Document of The World Bank FOR OFFICIAL USE ONLY PROJECT PAPER ON A PROPOSED ADDITIONAL FINANCING

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1 Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Report No: ZR Public Disclosure Authorized Public Disclosure Authorized PROJECT PAPER ON A PROPOSED ADDITIONAL FINANCING IN THE AMOUNT OF SDR 50.9 MILLION (US$80 MILLION EQUIVALENT) TO THE DEMOCRATIC REPUBLIC OF CONGO FOR A HEALTH SECTOR REHABILITATION SUPPORT PROJECT December 3, 2010 Public Disclosure Authorized 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.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective October 31, 2010) Currency Unit = Congolese Franc CDF918 = US$1 US$ = SDR 1 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ACT Artemisinin Combination Therapy ISR Implementation Status and Results Report AF Additional Financing ITN Insecticide Treated Net BCECO Bureau Central de Coordination LIB Limited International Bidding CAS Country Assistance Strategy LLINs Long Lasting Insecticidal Net CQ Consultants Qualification MDG Millennium Development Goal DA Designated Account M&E Monitoring and Evaluation DC Direct Contracting MICS Multiple Indicator Cluster Survey DHS Demographic and Health Survey MIS Multi-indicator Malaria Survey DO Development Objective MOH Ministry of Health DRC Democratic Republic of Congo MOF Ministry of Finance EEA External Evaluation Agency MS Moderately Satisfactory EMRRP Emergency Multisectoral Rehabilitation MU Moderately Unsatisfactory Reconstruction Project EHS Essential Health Service MWNMP Medical Waste National Management Plan ESMF Environmental and Social Management NCB National Competitive Bidding Framework EUSRP Emergency Urban and Social Rehabilitation NGO Non-Governmental Organization Project FM Financial Management NHDP National Health Development Plan GFATM Global Fund to Fight AIDS, Tuberculosis and NMCP National Malaria Control Program Malaria GoDRC Government of Democratic Republic of Congo NMCS National Malaria Control Strategy HSRSP Health Sector Rehabilitation Support Project OPRC Operations Policy Review Committee HSSS Health Sector Strengthening Strategy PBC Performance Based Contracting HMIS Health Management Information System PCU Project Coordination Unit IBRD International Bank of Reconstruction and PDO Project Development Objective Development ICB International Competitive Bidding RDT Rapid Diagnostic Test IDA International Development Association SPP Simplified Procurement Plan IE Impact Evaluation SOE Statement of Expenditures IFR Interim Financial Report TB Tuberculosis IFRA Independent Fiduciary Review Agency TOR Terms of Reference IP Implementation Partners QCBS Quality and Cost Based Selection IPT Intermittent Preventive Treatment UNICEF United Nations Children s Fund IPPF Indigenous Peoples Planning Framework USAID United States Agency for International Development ISDS Integrated Safeguards Datasheet USPMI United States Presidents Malaria Initiative 2

3 Vice President: Obiageli Katryn Ezekwesili Country Director: Marie Françoise Marie-Nelly Sector Manager: Eva Jarawan Task Team Leader: Jean-Jacques Frère 3

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5 DEMOCRATIC REPUBLIC OF CONGO HEALTH SECTOR REHABILITATION SUPPORT PROJECT CONTENTS Table of Contents ADDITIONAL FINANCING DATA SHEET... 5 I. INTRODUCTION... 8 II. BACKGROUND AND RATIONALE FOR AF IN THE AMOUNT OF US$80 MILLION... 9 III. PROPOSED CHANGES IV. CONSISTENCY WITH THE COUNTRY ASSISTANCE STRATEGY (CAS) V. APPRAISAL SUMMARY VI. FINANCIAL TERMS AND CONDITIONS FOR THE ADDITIONAL FINANCING ANNEX 1: RESULTS FRAMEWORK AND MONITORING ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK ANNEX 3: DETAILED DESCRIPTION OF PROJECT ACTIVITIES UNDER AF ANNEX 4: IMPLEMENTATION ARRANGEMENT ANNEX 5: PROCUREMENT ARRANGEMENT ANNEX 6: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENT ANNEX 7: RECOMMENDATIONS ON ENVIRONMENTAL SAFEGUARDS ANNEX 8: DRC MALARIA CONTROL RESOURCE GAP

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7 DEMOCRATIC REPUBLIC OF CONGO HEALTH SECTOR REHABILITATION SUPPORT PROJECT ADDITIONAL FINANCING DATA SHEET Basic Information (Original Project) Project ID: P Project Name: DRC Health Sector Rehabilitation Support Project Team Leader: Jean-Jacques Frère Expected Closing Date: June 30, 2013 Environmental category: Partial Assessment B Lending Instrument: Specific Investment Loan Joint IFC: Joint Level: Basic Information (Additional Financing) Date: December 3, 2010 Team Leader: Jean-Jacques Frère Country Director: Marie Françoise Marie-Nelly Sector Manager/Director: Eva Jarawan Sectors: Health (100%) Themes: Malaria (100%) Project ID: P Environmental category: Partial Assessment Lending Instrument: Emergency Recovery Loan Additional Financing Type: Scale Up Joint IFC: Joint Level: AF Project Financing Data [ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): Proposed terms: AF Financing Plan (US$m) Source Local Foreign Total BORROWER/RECIPIENT IDA Grant Total: Borrower: Responsible Agency: Ministry of Health Boulevard du 30 juin B.P Congo, Democratic Republic of Tel: (243) bctrdc@ic.cd AF Estimated disbursements (Bank FY/US$m) FY Annual Cumulative Project implementation period: Start January 20, 2011 End: June 30, 2013 Expected effectiveness date: March 18, 2011 Expected closing date: June 30,

