THE ISLAMIC REPUBLIC OF AFGHANISTAN

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Human Development Unit South Asia Regional Office Document of The World Bank FOR OFFICIAL USE ONLY EMERGENCY PROJECT PAPER ON A PROPOSED GRANT IN THE AMOUNT OF SDR 19.9 MILLION (US$30 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF AFGHANISTAN FOR A STRENGTHENING HEALTH ACTIVITIES FOR THE RURAL POOR PROJECT February 18,2009 Report No F This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange rate effective January 3 1,2009) Currency Unit = Afghani Aft = US$1 SDR 1 = US$ FISCAL YEAR March March 20 ABBREVIATIONS AND ACRONYMS ARCS ARDS AFMIS ANDs ARTF BCC BHC BPHS BSC CAS CHC CMS CMW CN COPP CQS cso DA DAB DPT3 EC FB S EPHS EPP FM GAVI-HSS GCMU GMP GOA HMIS HNSS ICB IDA IEC IMF Audit Reports Compliance System Afghanistan Reconstruction and Development Services Afghanistan Financial Management Information System Afghanistan National Development Strategy Afghanistan Reconstruction Trust Fund Behavioral Change Communication Basic Health Center(s) Basic Package of Health Services Balanced Score Card Country Assistance Strategy Community Health Center(s) Central Medical Store Community Midwife(s) Community Nurse( s) Certificate of Pharmaceutical Product Consultant s Qualifications Selection Central Statistics Office Designated Account Da Afghanistan Bank Diphtheria, Pertussis and Tetanus European Commission Fixed Budget Selection Essential Package of Hospital Services Emergency Project Paper Financial Management Global Alliance for Vaccines and Immunization Grants and Contracts Management Unit Good Manufacturing Practice Government of Afghanistan Health Management Information System Afghanistan Health and Nutrition Sector Strategy International Competitive Bidding International Development Association Information Education Communication International Monetary Fund.. 11

3 FOR OFFICIAL USE ONLY IMR I SN JSDF LCS MDGs MOE MOF MOJ MOPH MOPH-SM NCB NGO OECD PACBP PEFA PFM PFMRP PHO PL PPA PPU PRR PU QBS QCBS RBF REO1 SBD SDU SHARP SM SOE sss TA TB TER UNDB UNFPA UNICEF USAID USMR Infant Mortality Rate Interim Strategy Note Japan Social Development Fund Least Cost Selection Millennium Development Goals Ministry of Economy Ministry of Finance Ministry of Justice Ministry of Public Health MOPH-Strengthening Mechanism National Competitive Bidding Non-Governmental Organization(s) Organization for Economic Co-operation and Development Public Administration Capacity Building Project Public Expenditure and Financial Accountability Public Financial Management Public Financial Management Reform Project Provincial Health Office(s) Procurement Law Performance-based Partnership Agreemenqs) Procurement Policy Unit ity Reform and Restructuring Procurement Unit Quality Based Selection Quality and Cost Based Selection Results-based Financing Request for Expression of Interest Standard Bidding Document Special Disbursement Unit Strengthening Health Activities for the Rural Poor Strengthening Mechanism Statement of Expenditures Single Source Selection Technical Assistance Tuberculosis Technical Evaluation Report United Nations Development Business United Nations Population Fund United Nations Children s Fund United States Agency for International Development Under Five Mortality Rate Vice President : Isabel Guerrero Country Director : Nicholas Krafft Sector Director :,Michal Rutkowski Sector Manager : Julie McLaughlin Task Team Leader : Emanuele Capobianco This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

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5 ISLAMIC REPUBLIC OF AFGHANISTAN STRENGTHENING HEALTH ACTIVITIES FOR THE RURAL POOR (SHARP) Table of Contents A. INTRODUCTION... 2 B. EMERGENCY CHALLENGE: COUNTRY CONTEXT. RECOVERY STRATEGY AND RATIONALE FOR PROPOSED BANK EMERGENCY PROJECT... 2 C. IDA RESPONSE AND STRATEGY... 4 D. APPRAISAL OF PROJECT ACTIVITIES... 7 E. IMPLEMENTATION ARRANGEMENTS AND FINANCING PLAN... 8 F. PROJECT RISKS AND MITIGATING MEASURES G. TERMS AND CONDITIONS FOR PROJECT FINANCING Annex 1 : Detailed Description of Project Components Annex 2: Results Framework and Monitoring Annex 3: Summary of Estimated ProgrdProject Costs Annex 4: Financial Management and Disbursement Arrangements Annex 5: Procurement Arrangements Annex 6: Implementation and Monitoring Arrangements Annex 7: Project Preparation and Appraisal Team Members Annex 8: Environmental and Social Safeguards Framework Annex 9: Statement of Loans and Credits iv

