key staff in the use of Navision MOH Chief Training completed accounting software Accountant 3. Recruit Senior Accountant MOH Chief Completed Accountant 4. Produce an Internal Audit work program for the Principal Internal Completed project, indicating the actual work to be Auditor undertaken. 5. Revise and update the MBP financial MOH Chief Draft Manual management procedures manual and submit for Accountant IDA review: Indicating that the manual is applicable to Russian TF, RBF Initiatives, and additional financing. Include activities for the TF, RBF and additional financing and describe the implementation arrangements relating to these Written roles and responsibilities for all the accounting staff to be involved with the donor funds, as per establishment or planned The enhanced payment procedures. Authorization limits for each bank account signatory based on staff position. Guidelines on payment of allowances out of IDA assisted project funds. Cancelling of invoices and supporting documents by a PAID stamp. Internal audit involvement in the project 10. Compile and revamp the Fixed Assets Register MoH Chief Completed using an acceptable format and complete the Accountant tagging of project assets. 12. Provide training to the staff in MoH working on World Bank ­ Completed donor funded projects, in financial management FMS/Disbursement and disbursement procedures in World Bank staff assisted projects. 14. Reimbursement of ineligible expenditures MOF Completed 15 Annex 2. Revised Results Framework and Monitoring ZAMBIA: Malaria Booster Project Revisions to the Results Framework Comments/ Rationale for Change PDO Current (PAD) Proposed Increase the coverage of No change interventions for malaria prevention and treatment and other key maternal and child survival interventions PDO indicators Current (PAD) Proposed change* 1. Children under 5 years of Changed to: Modified to make indicator age who sleep under a treated Children under 5 years of age who slept consistent with the prevailing bednet (%) under an insecticide treated net last night definition in the 2010 Malaria from 50% to 55% by 2013. Indicator Survey (MIS) and to reflect that the NMCC has reduced retreatment activities of nets. 2. Pregnant women who Changed to: Modified to make indicator receive a complete course of To increase the percentage of mothers who consistent with the prevailing intermittent presumptive took 2+ doses of (IPT) for malaria from definition in the 2010 Malaria treatment for malaria (%) 70% to 75% by 2013. Indicator Survey (MIS). 3. People in IRS-eligible Changed to: Modified to make indicator district who sleep in To increase percentage of households consistent with the prevailing appropriately sprayed reported sprayed within the previous 12 definition in the 2010 Malaria structures (%) months from 23% to 26% by 2013 Indicator Survey (MIS). 4. Women delivering in Changed to: Corrected to adequately reflect the facilities by a skilled birth To increase the percentage of women geographical area for which the attendant (%) delivering in facilities by a skilled birth RBF interventions will be attendant in RBF eligible districts from implemented and for which data 31% to 36% by 2013 will be collected. Baseline and target will be modified once the RBF baseline study has been completed in April 2011. New: Core indicator added Direct Project Beneficiaries, (number) Of which female (%) Intermediate Results indicators Current (PAD) Proposed change* New: Core indicator added Long-lasting insecticide-treated malaria nets purchased and/or distributed (number) Households with more than Dropped To streamline results framework one ITN (%) Children under 5 years of age Revised: The 2010 Malaria Indicator Survey 16 Revisions to the Results Framework Comments/ Rationale for Change with fever in previous two Children under 5 years of age with fever (MIS) shows that number of weeks who received anti- in previous two weeks and who took an children promptly treated with an malarial drug within 24 hours anti-malarial, % who took the first-line anti-malarial drug has reduced in of onset of fever (%) drug (Coartem) recent years due to improvements in diagnostics capacity. Few febrile children actually have malaria. Thus, an improvement in this indicator can be ambiguous to interpret, since it could indicate declining diagnostics capacity rather than improvements in treating malaria. For this reason, this indicator has been modified. New: Introduced to capture changes in Children under 5 years of age with fever in outcomes in the area of previous two weeks who reported having diagnostics. finger or heel stick (%) Women attending postnatal Continued visit by health center staff (delivery at home or in facility) in RBF eligible district (%) Women receiving iron Dropped To streamline results framework supplements at antenatal care visit New: Core indicator added Pregnant women receiving antenatal care during a visit to a health provider Women using any type of Continued contraception (new acceptors) in RBF eligible districts Women who received at least Dropped To streamline results framework one injection of tetanus toxoid during pregnancy (%) New: Core indicator added Health facilities constructed, rehabilitated and/or equipped (number) New: Core indicator added Children immunized Children under six months Dropped To streamline results framework exclusively breastfed (%) and reflect the current design of the RBF program. Household with properly Dropped To streamline results framework hanging bednets (%) and reflect the current design of the RBF program. Children under five with Dropped To streamline results framework diarrhea receiving oral and reflect the current design of the rehydration salts (ORS) (%) RBF program. Malaria prone districts that Changed to: Corrected to adequately reflect the have at least one CBO/NGO Malaria prone districts in COMBOR geographical area for which the receiving grant to implement provinces that have at least one CBO/NGO COMBOR component will be malaria control activities in receiving grant to implement malaria implemented. communities control activities in communities (i) disbursement, withdrawals Dropped To streamline results framework and central procurement are and reflect the current design of the 17 Revisions to the Results Framework Comments/ Rationale for Change done according to established RBF program. standards and schedule (ii) Steering Committee for Dropped To streamline results framework results-based financing, that and reflect the current design of the meets at least 2 times per year, RBF program. in place at the central level during the