8 Does the project require any exceptions from Bank policies? Ref. Section Appraisal of Project Activities Have these been approved by Bank management? Does the project include any critical risks rated substantial or high? Ref. Section Project Risks and Mitigating Measures [ ]Yes [X] No [ ]Yes [ ] No [ ]Yes [X] No Original project development objective : To ensure that the target population of selected health zones has access to, and use, a well-defined package of quality essential health services (EHS). Project description The original project has four components: (1) Expand Access and Utilization of a Proven Package of Essential Health Services to Selected Districts and Health Zones; (2) Boost Malaria Control Interventions; (3) Strengthen capacity for oversight and evidence-based management of the health system; (4) Project Coordination. Activities supported by the Additional Financing will amplify malaria control interventions. Main activities include: (i) contribution to the government s LLIN mass distribution campaign in the Provinces of Katanga, South Kivu and Nord Kivu; (ii) provision of malaria-related preventive, diagnostic and treatment services in HSRSP target health zones; and (iii) support to health system strengthening through training of health care providers and support to key functions within the Ministry, as well as improvement of monitoring and evaluation (M&E). Which safeguard policies are triggered, if any? Ref. Section Appraisal of Project Activities Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Cultural Property (OPN 11.03) X Indigenous Peoples (OP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X Conditions and Legal Covenants Financing Agreement Reference Description of Condition/Covenant Date Due Schedule 2, Section V. 1. Schedule 2, Section V. 2. The Recipient shall ensure that the existing PPC with Implementing Support Partners shall have been updated, under terms satisfactory to the Association, to reflect the requirements under Section I.A.2 of Schedule 2 to this Agreement. The Recipient shall ensure that the existing accounting software shall have been upgraded to a multiprojects version and the users shall 6 One month after Effective Date. Not later than two months after Effective Date.

9 Schedule 2, Section V. 3. Schedule 2, Section V. 4. Schedule 2, Section V. 5. Schedule 2, Section V. 6. have been trained in its use. The Recipient shall ensure that the PIM [and the PAPAM] including the Anti-Corruption Plan, shall be updated, under terms satisfactory to the Association. The Recipient shall disclose adopt the IPPF in form and substance satisfactory to the Association and carry out an audit on terms satisfactory to the Association on the distribution to date of insecticide-treated nets under the Project to indigenous population [as well as civil works constructions carried out under the Original Financing] and promptly take thereafter any remedial action if deemed necessary by the Association in manner satisfactory to the Association. The Recipient shall ensure that the terms of reference and contract of the current internal auditor, shall be updated and extended to reflect the Project. The Recipient shall ensure that the terms of reference of the external auditors, shall be updated to reflect the Project. Not later than one month after Effective Date. Not later than February 25, No later than one month after the Effective Date. No later than one month after the Effective Date. 7

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11 I. INTRODUCTION 1. This Project Paper seeks the approval of the Executive Directors to provide an additional grant in the amount of US$80 million to the Democratic Republic of Congo (DRC) Health Sector Rehabilitation Support Project (HSRSP) (P088751; Grant H182 -DRC). 2. The proposed additional financing (AF) responds to the Government of DRC (GoDRC) s request to bridge the existing resource gaps for its effort to scale up malaria control interventions. The AF also supports the international agenda for malaria control as DRC and Nigeria are the two priority countries under Phase 2 of the Malaria Booster Program. Malaria is the single most important cause of morbidity in DRC and a significant contributor to under-five and maternal mortality. It is estimated that 97% of the country s population is at risk of endemic malaria, while the remaining 3% are vulnerable to epidemic malaria. The DRC s National Malaria Control Strategy (NMCS) intends to reduce malaria-related mortality and morbidity by 50% by The strategy calls for rapid scale-up of malaria-related interventions through a comprehensive approach, including universal coverage of Insecticide Treated Nets (ITNs), provision of malariarelated services including use of Rapid Diagnostic Tests (RDTs) for screening, availability of Artemisinin-based Combination Therapy (ACTs) as first-line treatment, and Intermittent Preventive Treatment (IPTs) for pregnant women. While effort has been made to mobilize additional resources, the GoDRC estimates that there still remains a financial gap of approximately US$156 million 1 to attain the objectives by The World Bank s support of US$80 million under the proposed AF therefore represents a significant contribution. 3. The AF will scale up activities under Components 2, 3, and 4 of the Health Sector Rehabilitation Support Project (HSRSP) with an emphasis on Component 2. The HSRSP s Component 2 is a US$30 million component which aims at boosting key malaria control interventions through provision of malaria control services package as defined by the Ministry of Health (MOH). The AF intends to scale this up by financing the following activities: (i) provision of approximately 8.4 million long-lasting insecticidal nets (LLINs) as part of the provincial-wide mass distribution campaigns in the Provinces of Katanga, South Kivu, and North Kivu; (ii) continued delivery of routine malaria control services to pregnant women and under-one year of age children in the HSRSP target health zones, including preventive, diagnostic, and treatment services; and (iii) support to health system strengthening, through capacity building to health care providers to improve their case management and treatment skills, technical and operational support to the National Malaria Control Program and other functions within the MoH. Improved monitoring and evaluation (M&E) mechanism will also be a focus of the AF. 4. Project closing date will be extended by an additional 18 months from the current date of December 31, 2011 to June 30, 2013 to accommodate the new activities under the proposed AF. The overall design of the project will remain unchanged. The proposed AF would retain the original project development objectives (PDOs) and implementation arrangements while the project outcome indicators and targets will be modified to take into account the new activities and new geographic scope of intervention. 1 The GoDRC estimates that resource needed to support a comprehensive approach to malaria control nationwide in would require US$573 million, of which US$417 million are currently available. The available funds are contributed by the following main donors: the Global Fund to Fight AIDS, Tuberculosis (TB) and Malaria (GFATM), United States Presidents Malaria Initiative (USPMI), United Nations Children s Fund (UNICEF), and United States Agency for International Development (USAID).