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7 EMERGENCY PROJECT PAPER DATA SHEET ISLAMIC REPUBLIC OF AFGHANISTAN STRENGTHENING HEALTH ACTIVITIES FOR THE RURAL POOR (SHARP) Date: February 18,2009 Country Director: Nicholas Krafft Sector Manager: Julie McLaughlin Lending instrument: Emergency operation Project ID: P Team Leader: Emanuele Capobianco Sectors: Health (80%); Governance (20%) Themes: Health system performance; child health; population and reproductive health; other communicable diseases; gender Environmental category: B Total Amount: US$30,000,000 Expected effectiveness date: July 1, 2009 Expected implementation period: 45 months Expected closing date: September 30,2013 Borrower Total IBRDDDA Norwegian Trust Fund Japan Social Development Fund (JSDF) Afghanistan Reconstruction Trust Fund (ARTF) Total Total Total IBRDDDA Norwegian Trust Fund O JSDF ARTF Total Does the emergency operation require any exceptions from Bank policies? Yes [ ] No [XI Have these been approved by Bank management? Are there any critical risks rated substantial or high? Yes[ 1 No[ 1 Yes [XI No [ 3 What safeguard policies are triggered, if any? Environmental Assessment

8 A. INTRODUCTION 1. This Project Paper seeks the approval of the Executive Directors to provide a grant in an amount of SDR 19.9 to the Islamic Republic of Afghanistan for Strengthening Health Activities for the Rural Poor (SHARP). 2. The proposed grant will help finance the costs associated with the provision of health services to the Afghan population with particular attention to basic health services for women and children in underserved areas. The proposed grant builds on the experience of the Health Sector Emergency Reconstruction and Development Project ( ), and widens the scope by: (a) initiating a programmatic approach to the sector based on the Afghanistan Health and Nutrition Sector Strategy (HNSS) ( ); (b) expanding the delivery of the basic package of health services (BPHS); (c) supporting the delivery of essential package of hospital services (EPHS); (d) further strengthening the capacity of the Ministry of Public Health (MOPH) both at central and provincial level; and (e) testing innovations to increase utilization of health services. The proposed grant is expected to improve the health status of the Afghan population by reducing morbidity and mortality, especially among children and women. It will also contribute to the achievement of the Millennium Development Goals (MDGs), particularly of MDGs 4 and The proposed grant will finance part of the Afghanistan health sector program for the period The US and European Commission (EC) will continue to support the health sector program, by financing BPHS and the EPHS in approximately 25 provinces of the country. Besides secured support of Norway, funding support is being sought from the ARTF and the Japan Social Development Fund to cover the funding gap of the proposed operation. B. EMERGENCY CHALLENGE: COUNTRY CONTEXT, RECOVERY STRATEGY AND RATIONALE FOR PROPOSED BANK EMERGENCY PROJECT 4. Afghanistan is a country that has been besieged by civil strife for almost three decades. Conflict left Afghanistan devastated and with destroyed infrastructure, fragmented institutions and a lack of basic health, education and sanitation facilities in most parts of the country. However, over the last five years, Afghanistan has achieved significant results in a challenging context: progress in the health sector has been particularly remarkable. Nevertheless, the situation remains very fragile, especially in view of the tense, and in some areas deteriorating, security situation. Notwithstanding the economic recovery and the implementation of a sound development strategy, the country has not emerged fully from its state of conflict. 5. Up to 2003, provision of primary health care services in Afghanistan was low and erratic. Non- Governmental Organizations (NGOs) delivering services were generally uncoordinated and unfocused. Successive Afghan governments during the 1980s and 1990s had little interest, ability, or inclination to coordinate the activities of the NGOs, partly because they did not control large parts of the country. Though NGOs often provided good quality services, the coverage was modest with approximately one functioning primary health care facility per 50,000 population. As a result of the modest availability of services, lack of clear objectives, unclear geographic responsibility, results were modest: a multiple indicator cluster survey conducted in 2003 found low rates of skilled birth attendants (6.O%), contraceptive prevalence (5.1%) and child immunization coverage (only 19.5% had received three diphtheria-pertussis-tetanus [DPT] immunizations) in rural areas. 2