project period (iii) percentage of health Dropped To streamline results framework facilities that report timely on and reflect the current design of the indicators in RBF districts RBF program. New: Core indicator added Health personnel receiving training (number) Collection and analysis of end- Revised to: Modified to make indicator more line household and facility Baseline and follow-up surveys at the precise and easier to measure. data completed household and facility levels for impact evaluation completed Case studies documenting the Revised to: Modified to make indicator more process of implementing An article on the impact of the RBF precise and easier to measure. results based financing component is drafted 18 REVISED PROJECT M&E ARRANGEMENTS Project Development Objective (PDO): Baseline Cumulative Target Values16 Respons Unit of Original Progress ibility 2011 2012 2013 Data Source/ PDO Level Results Indicators14 Measur Project To Date Frequency for Data Comments Core Methodology ement Start (2010)15 Collectio (2006) n 1. Children under 5 years of age who slept under an insecticide Malaria % 24 50 55 55 Every 2 years NMCP treated net last night from 50% to Indicator Survey 55% by 2013 2. To increase the percentage of mothers who took 2+ doses of Malaria (IPT) for malaria from 70% to % 59 70 75 75 Every 2 years Indicator Survey NMCP 75% by 2013. 3. To increase percentage of New indicator, households reported sprayed Malaria baseline for % NA 23 26 26 Every 2 years NMCP within the previous 12 months Indicator Survey 2006 not from 23% to 26% by 2013 available This indicator relates to the RBF financed grant. Data 4. To increase the percentage of provided women delivering in facilities by a Dedicated World Bank assumes that skilled birth attendant in RBF 31 surveys Impact World RBF eligible % NA 33 36 eligible districts from 31% to 36% (2007) (baseline and Evaluation Bank districts on by 2013 follow up) Surveys average have the same skilled delivery rate as the country. The baseline and 14 Please indicate whether the indicator is a Core Sector Indicator (see further http://coreindicators) 15 For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value 16 Target values are expressed cumulative values 19 target will be modified once the RBF baseline study has been completed. Beneficiaries17 Number The progress to date and target % values are 8,000 tentative and 0 5,800,000 8,000,000 8,000,000 5.Direct Project Beneficiaries, ,000 NMCP ITN will be Yearly NMCP Of which female Database modified once 0% 60% 60% 60% 60% the RBF baseline study has been completed. Intermediate Results and Indicators Baseline Target Values Respons Unit of Original Progress ibility 2011 2012 2013 Data Source/ Intermediate Results Indicators Measur Project To Date Frequency for Data Comments Core Methodology ement Start (2010) Collectio (2006) n Intermediate Result 1: Bednets provided Target values are based on a unit cost of US$5 dollar for. Targets 6. Long-lasting insecticide-treated will be NMCP ITN malaria nets purchased and/or Number 0 1,200,000 3,700,000 3,700,000 Yearly Database NMCP adjusted once distributed the competitive procurement process has been completed and unit cost has 17 All projects are encouraged to identify and measure the number of project beneficiaries. The adoption and reporting on this indicator is required for IDA- supported investment projects which have an approval date of July 1, 2009 or later. 20 been determined. Intermediate Result 2: Malaria cases treated 7. Children under 5 years of age with fever in previous two weeks Malaria and who took an anti-malarial, % % 18 76 85 85 Every 2 years Indicator Survey NMCP who took the first-line drug (Coartem) 8. Children under 5 years of age This indicator with fever in previous two weeks was not Malaria included in the who took anti-malarial drug same % N/A 17 25 25 Every 2 years Indicator Survey NMCP 2006 MIS. day/next day reported having Therefore there finger or heel stick is no baseline. Intermediate Result 3: Increased access to maternal health interventions This indicator relates to the RBF financed grant. Data provided assumes that RBF eligible districts on 9. Women attending postnatal visit Dedicated World Bank average have by health center staff (delivery at 47 surveys Impact World the same % N/A 52 52 home or in facility) in RBF eligible (2007) (baseline and Evaluation Bank skilled delivery district follow up) Surveys rate as the country. The baseline and target will be modified once the RBF baseline study has been completed. Dedicated World Bank Baseline and 10. Pregnant women receiving surveys Impact World target will be antenatal care during a visit to a Number 0 N/A TBD TBD TBD (baseline and Evaluation Bank provided once health provider follow up) Surveys the RBF 21 baseline study has been completed. Baseline and target will be Dedicated World Bank 11. Women using any type of provided once surveys Impact World contraception (new acceptors) in % 0 N/A TBD TBD TBD (baseline and Evaluation Bank the RBF RBF eligible districts baseline study follow up) Surveys has been completed. Procurement MOH 12. Health facilities constructed, document and and rehabilitated and/or equipped Number 0 0 40 100 180 Routinely Health facility World (number) assessments Bank Intermediate Results and Indicators Baseline Target Values Respons Unit of Original Progress ibility 2011 2012 2013 Data Source/ Intermediate Results Indicators Measur Project To Date Frequency for Data Comments Core Methodology ement Start (2010) Collectio (2006) n Intermediate Result 4: Increased access to key child health interventions This indicator relates to the RBF financed Dedicated World Bank grant. Baseline surveys Impact World and target will 13. Children immunized Number 0 0 TBD TBD TBD (baseline and Evaluation Bank be provided follow up) Surveys once the RBF baseline study has been completed. Intermediate Result 5: Improved awareness of malaria risk, transmission and prevention modes 14. Malaria prone districts in COMBOR provinces that have at The progress to COMBOR least one CBO/NGO receiving % 0 TBD TBD TBD TBD Every 1 years progress reports NMCP date is yet to be grant to implement malaria control included. activities in communities 22 Intermediate Result 6: Strengthened capacity of MOH to provide technical and operational leadership in malaria and results based financing operations 15. Health personnel receiving Number 0 0 300 300 Routinely MOH training (number) Intermediate Result 7: Impact of the RBF program determined 16. Baseline and follow-up surveys 4 times during World at the household and facility levels