12 II. BACKGROUND AND RATIONALE FOR AF IN THE AMOUNT OF US$80 MILLION 5. The International Development Association (IDA) grant-financed SDR 99.3 million (equivalent to US$150 million) HSRSP was approved by the Board in September 1, 2005 and became effective on April 13, 2006 with the initial closing date at June 30, The PDO is to ensure that the target population of selected health zones has access to, and use a well-defined package of quality essential health services (EHS). The original project supports 83 health zones in the Provinces of Bandundu, Equateur, Kinshasa, Katanga, and Maniema encompassing a total population of 9.4 million. However, the project has recently absorbed an additional 70 health zones supported by the Emergency Multisectoral Rehabilitation Reconstruction Project (EMRRP) which closed in March This new geographical scope increased the population coverage from 9.4 million to 18.9 million. The project closing date was once extended by 18 months from June 30, 2010 to December 31, 2011 to compensate for the significant start-up delays the project faced in the initial years after effectiveness. The project also underwent a Level 2 restructuring in April 2010 to address some of the remaining bottlenecks that were affecting project implementation performance. Overall disbursement of the project as of end October 2010 is at 73% of the total project amount. The project continues to be in compliance with formal legal covenants. 6. The original HSRSP consist of the following components: i. Expand Access and Utilization of a Proven Package of Essential Health Services to Selected Districts and Health Zones (US$104 million): Support to implementation of MoH package of essential primary health care services with international Non Governmental Organizations (NGOs) as Implementing Partners (IPs) through performance-based contracting. ii. Boost Malaria Control Interventions (US$30 million): Interventions include: (i) IPTs for pregnant women; (ii) ACTs for first-line treatment for malaria; (iii) scaling up coverage of LLINs; and (iv) technical assistance and operational research. iii. Strengthen capacity for oversight and evidence-based management of the health system (US$12 million): This component focuses on: (i) building capacity for M&E through contracting a firm as an External Evaluation Agency (EEA); and (ii) strengthening institutional capacity of provincial and district health administrations through technical assistance provided by an international NGO. iv. Project Coordination (US$40 million): This supports the HSRSP Project Coordination Unit (PCU) as well as the costs for an annual Project Review Forum. Initially the Bureau Central de Coordination (BCECO) in the Ministry of Finance (MoF) was responsible for fiduciary management of the project but this responsibility has been subsequently transferred to the PCU in order to improve ownership and accountability of the MoH. 7. Overall performance of HSRSP has significantly improved in the past year. Implementation Status and Results Report (ISR) rating has been upgraded from moderately unsatisfactory (MU) to moderately satisfactory (MS) for both PDO and implementation performance since December The previous MU status was largely due to delays in delivering key inputs such as vehicles, medical equipment, and drugs on the ground under the previous fiduciary management set up, and lack of clarity in the procedures to be followed by the Implementation Partners (IPs). These issues were addressed over the last year and during the recent restructuring. The current ISR rating for M&E remains as MU and concerns about the EEA s performance have been raised. Corrective measures are sought including replacement of the local Team Leader and revisions of the EEA s Terms of References (ToRs) that had been introduced by the MOH. In addition, while the current EEA will continue monitoring the activities under the original project, different arrangements will be proposed for the AF including recruitment of another EEA. The project s overall safeguard compliance and 9