9 6. The Afghan health system has made considerable progress over the period , thanks to strong MOPH leadership, sound public health policies, innovative service delivery models and careful monitoring of performance. Confronted by an uncoordinated and poorly performing health care system, in 2003 MOPH undertook a series of critical and strategic steps: it defined a package of priority health services, known as BPHS; it established large scale contracting with international and national NGOs for the delivery of services; and it prioritized monitoring and evaluation of health sector performance. MOPH assigned clear geographical responsibility to NGOs (typically for whole provinces with populations ranging from about 150,000 o 1 million) and selected them competitively. A common set of indicators was used to assess performance; and a third party was hired to perform national facility surveys on a regular basis. The threat of sanctions in case of low performance was invoked and MOPH did actually terminate contracts of underperforming NGOs. 7. The results of the above efforts have been encouraging. Administrative data indicate that the number of functioning primary health care facilities has increased from 496 in 2002 to 1,169 in 2007 while the proportion of facilities with skilled female health workers has increased from 25% to 83%. The health management information systems indicates a four-fold increase in the number of outpatients visits from 0.23 visits per capita per year in 2004 to 0.94 in Comparing the results of household surveys conducted between 2003 and 2006, there have been significant improvements in the coverage of reproductive and child health services. At the outcome level, a nation-wide survey conducted in late 2006 found an infant mortality rate of 129 per 1,000 live births and an under five mortality rate of 191 per 1,000 live births, representing a 22% and 26% decline, respectively, from the 2003 estimates. Despite this progress, the under five mortality rate in Afghanistan is still 67% higher than the average for low income countries. Maternal mortality is the second highest in the world: with a ratio of 1,600 maternal deaths per 100,000 live births, women s survival remains a top priority for the health sector. As the country is large, poorly linked and with a thinly spread population, physical access remains an issue with more than 60% of the population living more than one hour from a health facility. This is one of the factors that explain very low vaccination coverage (Diphtheria, Pertussis and Tetanus (DPT3) coverage of 35% vs. 65% for low income countries as a whole) and limited number of institutional deliveries (45%). 8. The positive experience during the period laid the foundations for a programmatic approach to building a country-wide health service system. The three donors supporting the health sector in Afghanistan (EU, United States Agency for International Development (USAID), and International Development Association (IDA) finance the BPHS and engage specialized national and international NGOs for service delivery in defined geographic locations, thus avoiding overlapping and enforcing NGOs accountability for results. A common set of indicators is in use and the selection of a third party has allowed regular monitoring of NGOs performance. Over the years MOPH has maintained a crucial role in leading and coordinating activities, from managing contracts and grants, to carrying out annual strategic planning retreats to review performance and tackle bottlenecks for implementation. The retreats see the involvement of all donors and implementing partners and have contributed to create one health program in Afghanistan. MOPH leadership has been so impressive that in 2008 USAID agreed to provide direct budget support for implementation of health activities in Afghanistan. 9. The HNSS represents a further step towards the establishment of a comprehensive health policy, as it (a) defines the objectives for the sector; (b) identifies BPHS and EPHS as the priorities for service delivery; and (c) creates a framework for donor financing. The HNSS is an integral part of the Afghan National Development Strategy (ANDs) and fits under the economic and social development pillar which includes improving human development indicators and making significant progress towards the MDGs. The HNSS goals for 2013 are to reach: (a) BPHS coverage of at least 90% of the population; (b) a 15% reduction in maternal mortality from the 2000 baseline; and (c) a 20% reduction of infant and under five mortality from the 2000 baseline. The HNSS identifies BPHS as the overarching priority for

10 the sector, while also aiming at strengthening the referral network that links patients into the hospitals that provide EPHS. 10. The total cost for the implementation of the HNSS over the period is approximately US$550 million: almost 70% of the funds will be allocated to the BPHS, and the remaining 30% will finance EPHS, strengthening of the MOPH stewardship functions and various innovations (See Annex 3 for details). The HNSS will be supported by the three traditional donors (EC, USAID and IDA), that have been financing health activities during the period Additional donor support is being sought from ARTF and bilateral donors. The indicative financing arrangements for the health sector program, including possible funding support from ARTF, is shown in Table 1. It should be noted that possible changes in the content of BPHS and particularly of the EPHS may have a considerable impact on the overall program costs and funding requirements, particularly for the later years of the program implementation. Government of Afghanistan (GOA) and the donors will make a concerted effort to ensure adequate financing is secured in a timely fashion to enable program implementation Table 1. Indicative Financing Arrangements for Health Sector Program ( ) Donor - ARTF EC IDA JSDF Norway Trust Fund USAID Total Duration of support Pledges C. IDA RESPONSE AND STRATEGY 11. IDA has been playing an instrumental role to assisting the MOPH in rebuilding a cost-effective and results-focused basic health service system in Afghanistan through policy dialogue with the government and concerned donors, technical assistance to establish a critical mass of management capacity in the MOPH to manage the sector activities, and funding support for the delivery of the BPHS in 11 provinces. IDA has been a lead player in Afghanistan s health sector since 2003 and has gained extensive experience and knowledge on delivery of health services in the fragile country context. Continued IDA involvement in the health sector is crucial at this particular juncture when the MOPH leadership demonstrates its commitment to implementing sound sector development policies and institutional reforms, and mainstreaming effective service delivery models. IDA support needs to be maintained based on: (a) the present shortage of funding for the health sector; (b) a humanitarian commitment to improve the lives of the Afghan population, whose maternal and infant mortality rates remain among the worst in the world; (c) a corporate commitment to contribute to the MDGs; (d) the opportunity to build peace and development through the provision of basic services to populations in remote areas of the country; and (e) the opportunity to align its support to the national strategy and to contribute to harmonization of donor financing. 12. Project Development Objective: The project will provide strategic support to the overall implementation of the health sector program for The development objective of the project is to support the government in achieving the HNSS goal to contribute to improving the health and nutritional status of the people of Afghanistan, with a greater focus on women and children and underserved areas of the country. Specifically, SHARP will: (a) finance the provision of BPHS in selected 4