Number 0 0 2 2 0 implementation IE report Bank for impact evaluation completed 17. An article on the impact of the World Yes/No No No No No Yes N/A RBF component is drafted Bank 23 Annex 3. Financing Table Category IDA IDA Russian TF Russian TF Additional Percentage Credit of Credit Credit expenditur restructuring reallocation allocation reallocation allocation es to be 2009 financed (inclusive (SDR) (SDR) (US$) (US$) (SDR) of taxes) Goods (excluding 10,290,000 11,286,000 4.550,000 2,904,454 5,900,000 100% insecticide treated nets under Part 1(a)(ii) of the Project), works, consultants' services and Training for Part 1(a)(i), (ii), (iii), (iv) and (v) of the Project, Part 1(b), and Part 3 of the Project (2) District Basket 2,050,000 634,00018 1,000,000 1,500,00019 N/A Such Sub-Grants under percentage Part1(a)(i) of the of Project (Pro expenditure memoria) s as the Association shall specify by notice to the Recipient (3) Community Sub- 1,360,000 780,000 300,000 2,445,546 0 100% of Grants amounts payable pursuant to the respective Sub-grant Agreement (4) Unallocated 0 0 1.0 0 0 18 Undisbursed funds in the district basket under the original IDA project are reallocated to other categories to avoid the use of the pooled fund. 19 Reallocation to District Basket takes place to address an overrun in the category. There are no new funds allocated to this category 24 (5) Insecticide 0 10,200,000 100% treated nets under part 1(a) (ii) of the Project (6) Operating Cost 0 3,000,000 100% 1,000,000 for the project TOTAL AMOUNT 13,700,000 13,700,000 6,850,000 6,850,000 19,100,000 25 Annex 4. Procurement Plan 1. Project ID No. 120872 Project Implementing Agencies: Ministry of Health 2. Bank's approval Date of the Procurement Plan: November 3, 2010 3. Date of General Procurement Notice: TBA 4. Period Covered by this Procurement Plan: Nov 2010 ­ January 2013 II. Goods, Supply & Installation of Plant & Equipment, Works & non-Consulting Services 5. Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement: Thresholds for Procurement Methods and Prior Review ­ Goods and Works Contracts Subject to Prior Expenditure Contract Value Threshold Procurement Method Review Category (US$) (US$ millions) 1. Works ICB (Works/Supply & >=3,000,000 All Contracts Installation) >=50,000 - <3,000,000 As in procurement plan NCB <50,000 None Shopping All values All Contracts Direct Contracting None Commercial Practices 2. Goods ICB >=300,000 All Contracts NCB >=50,000 < 300,000 As in procurement plan UN Agency All Values None Shopping <50,000 None Direct Contracting All values All Contracts Commercial Practices None 6. Procurement Guidelines: Procurement for the project would be carried out in accordance with the World Bank's "Guidelines: Procurement under "IBRD Loans and IDA Credits" dated May 2004, revised in October 2006 and May 2010); Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 revised in October 2006 and May 2010; and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank and are outlined in the Procurement Plan. 7. Pre-qualification: The Project shall not undertake any pre-qualification process; however, Long Lasting Insecticide Treated Nets shall be procured using WHO/WHOPES pre-qualified list 8. Proposed Procedures for CDD Components (as per paragraph 3.17 of the Guidelines): These will apply in respect of activities under the Community Booster Response to Malaria (COMBOR) which will provide support aimed at strengthening local capacities of communities to effectively prevent and control and treat malaria and deal with the demand-side constraints to effective malaria control programming, based on community demand-driven interventions through: (i) financing on a grant basis of Community Sub-Grants of selected projects to be carried out by community based organizations using community participation in procurement procedures acceptable to the Bank as will be further elaborated in the project implementation manual. 26 9. Reference to (if any) Project Operational/Procurement Manual: MoH as the implementing Agency will amend its procurement procedures manual to incorporate the requirements of the Malaria Booster and RBF activities and in order to incorporate provisions of the new Public Procurement Law No 12 of 2008 and the Procurement Regulations (subsidiary law) which will be finalized in 2010. The Procurement Plan and the procedures for implementing procurement activities for the COMBOR using CDD will also form part of the Project Procurement Manual. 10. Any Other Special Procurement Arrangements (including advance procurement and retroactive financing, if applicable): N/A. Procurement Packages with Methods and Time Schedule a) Works: There will be no works contracts funded from the Additional Financing to the Malaria Booster Project. b) Goods Expected Estimated Prior or Package Lot Procurement Bid- Delivery Description* Amount in US Post Number No. Method Opening Date $ Review Date 1. Supply and delivery of TBA 11,000,000 LIB Prior April Long Lasting Nets (LLIN) 2011 Aug 2011 2. Supply and delivery of TBA 5,000,000 UN Post N/A Long Lasting Nets (LLIN) (UNICEF) Dec 2010 3. Supply and Delivery of TBA 1,000,000 ICB Prior April Rapid Diagnostic Tests 2011 Aug 2011 4. Supply and delivery of TBA 1,500,000 ICB Prior April Insecticides for IRS 2011 Aug 2011 5. Supply and delivery of TBA 1,000,000 ICB Prior April Spray Pumps for IRS 2011 Aug 2011 6. Supply and delivery of TBA 500,000 ICB Prior April Aug 2011 Assorted Materials and 2011 Consumables for IRS III. Selection of Consultants 11. Prior Review Threshold: Selection decisions subject to Prior Review by the Bank as stated in Appendix I to the Guidelines: Selection and Employment of Consultants: Thresholds for Consultants Selection Methods and Prior Review Contract Value Contracts Subject to Prior Threshold Expenditure Category Procurement Method Review (US$) (US$ millions) >=200,000 All Contracts QCBS, QBS, LCS, >200,000 As per Procurement Plan Consulting Services CQS, LCS, QBS, FBS >=100,000 None (Firms) SSS =100,000 Individual consultants All contracts SS (IC) All values (IC) 12. Consultancy services estimated to cost above US$200,000 equivalent per contract and individual consultants assignments estimated to cost US$100,000 and above and all individual consultants hired on single source basis will be subject to prior review by the Bank. 13. Terms of Reference (TOR) for all consultancy contracts as well as all single source selections, irrespective of the contract value, will be subject to prior review. 