13 Environmental Assessment have consistently been classified as Satisfactory. PDO indicators have progressed well and are likely to achieve their targets. 8. Implementation of Component 2 (Boost Malaria Control Interventions) has been progressing well and has been consistently rated as satisfactory or moderately satisfactory. As part of the Malaria Booster Program the project has so far procured and distributed 2.9 million LLINs with the majority used for routine distribution to the HSRSP target health zones, while the rest for the Equateur Province mass campaign in The project also provided a total of 9.1 million treatment doses of ACTs in the HSRSP zones and supplied medications for IPTs to pregnant women. In addition, the World Bank-funded multisectoral Emergency Urban and Social Rehabilitation Project (EUSRP) successfully supported a campaign for the distribution of 2 million LLINs in the Kinshasa province in 2009 through its health component. A follow-up evaluation by the Kinshasa School of Public Health showed increased gains in possession and utilization of ITNs and concomitant reduction in fever episodes. The proposed AF builds on these successful operations undertaken by the World Bank by expanding the geographical coverage to the Provinces of South Kivu and North Kivu while continuing support in the Provinces under the original HSRSP The recent experiences with the LLIN mass campaigns in DRC suggest that it is possible to obtain rapid results. In line with the global strategy to rapidly expand ITN coverage, the GoDRC has carried out provincial-wide LLIN mass campaigns since 2006 in the six of the eleven provinces, covering a total population of approximately 29.7 million. Three additional campaigns are currently underway with support from development partners 3. The campaigns were carried out either in the form of stand-alone or integrated distribution through campaigns for vaccination, Vitamin A supplementation or de-worming. The recent 2010 Multiple Indicator Cluster Survey (MICS 2010) suggests significant progress in overall ITN coverage: nationwide 51% of households have at least one ITN as opposed to 9.2% in MICS ITN utilization rate has also improved: MICS 2010 reports that 38% of under-five children slept under ITN, while this was only 0.7% in MICS 2001 and 5.8 % in the 2007 Demographic Health Survey (DHS 2007). As for pregnant women, the result from MICS 2010 reports that 43% slept under ITN, in comparison to 7.1% in DHS Similarly, studies also show that increased ITN coverage also yields positive impact in reducing malaria transmission. Between 2001 and 2010 prevalence of fever in DRC has significantly decreased from 41.1% in 2001 (MICS 2001), 30.8% in 2007(DHS 2007) and 27% in 2010 (MICS 2010). 10. However, there still remains a gap in achieving the intended coverage. The national strategy aims to achieve universal LLIN coverage through distribution of 3 ITNs per household. Despite the efforts to date, an analysis conducted by the NMCP concludes that there is still an existing gap of approximately 11.2 million LLINs in the Provinces of Katanga, North Kivu, South Kivu, and Bandundu to achieve this target (see Table 1, Annex 8). The proposed AF will finance a large part of this gap by supporting the next mass campaigns in the Provinces of Katanga, North Kivu, and South Kivu accounting for about 8.4 million nets. The remaining gap of approximately 2.8 million nets in the Province of Bandundu will be addressed by another grant to the World Bank EUSRP. 5 2 Mass campaigns supported by AF will target Provinces of Katanga, South and North Kivu. While the original grant supports only two districts in Katanga, the AF will cover the entire province through the planned campaign. North and South Kivu do not fall under the geographical target under the original project but will be added to the AF. 3 Mass campaigns were carried out in Provinces of: Bas Congo and South Kivu ( ), Equateur and Kinshasa ( ), Oriental and Maniema (2010), and under preparation in Kasai Oriental, Occidental, and Bandundu. 4 Data for women sleeping under ITNs is not available in MICS It is expected that the EUSRP will allocate approximately US$19 million out of their additional grants to support the campaign in Bandundu. 10

14 III. PROPOSED CHANGES Overall project design, development objectives and scope. 11. While the fundamental design of the project remains unchanged, the AF will mainly comprise a major scale-up of malaria control activities, as well as stronger emphasis on health systems strengthening. Programmatic aspect of the project design will follow the original grant but the AF will focus on malaria control activities through different approaches. Procurement method to be used to accomplish the task will also be changed from the original grant. PDO will remain the same from the original project: to ensure that the target population of selected health zones has access to, and use, a well-defined package of quality essential health services. As activities under the original grant will continue in parallel with the AF, indicators pertaining to the ongoing activities will continue to be measured. New malaria-specific indicators will however be introduced to rigorously measure the outcomes related to the AF (see Annex 1). Targets will also be adjusted to take into account the revised geographical scope. Implementation arrangements. 12. Implementation arrangements will remain unchanged from the restructured original project with the HSRSP-PCU assuming overall responsibility for project implementation, including oversight, coordination and fiduciary management (see Annex 4): A) The PCU is headed by a Project Coordinator and includes a small fiduciary management team with sufficient capacity. Following the formal restructuring in April 2010, all fiduciary responsibility has been transferred from BCECO to the PCU. Auditing functions (internal, external and procurement) are delegated to specialized independent firms. B) International NGOs that are contracted as IPs under the original project will continue to provide support under the AF in the project-supported districts. While their current scope of work encompasses a wide range of activities, their mandate under the AF will be limited to supporting malaria control routine services. Their contracts will be amended to reflect this change. C) The NMCP, a specialized Program under the MoH, will work closely with the PCU in coordinating the project s efforts with other malaria control interventions, as well as in providing adequate technical and logistical support. Given stronger focus on malaria under the AF the Program will be heavily involved in all aspects of the operation. D) The EEAs will be used to provide baseline and follow-up data to measure project performance. It will supplement the routine data collection supported by the national health management information system (HMIS) and it will contribute to capacity building in M&E and in the measurement of performance. The current M&E agent will continue monitoring the original grant until end of its contract. However, its scope of work has been revised and the local team has been modified. A new agent will be recruited to focus on the AF activities. In addition to the EEA, an independent research institution or University will be contracted to conduct pre- and post- impact evaluation (IE) studies after every provincial LLIN mass distribution campaign. E) United Nations agency will be used for the procurement of the LLINs and possibly other specialized health commodities. Clearance by the Operations Policy Review Committee (OPRC) has been obtained to contract UNICEF, upon approval of the AF, for provision of a comprehensive service including purchase, distribution, related communication and supervision, based on their experience in handling similar operations in DRC in the past. 11