11 provinces; (b) lead the policy dialogue to strengthen EPHS delivery; (c) maintain the support to MOPH stewardship functions, particularly to monitoring and evaluation; and (d) lead an innovative results-based financing pilot to further increase utilization of services. The results framework and key outcome indicators are detailed in Annex Summary of Project Components: The project comprises of the following components: Component 1: Sustaining and strengthening the Basic Package of Health Services (BPHS) fusd97.5 million, of which: IDA 19 million + JSDF 15.9 million + ARTF 62.6 million) 14. The BPHS is a well-defined package of basic services such as immunization, antenatal, delivery and post-natal care, basic nutrition services and treatment of communicable diseases such as tuberculosis and malaria. These services are being provided in large areas of the country through contracted NGOs and in certain provinces through the MOPH s own service system. Both these approaches have been successfully implemented on a large scale during the previous Bank-supported project. 1 5, This component will support the implementation of the BPHS through Performance-based Partnership Agreements (PPA), i.e., contracts between the MOPH and the implementing NGOs. It will also support MOPH s efforts at delivering the BPHS through contracting in management services (MOPH strengthening mechanism) in a number of provinces. The project will support further expansion of health facilities, particularly sub-centers, to improve access for the 60% of people who live over an hour away from a health facility; training of additional community mid-wives (CMW); and training of female community nurses (CNs). This component will also support retroactive financing of expenditure incurred for delivery of BPHS in the twelve months before SHARP effectiveness. Comuonent 2: Strengthening the deliverv of the Essential Package of Hosuital Services (IDA US$I million) 16. EPHS is GOA S strategy for the delivery of hospital services. Similar to BPHS, the delivery of hospital services is supported by GOA and several development partners based on a geographic division of labor. The package of services, however, is not as well defined as BPHS; the EPHS coverage is still limited and differences in implementation approaches exist across the country. 17. This component will finance an evaluation of the impact and lessons learnt from different approaches adopted for EPHS implementation in the past three years. It will support the policy dialogue to develop a systematic and coherent package of hospital policies that will ensure efficient use of resources and provision of priority services, especially for the poor. Through third party assessment (see Component 3), SHARP will also contribute to monitoring hospital performance in the country. Upon finalization of the evaluation and adoption of a package of evidence based hospital policies, additional financing may be sought to support hospitals and hospital functions critical to reduce maternal and child mortality in some locations, with special emphasis on the poor. The support to hospitals may occur through contracted NGOs or through the MOPH strengthening mechanism, based on a specific EPHS expansion plan and on availability of resources. Component 3: Strengthening MOPH stewardshiu functions (USD16.5 million, of which: IDA IO million + ARTF 6.5 million) 18. In close coordination with other donors, this component will strengthen both the central MOPH and the Provincial Health Offices (PHOs), while maintaining coordination and promoting decentralization. At central level, this component will finance contractual staff in critical areas of MOPH (e.g., procurement, monitoring and evaluation, health care financing, public relations, etc.) as well as a 5

12 limited number of line manager positions, as did the previous Bank project. At provincial level, PHOs will be strengthened through computerization and reactivation of provincial health coordination meetings. SHARP will contribute to the organization of semi-annual national health coordination workshops and to upgrading of the MOPH website, so as to transform it in a communication platform between the center and the periphery. Capacity of staff at central and provincial levels will be strengthened through participation in training activities as well as relevant national and international conferences. Renovation of Grant and Contracts Management Unit (GCMU) offices will also be financed. This component will further support monitoring and evaluation of BPHS and EPHS through the contracting of a third party evaluator to conduct health facility surveys and household surveys. The project will support retroactive financing of expenditure incurred for monitoring and evaluation in the twelve months before SHARP effectiveness. Component 4: Piloting Innovations (Norwegian Trust Fund USDll million) 19. This component will pilot supply-side interventions as part of an international results-based financing (RBF) study supported by the Government ofnonvay. One pilot will target health providers by paying for performance against achievement of agreed indicators related to MDGs 4 and 5. Another RBF pilot may support testing of performance based payments in the hospital sector. An impact evaluation will be conducted to assess and document the effects of the pilots. To ensure credibility and independence, a qualified research organization will be contracted to gauge annual performance, conduct annual facility surveys and full household surveys at the beginning and at the end of implementation. 20. Eligibility for Processing under OP/BP 8.0: All projects in Afghanistan continue to be prepared under OP/BP 8.0. Specifically, SHARP S eligibility under OP/BP 8.0 is based on the following: (a) Bank s response is indispensable to maintain essential health services for millions of Afghans; (b) provision of health services, especially at times of growing insecurity, is a fundamental tool to strengthen Government s credibility, to win communities support and to foster peace building in the country; and (c) the proposed interventions are crucial to mobilize emergency support provided by other development partners and to assist GOMOPH to make effective use of the donor assistance to the health sector Consistency with Country Strategy (CAS) or Interim Strategy Note (ISN): The proposed activities are fully consistent with the current strategy goals of developing capacity of the state and providing tangible benefits to the population. In line with the ISN, the project follows a two-pronged approach that institutionalizes processes to contract out service delivery, and also builds state capacity to deliver, by strengthening critical stewardship functions of MOPH. The proposed two-pronged approach will guarantee provision of services in the immediate term and will also contribute to longer term sustainability. The alignment with the HNSS further ensures consistency with the country strategy. 22. Expected Outcomes: The project supports the implementation of a portion of the health sector program and will contribute its share to the achievement by 2013 ofthe HNSS goals of: reaching BPHS coverage of at least 90% of the population; reducing maternal mortality ratio by 15% from the 2000 baseline; and reducing infant and under five mortality rates by 20% from the 2000 baseline. In the provinces where the Bank will operate, progress will be closely monitored by focusing on output indicators that are proxies for outcome but are more easily and more regularly measurable. The indicators include tuberculosis treatment success rate, DPT3 coverage, proportion of births attended by skilled attendants, contraceptive prevalence rate, proportion of the lowest income quintile using BPHS services, etc. (see Annex 2 for details) 6