14. Short lists entirely of national consultants: Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 15. Any Other Special Selection Arrangements: Some activities may be implemented on the basis of the use of Nongovernmental organizations in line with the provisions of the Consultants Guidelines paragraph 3.16. Consultancy Assignments and Training with Selection Methods and Time Schedule: c) Consultant Services These are to be determined during appraisal for the Additional Financing needs for Consultants Expected Expected Cost Estimate Selection Prior/Post Proposal Ref No. Description of the assignment Completio in US Dollars Method Review Submission n Date date 1 Engagement of Consultants to manage the Supply Chain US$3, 500,000.00 QCBS Prior Feb 15 2011 December Public sector pilot 2012 2. Engagement of a Fiduciary Management Agent US$200,000 QBS Prior d) Training The training needs will be determined after project effectiveness. No. Expected outcome / Estimated Estimated Start Date Activity Description Cost Duration Total 50,000 Note: All training will be based on agreed training plan that will be prepared by the Government of the Republic of Zambia (GRZ) and approved by the Bank and will include at the least the justification of the training identified and the capacity gap, the intended trainees, the name of the training provider, the duration and cost of training. After the training, the beneficiaries will be requested to submit a brief report indicating what skill have been acquired and how the skills will contribute to enhance his performance and contribute to the attainment of the project objective. The training plan will be prepared and submitted once a year and updated as required. 28 Annex 5. Implementation Progress Governance Action Plan GOVERNANCE ACTION PLAN FOR STRENGTHENING ACCOUNTABILITY AND FINANCIAL CONTROLS IN THE MINISTRY OF HEALTH - STATUS 29TH SEPT 2010 Activity Performance Measure Means of Verification Responsibility Verification by external Progress as at September 30,2010 auditor - December 2009 1. Sector Governance Dialogue and Plan of Action 1.1 Mechanism established for dialogue 1.1.1 Policy Governance Committee 1.1.1 TOR developed for Policy MoH Satisfactory - between GRZ and Health CPs and established and meeting regularly to Governance Committee. Minutes agreement reached on strengthening provide oversight on strengthening of meeting. governance and financial controls in the internal controls and financial sector. management in the sector. Meetings chaired by PS Health and attended by MoFNP, Health CPs, GFATM LFA, CCM Finance Committee and OAG. MoH Satisfactory A Governance Action was jointly approved; 1.1.2 Joint Technical Team of GRZ 1.1.2 Action Plan for Several meetings held regularly at technical and CP tasked to develop an action strengthening accountability and and policy levels in MoH and MoFNP plan and TOR for additional OAG financial controls in the MoH (JTT, MoH/CP Policy meetings, PRBS). oversight. developed by the JTT and adopted by the Policy Governance Committee. 1.2 Recovery and repayment of funds 1.2.1 A written commitment that 1.2.1 Letter of assurance from SC ST/SC alleged to have been misappropriated funds alleged to have been received by CPs misappropriated will be recovered Satisfactory and repaid to CPs in line with the existing bilateral agreements and existing laws 1.3.1 CPs & GRZ agree on triggers 1.3.1 Governance Action Plan for release of funds jointly adopted Satisfactory 1.3 CPs obtain agreement from HQ on the schedule for resumption of funding and inform MoH 1.3.2 Schedule for resumption of CP CPs reported resumption of funding at a funding obtained from CPs HQ Satisfactory Joint Technical Team meeting held on 17th November, 2009. 2. Strengthening Financial Management, Accounts and Procurement 29 2.1 Build internal capacity within 2.1.1 Present capacity compared 2.1.1 Three action papers MoH Satisfactory Accounts, Internal Audit and Procurement with the establishment to identify the prepared and adopted for units needs (staffing levels, skills and strengthening capacity of systems) Accounts, Internal Audit and Procurement units 2.2 Terms of Reference developed for a 2.2.1Terms of Reference developed 2.2.1 Letter of commitment, MoH Satisfactory The TOR for the comprehensive Systems comprehensive Systems Audit covering and agreed by Policy Governance agreed Terms of Reference and (JTT)/OAG Audit covering accounts has been agreed by accounts, auditing and procurement Committee that includes a brief systems audit plan sent to CPs. all stakeholders at the JTT meeting functions; plus a full Financial & systems audit plan outlining November 17,2009 Procurement Audit of GRZ and CP funds coordination, technical assistance, (including the Expanded Health Basket, costings and time frame. Human Resources Basket, GFATM and if required GAVI) in the health sector for 2006 - 2009. The TOR will outline the audits' scope, human and financial needs, and timeframe. 3. Strengthening Internal Audit 3.1 Strengthen the role of Internal Audit 3.1 Clearly define responsibilities in 3.1 Action paper developed and MoH Satisfactory Four members of the OAG have been relation to the development of a agreed. The paper will clearly `stationed' at the MoH with a view to dynamic internal control system. outline measures to be taken in strengthening the functions of the relation to identified weaknesses Internal Auditors. Specific training in governance and risk management is planned for December 2009 (date to be confirmed). Also, see comments on 2.1 Build internal capacity within Accounts, Internal Audit and Procurement and Supplies units. 3.2 Process for the establishment of an 3.2 Process for establishing an Audit 3.2 Minutes of Policy Governance ST/SC Satisfactory Letter from the Treasury in July 2009 Audit Committee in the MoH agreed and Committee in the MoH agreed and Committee record the agreed approving the appointment of An Audit started. started. process. MoH writes to Secretary Committee. to Cabinet requesting for the constitution of the committee and Committee appointed on 17 September appointment of committee 2009, and has held its inaugural / members. orientation meeting. The Committee has since been meeting on a monthly basis. 