15 Proposed additional financing activities. 13. The following activities will be funded under the AF (see Annex 3). Under Component 1: Expand Access and Utilization of a Proven Package of EHS to Selected Districts and Health Zones. No new activities will be added under AF. Under Component 2: Boost Malaria Control Interventions. A) Contribution to mass LLIN campaigns through purchase and distribution of 8.4 million LLINs (US$50.3 million): The proposed AF will primarily focus on support to the planned provincial-wide LLIN campaigns in 2011 in Katanga, South Kivu and North Kivu as part of the government-led mass campaigns organized by the NMCP. UNICEF will be responsible for the procurement and distribution of the LLINs to the health zone level in close collaboration with the provincial level NMCP, the health district and health zone authorities. At community level, civil society organizations such as Women or Youth associations as well as community leaders will be mobilized to support the final stages of the distribution. Concerns regarding drop-off from possession to correct utilization of bed nets needs to be addressed through communication and close monitoring. 6 The contract with UNICEF will include implementation of communication strategies as well as monitoring for after distribution. B) Provision of preventive, diagnostic and treatment services package for malaria control in HSRSP target health zones (US$22.9 million): The AF will continue financing the costs associated with provision of routine malaria prevention and treatment services as provided under the original grant. The activities will include provision of ACTs for first-line treatment, IPTs for pregnant women, as well as routine distribution of LLINs to pregnant women during ANC and to children under-one year of age at immunization visits (EPI). 7 In addition, RDTs for mandatory parasitological confirmation of malaria infections will be included in line with the new government policy and treatment guidelines. This component will also finance the costs associated with contracting of IPs to support provision of these services in the target zones. Necessary inputs such as RDTs and anti-malarial drugs will be procured centrally by the PCU. Under Component 3: Strengthen capacity for oversight and evidence-based management of health system. C) Building Institutional Capacity and strengthening M&E (US$4.8 million): i) Support to training and supervision. Training of health care providers will focus on introduction and roll out of parasitological confirmation of malaria diagnoses, correct utilization of ACTs and introduction of IPT. In addition, the ambitious volume of activities supported by this AF will call for substantial improvements in supervision from the central, provincial, district and zone levels. Support to regular supervision at these different levels will be supported to ensure coherence in the central and peripheral levels interventions. 6 Although this has not been of major concern in DRC compared to other countries in the region, as preliminary results of the MICS show a relatively low drop-off rate (see paragraph 9). 7 The original project did not include parasitological diagnosis of malaria with RDTs as this was not part of the national malaria control strategy and treatment guidelines when the HSRSP was designed. However, the global guidelines by WHO now recommend screening for malaria with a use of RDT prior to treatment. 12

16 ii) Strengthening MOH institutional capacity through: (a) support to NMCP through the provision of TA to strengthen malaria-related HMIS as well as their capacity to provide training to health workers at peripheral levels. (b) support to the recently established Management Unit mandated to centralize and manage all health donor funds in DRC under the MOH (Cellule d Appui à la Gestion, CAG) 8 through technical assistance (TA) to improve their planning, contracting and management capacity, as well as support to operational costs. iii) M&E. Introduction of a more rigorous M&E mechanism to improve results orientation will also be covered under this component. In addition to supporting the existing HMIS which includes specific reports on malaria morbidity and some information on mortality, the project will use the services of an EEA to closely follow the progress on project s key indicators. While routine data collection will take place by the above-mentioned EEA, the project will also conduct pre- and post- impact evaluations after each provincial mass campaign. A large part of the malaria-related indicators can be obtained from MICS However a baseline study will be conducted to inform the new indicators as soon as the AF is approved. In addition, the project will capitalize on the work done by other partners to supplement the project s M&E: such as multiple malaria indicator surveys (MIS) programmed by the GFTAM in 2011 and 2013, as well as the next DHS scheduled in Under Component 4: Project Coordination D) Support to PCU (US$2 million): The PCU will maintain its roles as the MOH interlocutor for all projects implementation agencies, particularly the IPs, EEA, and consultants and firms providing technical assistance. The AF will cover the operational costs associated with maintaining the capacity of the current HSRSP-PCU until the project s proposed closing date in June The PCU will maintain its set-up with its core staff led by the Project Coordinator with a functioning fiduciary management team, while relying on external independent firms for internal and external audits. Financial Management (FM), reporting, audit and disbursement arrangements. 14. The FM system and performance of PCU under the initial project are acceptable to IDA. PCU will be responsible for FM of the AF and remains the Bank focal point. The PCU is familiar with the Bank FM requirements and is currently managing one IDA-financed project and one TF. The FM of the AF will follow the same approach as the implementation arrangements in place for the ongoing projects managed by the PCU. The current FM staffing is deemed acceptable; no additional staff will be recruited. The current version mono-project of the TOMPRO will be upgraded to a multi-projects version and will be used for the initial phase and the AF. The existing FM procedures manual which is being updated to reflect the aspects of the AF (update completed by Dec 15, 2010) is acceptable to IDA and could be used for the purpose of the AF. The residual FM risk after mitigation measures remains Substantial. The action plans derived from the implementation support mission of June 2010 as well as the recommendations of the 2009 external audit reports, have been or are being implemented well. The interim un-audited financial reports (IFR) are prepared every quarter and submitted to the Bank regularly (e.g. 45 days after the end of each quarter) on time. 8 CAG was created in December Its mandate is to function as a central management unit for health development programs in the country. CAG is expected to play a key function in centralizing and managing all donor funds including the upcoming Round 9 of the GFATM and EU funds. It will coordinate and ensure the link between the PCU, NMCP and the Secretary General and other partners. Building their capacity is therefore imperative in ensuring sustainability of the future malaria-related interventions. 13