13 D. APPRAISAL OF PROJECT ACTIVITIES 23. Economic and Financial Evaluation: SHARP benefits are likely to be pro-poor, because the focus of BPHS is provision of highly cost-effective primary care interventions in rural areas that are characterized by very high poverty rates and worse-than-average health indicators. In conflict-affected areas, the results-focus of PPA contracts, combined with flexibility for NGOs to deliver services in alternative ways, maximizes the possibility of sustaining or improving access to basic services in these areas. 24. Technical Evaluation: The main component of the project is BPHS, which comprises a prioritized set of high-impact interventions with proven cost-effectiveness, well in line with the international health agenda to achieve MDGs 1, 4 and 5. As demonstrated since 2003, BPHS is an effective way to respond to the basic health needs of the communities and as such is a key tool to improve government s credibility and overall stability in the country. Indeed, the Afghanistan provision of BPHS through contracting out has become a model for other fragile states trying to rebuild their health system after emerging from conflict. 25. The content of BPHS may be modified during the project period in order to include elements (e.g., mental health services) or beneficiaries (e.g., nomadic populations and prisoners) that were not included in the original BPHS. This may require some adjustments in the budget allocated for Component 1, depending on the size of the expansion of the package. It is understood however that BPHS will keep its focus on primary health care interventions and will be expanded in a careful manner as to maintain the cost of the package within reasonable limits. 26. EPHS is a relatively new concept in Afghanistan and a careful approach is required to support the hospital sector in a rational, gradual and fiscally realistic way. Given (a) a thriving, unregulated private hospital sector; (b) a poor performing public hospital sector; and (c) high costs associated with reforms in the hospital sector relative to the limited resources available for the health sector, SHARP will focus first on analytical work to provide evidence o f which approaches are most efficient and effective in the Afghan context. Only in a second phase the project will start supporting actual delivery of hospital services, based on availability of funds. 27. In order to carry out project activities effectively, strong project management and coordination is essential. IDA S support to MOPH stewardship functions was critical to the effective implementation of the previous health project. While MOPH capacity has greatly increased in the past five years, the presence of contractual staff in key departments is still indispensable to support MOPH in managing contracts and in supporting direct delivery of services. Support to other line managers positions was discussed and agreed with other development partners at the time of project preparation. MOPH will review contractual staff performance on an annual basis; a staff plan will be developed yearly and the total number of contracted staff will be kept to a minimum in the context of the ongoing civil service reform. 28. A strong data culture is indispensable to monitor progress in the health sector and to develop policies that can address gaps and improve performance. In this regard SHARP will finance a third party that will be responsible for monitoring and evaluating health activities in all provinces of Afghanistan. This arrangement, in line with the previous health project, will provide a common monitoring and evaluation framework to assess health outcomes in the whole of Afghanistan. By contracting out this activity to an independent agency, the project will continue supporting the data culture in MOPH and will further strengthen evidence-based approaches to health policy formulation. 7

14 29. Environment and social safeguards: The Environmental and Social Safeguards Framework (ESSF) developed for Afghanistan will be applied to the proposed project which has been classified as environmental category B. Activities under the project should not entail significant negative environmental impact, provided they are designed and implemented as planned. Proper management of health care waste is critical in efforts to control health risks associated with exposure to waste. In this regard the MOPH has been requested to revise the existing environmental management plan within the first 4-6 months after project effectiveness. 30. In accordance with the HNSS, SHARP primarily targets women and children and aims at reaching the poor by increasing access and utilization of health services in rural areas. The use of NGOs for service delivery shall ensure closeness to the people in need and responsiveness to their demands. SHARP plans to involve communities for the selection of CMW and CNs, so that trained health personnel can remain and provide services in the communities of origin. Communities, and particularly health Shuras, will help in addressing concerns/conflicts over community norms regarding sensitive health issues and practices. Community-based monitoring will also be encouraged through the involvement of community development councils to channel grievances to DHOs. SHARP will closely monitor progress on mother and child s health indicators, including breastfeeding practices, immunization coverage, antenatal care coverage, etc. SHARP will also track progress on BPHS utilization by the lowest income quintile. It will also make use of balanced scorecards to check progress on equity both at hospital and primary care levels. Overall the project, which focuses on providing services for the rural poor and especially women and children is expected to have significant positive social impact. E. IMPLEMENTATION ARRANGEMENTS AND FINANCING PLAN 3 1. Institutional Arrangements: The project will be implemented by MOPH, which will have overall responsibility for project oversight and supervision through its Executive Board. The Deputy Minister for Technical Affairs will be the project s manager and focal point. The MOPH through its central departments and provincial offices will be responsible for the smooth implementation of the project, while assisted by technical assistance in the GCMU. The actual delivery of health services will be done through contracted NGOs or through civil servants. Monitoring of the services will be done through the regular health management information system (HMIS) and through facility and community surveys carried out by a third party. The GCMU in MOPH will handle fiduciary aspects of the project related to financial management, procurement, disbursement and audit functions for the life time of the project. The same institutional arrangements were successfully adopted under the previous project. 32. SHARP is expected to begin on July 1, 2009 and to be implemented over a period of 45 months. Advanced procurement of NGOs for delivery of BPHS was initiated in October 2008 in order to ensure a smooth transition of service providers as the service contracts under the ongoing project will end on June 30, All NGO contracts will be signed for 45 months to cover the entire project duration. The implementation completion date will coincide with the end of the HNSS, Le., March 30, The grant closing date will be September 30, Financing Plan: Table 2 summarizes the financial requirements for SHARP, e.g. for: (a) the implementation of BPHS in the IDA supported provinces, including retroactive financing for BPHS provision under the previous health project (See Annex 5); (b) the policy dialogue for EPHS; (c) the support to MOPH, including the contracting of a third party for monitoring and evaluation; and (d) the RBF pilot. The project s financing requirements are estimated to be US$126 million. Funding support of US$11 million for the RBF pilot has been secured and processing of the JSDF support of US$15.9 million is at an advanced stage. Discussions have been held with the Ministry of Finance (MOF)/MOPH and IDA (as the Administrator of the ARTF) for funding support from ARTF to cover the funding gap of 8