30 3.3 Office of the Auditor General to 3.3 In accordance with the agreed 3.3.1 Submission of weekly OAG Partially Satisfied. From 16th July 2009 to Date, officers from provide additional oversight and TOR, OAG will post personnel in reports and monthly summaries to the OAG have been working on pre-audits safeguards of government and partner's the MoH for delivery of special the OAG by their personnel in the in line with agreed TORs for the OAG. The resources in the sector by conducting external audit services as follows: MoH. team has been operating at full capacity continuous pre and post audits in (I) Conduct pre audit checks on a since they reported and audits have covered accordance to the agreed Terms of sample of payments for goods and 100 percent of all payments. Continuous Reference. services, imprest, pre - payments, capacity building is also being provided to grants to provinces and districts; Pre- the Internal Audit Unit in the process. award audits of contracts; Retirement of imprest and pre payments; narrative and financial reports on workshops, training and other events; Medical Stores management; spot checks in provinces, districts, training institutes, statutory bodies and hospitals; (ii) Conduct quarterly post audit checks of GRZ and CP funding (iii) Create additional safeguards to 3.3.2 Quarterly post audit reports Unsatisfactory directly address weaknesses in the submitted and shared with the MoH operations and financial MoH and CPs. control procedures; and (iv) Add to capacity building towards strengthening the internal controls 4. On-going investigations 4.1 Identify officers suspected to be 4.1 Officers allegedly involved being 4.1 Officers identified and letters SC Satisfactory Officers identified and letters of forced involved in the fraud identified and sent on forced leave of forced leave issued leave sent. The process is however ongoing as the matter is with the judiciary. 4.2 Prosecution of identified officers 4.2 Legal action taken against 4.2 Letter of assurance that SC Satisfactory Letter sent by SC to CPs officers identified to be involved in officers under investigation, if misapplication of public funds found with a case are prosecuted 4.3 Replace Staff who have been sent on 4.3 Officers identified and deployed 4.3 Officers replaced MoH/ PSMD Partially Satisfied Accounts: forced leave, especially in the Internal All positions now replaced Audit, Accounts and Procurement departments Internal Audit: All positions now replaced Procurement and Supplies: All positions now replaced 4.4 Providing resources to law 4.4 Government providing resources 4.4 Fund released by MoFNP MoFNP Satisfactory A print out from the MFNP's accounting enforcement agencies (Police, DEC), ACC to facilitate investigations ledgers showing additional funds released and OAG to enable them to conduct a to the Police and ACC has been vouched. thorough investigation in the health sector 31 4.5 The initial findings of the OAG 4.5.1 Health CPs receive regular 4.5.1 A letter from the Secretary SC Satisfactory Letter from the SC sent to CPs Forensic Audit are shared with updates on the available information to the Cabinet to Health CPs Cooperating Partners and updates regarding: (i) The amounts of funds outlining the required provided on the progress of the allegedly misappropriated or information from the OAG's investigations into the alleged misapplied; (ii) The years in which Forensic Audit misappropriation of funds funds were allegedly misappropriated or misapplied; (iii) The source of funds (GRZ, Expanded Health and HR Baskets, GAVI, GFATM) that were allegedly misappropriated or misapplied and the account numbers from which the money was taken; and (iv) Possible explanation on how funds were allegedly misappropriated, highlighting the possible weaknesses in the MoH financial management systems. 4.5.2 CPs to be given regular updates by GRZ on the progress of the investigation through the regular SWAp meetings. 5. Decision on CPs release of funds to MoH as per the agreed schedule in 1.3 above. 5.1 MoH report on implementation of 5.1 Governance Action Plan 5.1 Donors release tranche 1 MoH/CPs Satisfactory It was agreed at the closing meeting that the Governance Action Plan to CPs who will approved and implementation of funds based on re-prioritized resumptions of funding will follow once the consult and inform MoH on decisions on immediate Action Points MoH Annual Action Plan to cater verification exercise determines that the the release of funds commenced for quarter 2 and quarter 3 Action Plan has been implemented. MoH activities developed a Liquidity Plan and Budget which was submitted to the CPs on 1st December, 2009. On 21st December 2009, the Netherlands and Swedish Governments released a total of 7.8 million. 6. 1 Independent verification exercise 6. 1 Independent verification report 6.1 Donors release tranche 1 Satisfactory November 2009 funds based on acceptable report 32 Annex 6. Terms of Reference for Independent Fiduciary Review Agent (IFRA) Background The Zambia Malaria Booster Project (MBP) was approved on November 15, 2005 and became effective on March 13, 2006 as a US$20 million IDA credit with an original closing date of January 31, 2010 which was extended to January 31, 2012. In October 2009, the project was approved for a restructuring as co-financing resources were available to support this. Zambia received a Results Based Financing Grant (RBF) grant20 (US$17 million) from the Health Results Innovation Fund through a competitive selection process. The grant provided an opportunity to broaden the scope of the project which now includes some of the original malaria interventions as well as additional maternal and child survival interventions. In the restructured project, the specific activities to be financed through the grant will use RBF as a tool for improving coverage of a core set of maternal and child health interventions. The World Bank plans to extend a US$30 million Additional Financing credit. This puts the total project value at approximately US$47 million dollars. The specific objectives of the project are: (i) To increase the percentage of children under 5 years of age who slept under an insecticide treated net last night from 50% to 55% by 2013, (ii) To increase the percentage of mothers who took 2+ doses of intermittent preventive treatment (IPT) for malaria from 70% to 75% by 2013, (iii) To increase percentage of households reported sprayed within the previous 12 months from 23% to 26% by 2013 and (iv) To increase the percentage of women delivering in facilities by a skilled birth attendant in RBF eligible districts from 31% to 36% by 2013 The project will be implemented by the Ministry of Health and the funds will be provided by the World Bank. The new closing date of the project will be January 31, 2013. Objective of Independent Fiduciary Review Agent (IFRA) In order to ensure transparency, accountability, governance of resources and effectiveness in carrying out the implementation of the Malaria Booster Project, there is a need for an Independent Fiduciary Review Agent (IFRA). There are three key objectives of this agency is: 1) to provide a priori review and clearance of all payments under the Booster Project, 2) to ensure that any systemic governance problems and accountability issues are noted early and on a regular basis, so that corrective measures can be taken and problems rectified as soon as possible and 3) to undertake capacity building activities as defined in more detail below. The IFRA is also expected to review every financial management and procurement transaction to ensure compliance with prescribed rules and regulations and devise tools and procedures that will 20 The Results-Based Financing grant is a multi-donor trust fund primarily supported by the Norwegian government that supports a results-based approach to health sector development. 