17 15. The internal audit function contracted to an auditing firm operates well. However, following the last mission of June 2010, it was decided to strengthen the internal audit function of the PCU and transfer gradually this function to two individual consultants to be selected on a competitive basis. The TOR of the current internal auditing firm will be updated to reflect the AF. 16. There is no overdue audit report in the project and the sector at the time of preparation of this AF. The audit report of the project managed by the PCU covering the period that ended December 31, 2009 was submitted on time and is acceptable to IDA. The next audit reports of IDA-financed projects in the sector in DRC are due on June 30, The accounts of the AF will be audited on an annual basis and the external audit reports will be submitted to IDA within six months after the end of each calendar year. The accounts of the AF will be audited on an annual basis and the external audit reports will be submitted to IDA within six months after the end of each calendar year. The ToR of the current external auditing firm will be updated to reflect the AF. The project will comply with the Bank disclosure policy of audit reports and place the information provided on the official website within one month of the report being accepted as final by the team. 17. Upon AF effectiveness, transaction-based disbursements will be used as in the initial financing. The grant will finance 100% of eligible expenditures inclusive of taxes. A new designated account (DA) will be opened in a commercial bank acceptable to IDA. The ceiling of the DA will be established at US$2.4 million which represents four months of forecasted project expenditures expected to be paid from the DA. An initial advance up to the ceiling of the DA will be made and subsequent disbursements will be made against submission of Statements of Expenditures (SOE) reporting on the use of the initial/previous advance. The option to disburse against submission of quarterly unaudited Interim Financial Report (also known as the Report-based disbursements) could be considered, as soon as the project meets the criteria 9. The other methods of disbursing the funds (reimbursement, direct payment and special commitment) will also be available to the project. The minimum value of applications for these methods is 20% of the DA ceiling. The project will have the option to sign and submit Withdrawal Applications (WA) electronically using the esignatures module accessible from the Bank s Client Connection website. Procurement. 18. Given its satisfactory performance to date, the current PCU will remain the procurement agent for the AF until the new institutions recommended by the new national procurement law will be in place. For the time being, there will be no major changes on how procurement will be carried out. All procurement for goods and non consultant services will be handled by the PCU procurement unit governed by the Guidelines for Procurement under IBRD Loans and IDA Credit dated May 2004, revised in October 2006 and May 2010 published by the Bank. Procurement of Consultant s services will follow the "Guidelines for selection and Employment of Consultants by World Bank Borrowers " dated May 2004, revised in October 2006and May Detailed description of each procurement process is provided in Annex 5. The procurement manual developed for the project and further revised during the restructuring will serve as a base document for all procurement activities related to the project. An anti-corruption plan will also be prepared. 19. The new procurement code has been promulgated on April 27, 2010 and its effectiveness is expected by the end of this year. At this time, the new procurement code will be applicable to all contracts that are not advertised internationally. For this purpose, the Bank procurement team will identify and clarify clauses of the said code that are not entirely or partially applicable to a Bank 9 e.g. the draft report of the eligibility assessment current underway revealed that the project budgetary system and the quality of the financial reporting require some improvements before being considered for this method. 14

18 financed project, and propose appropriate modifications. These modifications would be set out in an agreement between the Government and the Bank. 20. Procurement and distribution of a total of 8.9 million LLINs (8.4 million for mass distribution campaigns and 0.5 million for routine distribution) worth approximately US$53 million will be procured through a direct contracting with UNICEF. The team conducted a preliminary analysis on different possible LLIN procurement methods including contract with a UN agency, International Competitive Bidding or contract with an NGO. Given the large quantity and tight lead time to carry out the campaigns, it has been agreed that the procurement and distribution of LLINs be done through direct contracting with UNICEF. UNICEF has experience in similar operations in DRC and demonstrated its strong competence. 10 First, UNICEF offers a comprehensive set of services, including procurement of LLINs, distribution, education and communication, enabling a sustained approach to maximize the impact of these campaigns. In the past they also trained the NMCP and health administration staff in peripheral levels on microplanning and household census preparation prior to the campaigns, in addition to treatment-related training. Second, UNICEF has capacity to control the LLIN market through its long-term agreement with prequalified suppliers leading to economies of scale and consequent competitive unit cost. Its pre-booking capacity also allows for securing the needed quantity at a time when LLINs are globally in high demand. Third, quality assurance is ensured through their independent inspection mechanism. Fourth, UNICEF has its own established distribution system in DRC through agreements with other UN agencies and transporters which results in a significantly reduced transportation cost. Last, UNICEF has an agreement with the government allowing streamlined customs clearance of UN procured products suggesting less risk of clearance delay at port of entry. An internal review by the OPRC concluded that direct contracting with UNICEF is justified especially in the DRC country context. An agreement between the PCU and UNICEF will be based on the Standard Agreement for the Procurement of Health Sector Goods that has been negotiated and agreed upon between the Bank and UNICEF. 21. Other procurement such as acquisition of goods and consultancy contracts will be conducted in accordance with applicable IDA guidelines and will rely on competitive process in most cases. International Competitive Bidding (ICB) /Limited International Bidding (LIB) and Direct Contracting (DC) will be used for goods and Quality-Cost Based Selection (QCBS) for services. Detailed procurement arrangements and a Simplified Procurement Plan (SPP) are presented in Annex 5. Most of the goods to be procured under the AF are inputs (ACTs, RDTs and other anti-malarial drugs). Consultancy contracts include NGO contract revisions, firms for M&E and audits. TA may also be provided by an independent consultant or a firm. 22. Closing date: The project requires a further extension by 18 months, bringing the final closing date to June 30, The project was once extended by 18 months from the original closing date of June 30, 2010 to December 31, 2011 in order to compensate for the start-up delays. This would bring the total extension period to 36 months. 23. Implementation Schedule: As soon as the AF becomes effective, the activities under the AF will start in parallel with ongoing activities under the original project. The HSRSP-PCU functions will be maintained until final closure of the AF phase. 10 UNICEF was in charge of the mass campaigns in Province Orientale and Maniema, the two Provinces with most difficult accessibility, procuring and distributing approximately 5.5 million nets. Communication and follow-up activities were also part of their contract. 15