15 the project, particularly to meet the costs of NGO service delivery contracts in project provinces. Approval by ARTF Management Committee is expected by March Should additional donor funding become available during the project period, IDA may shift its resources to other areas of the HNSS. A more detailed analysis of the program/project costs is presented in Annex 3. Table 2. Financing plan for IDA supported components (US% million) Components BPHS EPHS MOPH Stewardship RBF TOTAL Financing Norwegian IDA requirement Trust Fund JSDF ARTF Procurement: Procurement activities will be carried out by the MOPH through the GCMU. Procurement will be done in accordance with the World Bank s Guidelines: Procurement under IBRD Loans and IDA Credits (dated May 2004 and revised in October 2006); Guidelines: Selection and Employment of Consultants by World Bank Borrowers (dated May 2004 and revised in October 2006); and the provisions stipulated in the Development Grant Agreement. The Bank s Standard Bidding Documents, Requests for Proposals, and Forms of Consultant Contract will be used. In case of conflictkontradiction between the Bank s procurement procedures and any national rules and regulations, the Bank s procurement procedures will take precedence. The summary of the procurement capacity assessment of the implementing agencies and precise arrangements are presented in Annex Financial Management (FM), Disbursement and Audit Arrangements: A Public Financial Management (PFM) performance rating system using 28 high-level indicators that was developed by the PEFA multi-agency partnership program was applied in Afghanistan in June The PEFA assessment is structured around six core dimensions of PFM performance: (a) budget credibility; (b) comprehensiveness and transparency; (c) policy-based budgeting (d) predictability and control in budget execution; (e) accounting, recording, and reporting; and (f) external scrutiny and audit. Afghanistan s ratings against the PFM performance indicators generally portray a public sector where financial resources are, by and large, being used for their intended purposes. This has been accomplished with very high levels of support from international firms; this assistance will continue to be needed over the medium term if these ratings are to be maintained. 36. The MOPH GCMU is responsible for financial management functions. GCMU will carry out the day-to-day financial management operations of the project, preparation of M- 16 forms (payment orders), preparation of summary reports/simplified statements of expenditures, coordination with other line ministries involved in the program and overall contract and project management. This department is adequately staffed with FM personnel who are efficiently managing all external grants including IDA health project ( ). 37. The standard funds flow mechanism in Afghanistan will be followed in this project. Project funds will be deposited in the Designated Account (DA) to be opened and maintained at the Da Afghanistan Bank (DAB) or in a local commercial bank, if approved. The DA, in keeping with current practices for other projects in Afghanistan, will be operated by the Special Disbursement Unit (SDU) in the Treasury Department of the Ministry of Finance (MOF). Requests for payments from the DA will be made to the SDU by the implementing entity when needed (see Annex 7 for more details) 9