33 provide an early warning system, assist in risk mitigation and help to ensure the transparency and value for money of the program investments. Scope of Work Specifically the IFRA will undertake: (i) compliance verification of each procurement and financial transaction to financial management and procurement rules and regulations prior to payment(ii) procurement monitoring through spot checks and physical verification of outputs (iii) a pre-audit of each expenditure claim (withdrawal application) submitted to the Bank to certify eligibility or otherwise as well as compliance with prescribed formats, real time training and guidance on implementing key procedures; and guidelines and - (iv) periodic physical verification of assets and other goods (on a sample basis) procured out of project proceeds including the intended use of the same by beneficiaries. The IFRA will: (a) review and verify all procurements (ex ante) and payments (ex post) under the Project: (i) verify that all procedures that enhance transparency including proper maintenance of supporting records and documents are adhered to; (ii) verify that appropriate timeliness in the entire process from procurement and disbursement to accounting are observed; (iii) carry out physical verification on a sample basis in order to verify that activities in the approved work plans actually took place and that reported results are actually achieved; (iv) check on the accuracy and reconciliation of quarterly Interim Financial Reports (IFRs); (v) develop the internal capacity for correct application of procurement and financial management rules and guidelines based on the project procedures manual and the World Bank's procurement and disbursement guidelines through on-the job training and guidance; (vi) ensure that prompt remedial action is taken to minimize risks in implementation at various levels; and (vii) ensure that prompt remedial action is taken when any discrepancies are noted in the process and/or in the implementation of the program activities. A priori compliance verification of all payments. The IFRA will be responsible for reviewing all payments to ensure that procedures outlined in the project implementation manual are adhered to and that the required supporting documents are maintained prior to payment. Verification will be carried out for every transaction taking place with project funds. They will also monitor the timeliness of the reviewing process to ensure that undue delays are avoided in project implementation and procedures following the disbursements under the Booster Project. Procurement Monitoring and Reporting. The IFRA will work closely with the MOH as it carries out its procurement functions correctly. In the context, the IFRA will: (i) ensure that agreed guidelines are correctly applied during all steps of the procurement process of the project procurement plan; and through verification and continuous real time support during all steps of the procurement process, (ii) make recommendations for remedial measures against weaknesses identified, institutional arrangements, and/or irregularities in procurement practices, and capacity development and (iii)conduct periodic spot checks to ensure that the commodities have reach the intended destinations and beneficiaries in a timely manner. 34 Physical verification. The process will be repeated periodically (on a sample basis) to verify the existence of assets and goods purchased out of the project proceeds as well as usage of the same for the intended purposes. Interim Financial reports. The IFRA will certify the accuracy of the quarterly Interim Financial Reports (IFRs) to be submitted by the Project within 45 days of the end of each quarter. Develop Capacity. Based on its observations during the reviews, the IFRA will arrange to take necessary remedial actions as well as strengthen the capacity of the procurement and financial management staff in the Project to avoid recurrence of non-compliance issues and discrepancies. Such capacity building activities will include workshops and seminars based on issues observed. Duration The consultancy will be carried out during the duration of the Project, starting from FY 2010/11 until the project closing date in FY 2013/14. The timing of specific intervention will be determined after the Malaria Booster Project Additional Financing is fully operational, and will be linked to the cycles of reporting as stipulated in the FA. Reporting An Inception Report will be written as the entry point to the services. The Inception Report would provide details regarding: (i) the approach (including sampling) for making assessments; (ii) an activity plan for the duration of the consultancy; (iii) means for testing the approach selected; (iv) evaluation of results; and (v) reporting formats. The IFRA will report to the MOH, MOF and the World Bank on a quarterly basis. However, where immediate action is required, immediate feedback to the HSCC Steering Committee on specific cases will be expected. Furthermore, an annual report is expected, to consolidate findings and recommendations. A final report analyzing progress in relation to the Terms of Reference and the inception report is expected at the end of the consultancy. Qualification and Experience of the Firm The IFRA team needs to consist of the following specialists: Procurement Specialist: The Procurement Specialist should have demonstrated solid procurement experience and knowledge of procedures applicable to generally accepted international best practice and related Laws and Procurement Guidelines particularly those for the World Bank and to the requirement of the MOH procurement activities. Specifically, the specialist should have: 35 Masters Degree, in Engineering, Business Administration, Finance, Public Administration, Law or other related disciplines; Corporate membership of the Chartered Institute of Purchasing and Supply (CIPS) Conversant with both Government of the Republic of Zambia Procurement Law and Procedures as well as fully proficient in application of the World Bank Procurement procedures and Guidelines. 