19 24. Expected outcomes. Consistent with the original project, the AF will be used to finance activities to achieve the PDO of ensuring that the target population of selected health zones has access to, and use, a well-defined package of quality essential health services. However, PDO indicators will be revised as below to reflect the focus on malaria control. Since the activities under the original project will continue in parallel to the AF activities: (i) existing indicators will be maintained with revised targets to take into account the new geographical scope under AF; (ii) new indicators specific to malaria interventions will be added to measure more rigorously the impact of the AF activities. Revised Project Outcome Indicators (See Annex 1) PDO Current (after restructuring in April 2010) To ensure that the target population of selected health zones has access to, and use, a well-defined package of quality essential health services PDO indicators Current (after restructuring in April 2010) Per capita annual curative consultation rate % children 0-11 months vaccinated with DPT3 % deliveries assisted by qualified personnel % women years new users of family planning % of under-five children and pregnant women who have access to an insecticide-treated net Revisions to the Results Framework Proposed change No change Proposed change No change No change No change No change Modified to: % of under-five children who slept under an insecticide-treated net (ITN) the night before % of pregnant women who slept under an insecticide-treated net (ITN) the night before % pregnant women receiving 2 doses of intermittent preventive treatment (IPT) against malaria Comments/Rationale for Change The PDO was not modified during the recent restructuring and will remain unchanged for the AF. Comments/Rationale for Change Activities under the original project will continue until 31 December Indicators pertaining to the original project area will therefore remain. Same as above Same as above Same as above Unchanged but end target values to be modified 16

20 25. Costs by component. The proposed additional grant of US$80 million would bring the total project amount to US$230 million. The table below provides the financing allocation by component of the original project and the project including the proposed AF. Breakdown by Categories as well as Disbursement Plan are provided in Annex 6. Component Initial Project Cost ($ Million) Additional Financing Cost ($ Million) Total after Additional Financing ($ Million) 1) Expand Access and Utilization of EHS 2) Boosting Malaria Control Interventions 3) Capacity Strengthening for Oversight and Evidence-based Health System 4) Project Coordination TOTAL IV. CONSISTENCY WITH THE COUNTRY ASSISTANCE STRATEGY (CAS) 26. The proposed AF is fully consistent with the Country Assistance Strategy (CAS) and Government s health development policies. The CAS refers to the alarming situation of the country s high mortality rate caused by preventable diseases such as malaria and respiratory diseases, and confirms IDA s commitment to support malaria control interventions in coordination with the Global Fund. 11 The GoDRC s 2006 Health Sector Strengthening Strategy (HSSS 2006), which describes sector contribution to reducing poverty outlines malaria as a significant obstacle to achieving the Government s poverty reduction agenda. The National Health Development Plan (NHDP ), developed in March 2010 as an implementation plan of the aforementioned HSSS 2006, also recognizes high prevalence of several diseases with high morbidity and mortality including malaria, Tuberculosis and HIV/AIDS, as the main hindrances to achieving development outcomes. Finally, the AF is also in line with the government s ongoing efforts to achieve the Millennium Development Goals (MDGs), especially in relation to MDGs 4 and 6. V. APPRAISAL SUMMARY Economic and Financial Analysis 27. The economic and financial analysis provided for the original grant remains relevant for the AF given that the project s overall objectives and implementation structures remain unchanged. The AF will: (i) contribute to the resource shortages of malaria-control services in DRC and (ii) reduce the health services financing burden on households in a country where per capita income is among the lowest in the world. Malaria is highly endemic in DRC and its burden falls disproportionately on the poor. They are at increased risk of becoming infected more frequently and less likely to access medical care when confronting severe malaria episodes. In addition to its direct impact on morbidity and mortality, malaria has significant negative effect on the economy through school absenteeism, work 11 Country Assistance Strategy for DRC for the period of FY