16 38. The project accounts will be audited by the Auditor General, with the support of the Audit Advisor, with terms of reference satisfactory to IDA. The audit of the project accounts will include an assessment of the: (a) adequacy of the accounting and internal control systems; (b) ability to maintain adequate documentation for transactions; and (c) eligibility of incurred expenditures for IDA financing. The audited annual project financial statements will be submitted within six months of the close of fiscal year. All agencies involved in implementation and maintaining records of expenditures will need to retain these as per IDA records retention policy. 39. Monitoring and Evaluation (M&E): The MOPH will monitor progress against agreed indicators, as described in the Results Framework (see Annex 2). All of the indicators are in line with GOA S health strategy and come directly from the ANDS, the HNSS, and the MOPH s Monitoring and Evaluation Strategy. As such, the indicators for the IDA financed project conform to a programmatic approach. 40. The project will support sector-wide M&E through third party evaluations. The project will finance: (a) two household surveys to be conducted that will provide province-level estimates of many of the project s indicators; (b) annual surveys of facilities delivering the BPHS to assess quality of care, availability of inputs, staffing, and supervision; and (c) bi-annual hospital assessments that build on two rounds of hospital assessments that have been carried out in all public hospitals in the country. Much of the data collection to be financed by the project, such as household surveys and health facility surveys, will be nation-wide in scope, and not just focused on the area financed by the project Reporting: The MOPH will prepare an annual report for the overall program to track progress towards HNSS outcomes. The report will inform the annual results conference organized by MOPH where results in the health sector are shared with all donors and implementing partners. The results conference will be followed by an annual strategic retreat with the involvement of MOPH higher levels, key donors and a selected sample o f implementers. The strategic retreat will serve as a forum to agree on evidence based strategies to address obstacles to implementation of the HNSS. Results conference and strategic retreats have been successfully organized by MOPH in 2007 and Supervision: To ensure timely and effective implementation, an experienced Bank team of specialists will undertake supervision and implementation support missions to the country with a frequency of at least three visits per year. Depending on security, the Bank team will be expected to travel in different provinces to acquire first hand experience of implementation conditions. F. PROJECT RISKS AND MITIGATING MEASURES Risks Overall country inherent risk Risk Rating H Risk Mitigation Measures The January 2006 Compact signed between GOA and international parties anchors both sides, albeit in a non-binding commitment, to sustained fmancial support for Afghanistan to reach its development targets. The Compact also provides the framework for donor coordination, and increasing levels of assistance channeled through the core budget. At the same time the Bank-administered ARTF provides a fmancing mechanism with fiduciary safeguards for funding the core budget. Residual Risk Rating S 10

17 Risks Growing insecurity may disrupt provision of services in certain areas as well as hamper monitoring and evaluation of activities. 1 Perceived corruption H Political opposition to contracting M Implementation capacity of both MOPH and NGOs may weaken. Procurement of Consulting services: limited capacity may lead to delays in the recruitment of NGOs/M&E Agency. Procurement of Goods: limited evaluation skills, especially for pharmaceutical goods, may hamper Risk Rating H M H H Risk Mitigation Measures The delivery through NGOs, and mostly through national NGOs, will increase access to beneficiaries even in insecure areas, as demonstrated by the previous health project. Health Shurus will be involved to guarantee community ownership. Use of different data collection methods (third party evaluations and HMIS) will facilitate review of performance. GOA commitment, internal controls, and external audit will help to reduce the high level of perceived corruption. The project will help mitigate opposition to NGO provision of health services by ensuring that rigorous data is collected so that the debate can be evidence-based. To this aim the project will finance a third party for monitoring and evaluation activities. In addition, contracts will be signed for the entire project duration to minimize political interference. The Bank will continue its financial support to the GCMU to enable smooth implementation. The GCMU has been instrumental in implementing the previous health project. The unit is staffed by highly qualified local consultants hired on contract basis and paid market based salaries. The use of a third party evaluator will highlight deficiencies in performance and MOPH will be authorized to terminate contracts if needed. This mechanism had worked well under the previous health oroiect. The project will minimize use of Designated Account, and maximize direct payments to consultants and contractors. The project will rely on (a) FM Agent at the Treasury of MoF, responsible for processing payments, transaction recording and reporting; (b) Audit Agent at the Control and Audit Office, responsible for external audit of the project; (c) experienced and qualified financial management staff in the GCMU. Evaluation committees will include members with adequate skills. Service standards were set and agreed with MoPH for evaluation of bids/proposals. Short term international technical assistance will be hired to finalize bid evaluations. The alternative to use UNICEF as procurement agenthpplier for pharmaceutical goods will be explored. Residual Risk Rating S S L L S H 11

18 Risks the procurement process. External funding may not materialize as expected and the Program may remain partially unfunded. Overall project risk rating High risk; S: Substantial risk; M: Moc Risk Rating H H st risk; L: Risk Mitigation Measures MOPH will continue to advocate for additional resources, and particularly for support through ARTF. The Bank will also continue lobbying for additional fmancing, both internally and externally. SHARP is a follow on from a successful health project which has strong ownership and commitment from the client. The project will continue to rely on and further build the systems in MOPH which have been deemed adequate from an overall implementation perspective. Insecurity and unpredictability of donor fmancing for the sector are risks outside project s control that may severely hamper its chances of success.,ow risk Residual Risk Rating S S G. TERMS AND CONDITIONS FOR PROJECT FINANCING 43. The Project is supported by an IDA Grant and will finance loo%, including taxes, of project activities. There are no conditions for effectiveness. Project covenants are as follows: (i) CGMU will be fully staffed throughout the entire project implementation period; (ii) MOPH will ensure the appointment of a third party evaluator to carry out regular evaluation of project activities; (iii) MOPH will prepare a comprehensive report detailing project progress and achievements and submit to IDA two months prior to the mid-term review; and (iv) MOPH jointly with IDA and other relevant development partners will conduct annual program performance reviews in the form of Results Conference and/or Strategic Retreat. 12