7 years experience in procurement of which 5 years in donor funded projects Excellent organization skills; Excellent computer skills; Ability to work independently, pay careful attention to detail. Fluency and good knowledge of English as a working language; A working knowledge of the Health Sector is an added advantage. Financial Management Specialist: A Professional Accountant (CA, ACCA, CPA etc.) with a degree in finance or accounting A minimum of 7 years of post qualification experience in an accounting and auditing environment with exposure to computerized accounting Expertise in financial management in the context of externally funded development programs Experience of working in low and middle income countries preferably in Africa region Knowledge of government health systems and government accounting environment will be an added advantage Proficiency in English language and use of standard computer software packages like Word, Excel, PowerPoint as well as familiarity with accounting software packages. Payment Payment of the firm will be time based on the agreements under the contract. The firm needs to have an in-country process to provide the regular support and presence required for this work program. Contract will be for an initial period of one-year with possibility for extension. 36 Annex 7. Economic and Financial Analysis Economic burden of Malaria in Zambia 1. Increasing attention has been paid to the economic burden of malaria and the potential economic benefits of malaria control, elimination and eradication over the past few years. Malaria keeps countries as well as households in poverty: Annual economic growth in countries with high malaria transmission has historically been lower than in countries without malaria. Leading economists have estimated that malaria is responsible for an `economic growth penalty' of up to 1.3% per year in malaria endemic African countries. In a 2002 analysis by Jeff Sachs and Pia Malaney, it was estimated that between 1980 and 1995 malaria cost Zambia US$1.359 billion and that GDP in 1995 was 18% lower than it would have been in the absence of malaria.21 It has been well documented that malaria discourages internal and foreign investment and tourism; effects land use patterns and crop selection resulting in sub-optimal agricultural production; reduces labor productivity through lost work days and reduced on-the job performance and affects learning and scholastic achievement causing frequent absenteeism and, in children who suffer severe or frequent infections, permanent neurological damage and cognitive impairment. Cost-effective malaria interventions 2. Malaria preventive and curative interventions have been proven to be highly cost-effective. The Copenhagen Consensus 2008 estimated that providing the combination of malaria prevention and treatment interventions to at risk populations in sub-Saharan Africa would yield a benefit-cost ratio of $20 for every $1 spent22.The high human impact of the disease, the burden it places on health systems, the constraint that it imposes on economic growth and its association with poverty formed the rationale for World Bank and other donor investment in malaria control in Zambia over the past five years. Zambia Malaria Control: Success 3. Zambia has made dramatic progress in its fight to control malaria, as evidenced by results from population based health surveys conducted in 2002, 2006, 2007, 2008, and 2010. Most notable is the impact on Zambia's most vulnerable group, its children. In only two years, between 2006 and 2008, malaria parasite prevalence in children under age five years has been reduced by 54%, and severe anemia has been reduced by 69%. Since 2002, malaria infection and illness in this same age group have decreased substantially, and the all-cause mortality rate for children under age five years has dropped by 29%--meaning an estimated 75,000 lives have been saved over the 6 year period. Zambia Malaria Control: Current Challenges 4. This is a laudable achievement, however there is still a significant malaria burden in Zambia and a need for additional resource to reach and maintain critical targets for intervention 21 Sachs and Malaney 2002. The economic and social burden of malaria. Nature. 415(6872): 680-5. 22 Jamison DT. Jha P, Bloom D, 2008. Disease Control, Copenhagen Consensus Challenge Paper, April 2008. Copenhagen Consensus Center. Available on the internet at: ttp://www.copenhagenconsensus.com). 37 coverage. Indoor Residual Spraying must be repeated at least annually; long lasting nets need to be replaced as they wear out from use or 3 years after distribution. The scale up of these two programs is largely responsible for the improvements seen; however coverage of these interventions still falls short of Zambia's targets and the total human and economic benefit to be realized.23 For the curative interventions, rapid diagnosis and effective treatment with artemesinin-based combination therapy, little progress was observed in coverage at the national level between 2006 and 2008. By further increasing access to effective diagnosis and treatment, Zambia could reduce malaria mortality to near zero. 5. As estimated by the Ministry of Health and the Roll Back Malaria Partnership, the immediate funding needed to achieve coverage targets for the core malaria control interventions is US$ 38 million for 2010 and 2011. This estimate takes into account resources currently available and those expected from all sources before the end of 2011. Malaria resurgence and risk of malaria epidemics 6. There is a risk of malaria epidemics in Zambia that needs to be addressed. During the period of effective control, when malaria transmission is very low, the adult population can lose its naturally acquired immunity which results from frequent exposure to the parasite. When malaria is resurgent in a population due to the breakdown or interruption of effective control measures, which can be associated with interruptions in financing of the program, there is a risk a large scale epidemic that can kill people in all age groups, not just young children and pregnant women. This is a real concern in the current Zambian situation which can result in costly malaria epidemics. 