21 absenteeism 12, reduced productivity and the direct costs associated with severe malaria case management 13. The AF aims to mitigate these negative consequences by contributing to the costs associated with malaria prevention and treatment. 28. Current funding for malaria-related interventions is highly dependent on external financing. Over the period of donors pledged a total of about US$387 million with the main donors being GFTAM, the World Bank, UNICEF and USAID (see Table 2 in Annex 8). The USPMI is also committed to support the program with significant funding for 2011 onwards. The Government has set aside approximately US$30 million from their national resources over the three year period of to respond to the financial needs. However, their contribution remains modest. The recently developed NHDP calls for the need for urgent action in securing more domestic funds to ensure their population s universal access to malaria control. While sustainability remains as an imminent issue on the government agenda, this AF will contribute to the ongoing efforts by covering the existing financial gap. Technical Analysis 29. The underlying technical appraisal of the original project remains valid. Improving availability and utilization of essential health services in health facilities and community level has proven to be costeffective in reducing the disease burden in DRC. The continued focus on malaria control remains valid given the serious consequence of the disease on the population and priority in the national health strategy. Implementation arrangement through public-private partnership with NGOs as IPs also remains unchanged, as it has demonstrated its effectiveness in the DRC context. 30. While the main design of the project will not change, some aspects of the project will be refined to take into account the specific focus on malaria control, and lessons learned from implementation of the original project to-date: A) Malaria component: technical arrangement will not differ significantly from the parent project, except for its substantial scale-up by allocating the large part of the AF to malaria control activities. The approach to combine the LLIN mass campaigns in provinces where resource gap still exists, with provision of routine services for diagnosis and treatment in the HSRSP target zones, will contribute to ensuring impact and sustainability. B) Strengthening MoH supervision and management capacity: the recent restructuring of the original project emphasized the need for strong stewardship of the government. The GoDRC has committed to upgrade its capacity in order to meet the new conditions set by donors for receiving funding under the next Round of GFATM and the European Union (FED10). Strengthening capacity of the recently established Management Unit under MoH (referred to as CAG ) to centralize and manage health related donor funds is therefore critical in ensuring future sustainability in health program implementation. In addition, the AF s intended support o the NMCP can be justified given their importance in the government s commitment to malaria control. C) M&E: While M&E was one of the main focus of the original project, unsatisfactory performance of the EEA had undermined the project s result focus. Corrective measures have been taken to improve their performance. Nevertheless, different arrangements will be put in place to ensure a more rigorous M&E for AF. This will include: (i) recruitment of another EEA to focus 12 It is estimated that in DRC school absenteeism accounts for an average of 49 days out of 225 days of school year; work absenteeism for an average of 10 days per severe cases of a child. 13 According to a study done by Kieto Zola in 2005, direct costs associated with one episode of simple malaria treatment in Kinshasa at non-profit health facilities range from US$6-11; while at for-profit private facilities costs an average of US$21. 18

22 specifically on AF activities while routine data collection will be ensured by the IPs and EEA for the original grant, and (ii) involvement of a well-qualified research institute of a University to carry out the pre- and post- intervention impact evaluation is crucial in closely measuring results of the mass campaigns. Fiduciary Analysis 31. Currently, all fiduciary management responsibility under the original grant is with the HSRSP-PCU and this arrangement will be maintained under the AF. Weaknesses identified at the appraisal of the original project which led to outsourcing the fiduciary management responsibility to MoF are no longer warranted: (i) the PCU has qualified staff both in planning and fiduciary management, and their capacity is further strengthened by new experts on contract management and procurement; (ii) an accounting system fully acceptable to IDA exists and the FM staff are well trained on its usage and management; and (iii) the project has been in full compliance with reporting and auditing requirements (both external and internal) and they have demonstrated strong familiarity with IDA procedures. In addition, the procedural manual and the FM manual were revised during the recent project restructuring taking into account the new developments of the project. These will be further updated before the AF comes into effect. FM under PCU is functioning well since the transfer of responsibility from BCECO to PCU. Environmental Analysis 32. The original project is classified as category B partial for environmental safeguards. The only policy that was triggered was Environment Assessment (OP/BP/GP 4.01), as the project involved the handling and disposal of medical waste generated from health care facilities, and waste generated from minor rehabilitation of health facilities. The Medical Waste National Management Plan (MWNMP) prepared in November 2004 in the context of another Bank-funded HIV/AIDS Project has been used for the HSRSP. This Plan was recently updated following the above-referenced September mission by an independent consultant. The environmental Consultant also evaluated the status of implementation of the MWNMP and identified the following issues to be addressed: (i) need for improved management of biomedical waste in the health facilities; (ii) need for improved capacity building of health care workers on medical waste management and health service quality assurance; and (iii) improved access of pygmy population in areas where they are prevalent. Implementation of environmental safeguards has been consistently rated as satisfactory, and this was further confirmed during the supervision mission carried out by an independent environmental specialist in September The environmental category of the AF will remain unchanged from the original project and no major adverse environmental effects are expected. As was the case under the original grant, no insecticides and/or larvicides will be used under the AF. 33. No civil works will be supported by the Additional Financing. The original financing supported minor civil works that consisted of rehabilitation of existing health sector buildings, principally small clinics, and the construction of four new small clinics and a maternity ward in Katanga Province. The most recent Integrated Safeguards Datasheet (ISDS) confirms that the rehabilitations carried out under the original grant are of minor scale and follows the local environmental management guidelines remaining contracts from the original financing do not exceed $150,000 each, and include standard clauses for environmental management to address potential, site, and construction specific environmental impacts during construction. At the time of the presentation of the original Project to the Board, the need to prepare an environmental and social management framework (ESMF) was not anticipated. Since the minor rehabilitation and construction works carried out under the original financing had no negative environmental impact and complete and appropriate mitigation clauses 19