7. The 2010 Malaria Indicator Survey clearly shows that the disease is resurging in the poorest regions of Zambia because of the unpredictability in donor resources due to the financial management issues in the MOH that the Government has been working to resolve over the past year. Therefore, the Government has been unable to finance the IRS campaign or replacement nets in the country. As evidence from other countries prove, if predictable financing does not become available in the short term, Zambia is at risk of losing the progress made as well as the window of opportunity to eliminate malaria in the country in the medium term and is at risk of losing even more people to malaria during an epidemic as described above. Cost of burden on the health system 8. There is a concern that the current lack of funding for the malaria program will create a high financial burden on the health system in Zambia. In 2005, malaria control was identified as a high priority in Zambia on the basis of its human impact and the burden it placed on the weak and underfunded health system.24 At that time, there were an estimated 4.3 million clinical cases of malaria per year causing 50,000 child deaths and accountable for 20% of maternal mortality. The overwhelming number of malaria cases presents a crisis for health systems; even "best" performing systems will not be able to cope if the huge burden of malaria cases is not drastically reduced. Data from the Zambian health management information system indicated that in 2004, 23 % of children 0-59 months who slept under an ITN the previous night: target = 80%; 2008 = 41.1%. % of pregnant women who slept under an ITN the previous night: target = 80%; 2008 = 43.2% 24 Zambia National Health Strategic Plan 2006-2010 38 malaria was responsible for 45% of all hospitalizations and 50% of all outpatient consultations for children under five years of age. This can be reduced significantly with effective malaria prevention resulting in significant savings; an increase in the time that health care workers spend treating and controlling other diseases, and potentially dramatic increases in worker productivity in all sectors. Access to Prompt and Effective treatment of malaria 9. Accessibility of essential drugs, including malaria treatment, at the health facility level remains a bottleneck to health service delivery in Zambia. The MOH and its partners have invested substantial amounts of money in the public sector supply chain in recent years. Despite these efforts, health facilities across Zambia continue to face difficulties accessing drugs and medical supplies in appropriate quantities. Several assessments that were done prior to the design of the pilot program that has been showing results in 16 districts in Zambia including Beer (2007), Picazo (2006) and the baseline survey for the pilot program reported high stock-out rates, particularly at the health facility level. 10. In addition, effective treatment of malaria is a critical issue to help prevent against resistance to the effective drugs that are currently available. There is evidence of an improvement in the 2010 MIS from the 2008 MIS in access to the first line treatment due to improved case management through appropriate use as guided by the national policy. Rationale for the Malaria Booster Additional Financing Project 11. Given the above, there is strong rationale for this project. The design of the directly addresses the issues and challenges of the current malaria situation in the country: Purchase and distribution of bednets and support to IRS: A large portion of the financing is reserved for the purchase of bednets and support to the IRS campaign in the country. Extensive research and evidences shows that cost-effective interventions to control malaria are available. The cost-effectiveness range for malaria intervention in sub-Saharan Africa varied from US$4-10 per DALY averted for insecticide treatment, $19-85 for provision of bednets, $32-58 for residual spraying, $3-12 for chemoprophylaxis for children and $4-29 for intermittent treatment of pregnant women. (Goodman 1999). Access to effective treatment of malaria: As discussed above, the Additional Financing will support the scale-up of a model that addresses drug stock-outs at health facility level. Considering malaria related deaths alone, a scale up would translate into more than 770 000 Years of Life Lost (YLL) averted during a 5 year period. If we wish to express the cost-effectiveness in terms of health gains, we again focus on malaria deaths averted due to increase availability of ACT at the facility level. As expressed earlier, a national scale- up of Model B may result in 3320 fewer under-five deaths and 448 over-five deaths annually. In 2008, the life expectancy in Zambia (World Bank WDI, 2008) was estimated at 45.4 years. In terms of years of life lost averted, this translates into 720,440 YLLs averted from the reduction in under-five deaths, and 50,175 from the reduction in over five deaths (assuming the median age of Zambians over 5 is 22 years as per CIA World 39 Factbook). This implies a monetary value of $22 per YLL averted for a national scale-up of this model operating over a 5 year period. 12. It is difficult to find benchmark comparisons for this estimate of cost-effectiveness since it is a marginal investment into an active health system. However one contextual comparison is the estimated cost-effectiveness of antiretroviral therapy. One estimate for Sub-Saharan Africa stands at $350/DALY averted (Marseille et al. 2002).25 This comparison cost-effectiveness includes additional inputs such as medical staff as well as pharmaceutical costs. Other benchmarks are the cost-effectiveness of a global ACT subsidy at $1858/death averted (assuming full subsidy of one dollar per treatment course of ACT) (Laxminarayan et al. 2006) or the cost effectiveness of intermittent preventive treatment for malaria in pregnant women with Sulfadoxine-Pyrimethamine (SP) of $19/DALY averted (Yadav, 2010). Fiscal Sustainability 13. In the past, the issue of fiscal sustainability has been raised as a concern given the heavy reliance of the Zambia health sector on donor resources. The Government of Zambia has taken a proactive approach to the recent challenges in donor financing given the negative impact of these challenges on the delivery of health services. In this context, the Government has doubled its contribution to the health sector as indicated in the 2010 National Budget allocations and this trend is expected to continue in the foreseeable future. 25 In the case of malaria DALY and YLL are not equal but similar given that effects of malaria on disability are small. Correspondingly, the bulk of HIV related DALYs derive from YLLs. 40 41