19 ANNEX 1: DETAILED DESCRIPTION OF PROJECT COMPONENTS Component 1: Sustaining and strengthening the Basic Package of Health Services (BPHS) 1. Strengthening Health Activities for the Rural Poor (SHARP) will support the implementation of the BPHS through Performance Partnership Agreements (PPA), Le., contracts between the MOPH and the implementing NGOs. It will also support the government s own efforts at delivering the BPHS through contracting in management services. Both of these approaches have been successfully implemented on a large scale during the previous Bank-supported project. The current project will support the further expansion of health services, particularly through sub-centers, training of additional CMW, and training of female CNs. The CMW are women from the community, selected by implementing NGO, who receive a standardized 18 months course in the provinces. The training is provided by the NGO in an accredited training center. After passing their accreditation test given by the MOPH, the CMW have been recruited by the NGO to work near their homes. This model has been very successful so far and will be expanded to include a new cadre of CNs. 2. Contents of the BPHS: This component will help expand the coverage of basic health services and ensure that a greater proportion of the rural population receives the BPHS, delivery of which, the MOPH has made its highest priority. The BPHS as defined by the MOPH comprises: (a) preventive services such as immunization, micronutrient supplementation, and promotion of insecticide treated bed nets against malaria; (b) promotive health services such as encouraging breast-feeding and use of family planning; (c) basic curative services such as treatment of acute respiratory tract infections, diarrhea, other childhood illnesses, and tuberculosis; and (d) reproductive health services such as prenatal care, emergency obstetrical care, and post-partum care. These services are delivered through a network of community health workers (CHW), sub-centers with 2 staff that serve 3-7,000 people, basic health centers (BHCs) with about 5 staff that serve 15,000-30,000 population, and comprehensive health centers (CHCs) with about 12 staff serving 30,000-60,000 population, and through district hospitals, serving 100, ,000 population with about 35 staff. 3. Performance-based Partnership Agreements: PPA will be signed with NGO who are competitively selected and who will be responsible for implementing the BPHS in provinces spread over different regions of Afghanistan. Some of the provinces, such as Helmand, Farah, Nimroz, and Badghis face difficult security situations and it is expected that an increasing proportion of the PPA will be won by local NGO. To implement the PPA, during preparation, MOPH began a competitive selection process: the winning consultant/ngo will be provided a contract for the life of the project. The contracts will be managed by the PHOs and GCMU with the latter responsible for prompt payments to the NGOs based on satisfactory progress. 4. MOPH-Strengthening Mechanism (MOPH-SM): The MOPH-SM involves the contracting in of management support services for three provinces near Kabul (Kapisa, Panjshir, and Panvan) and rural parts of Kabul province. Health services are provided by MOPH staff of the PHOs with significant inputs of management supervision and support by consultants recruited competitively at market rates. The provinces will be given an agreed resource envelope comparable to the amounts provided to PPA NGO. 5. Monitoring of PPA and MOPH-SM Performance: The GCMU and PHOs (in PPA provinces) will be responsible for monitoring performance. This will be done by extensive field visits, analysis of health management information system (HMIS) data, the results of baseline and follow-on household surveys, results of balance scorecards (BSC) from annual health facility surveys conducted by an independent firm, and community feedback mechanisms. 13

20 Component 2: Strengthening the delivery of the Essential Package of Hospital Services (EPHS) 6. In the first year of SHARP, this component will support an evaluation of the impact and lessons from several alternative approaches that have been adopted for supporting EPHS implementation in the past three years: the MOPH s Hospital Reform Project, and contracting NGO to manage EPHS in selected provinces (supported by USAID and EC). The evaluation will draw upon data available from the Hospital BSC and HMIS, ongoing studies of hospital costs (supported by EC), and qualitative research. Drawing upon the lessons learnt, the project will support MOPH to finalize key policies for a model of hospital organization and financing that could improve hospital performance, and make better use of limited GOA S and donors resources for hospital care. MOPH is interested in scaling up implementation of the hospital management reforms and partial autonomy that have been piloted in the Hospital Reform Project. Other aspects of hospital policy that have also been identified as priorities are: review of the EPHS standards, hospital user fees, policy on contracting private organizations to manage public facilities, elaboration of standards and treatment guidelines for nationalhegional referral hospitals, and human resources policies for hospital staff. 7. The support for policy development provided by the Project will be part of coordinated support to the MOPH s Hospital Management Taskforce, which oversees and guides hospital policy development. This taskforce is supported by technical working groups, including a Policy and Strategy Group, which will be the main forum for the Project s support. The Hospital Management Taskforce already receives technical assistance for national hospital standards, monitoring, standards-based management, capacity building and health finance from EC and USAID-financed consulting firms. However, there is a consensus that more intensive, coordinated work is needed in order to develop a systematic, coherent package of policies for hospitals to ensure efficient use of resources and provision of priority services, especially for the poor. This component will provide flexible supplementary support to the Hospital Management Taskforce and its technical working groups. This is likely to include some local TA, support for studies and consultation with other stakeholders, from the hospital sector and professions, other GOA departments and agencies, such as the Ministries of Higher Education, Finance, and Justice, and NGO. It could also support some short-term international TA if there is demand for specific expertise to produce well-defined outputs. 8. Complementary support will be provided under Component 3 for strengthening MOPH s stewardship functions in relation to the hospital sector. Hospitals will be monitored for progress towards agreed targets for outputs and for the implementation of clinical and management standards of quality care, through strengthened MOPH supervision and feedback using a checklist (already piloted in Kabul hospitals), strengthened HMIS, and a Hospital BSC. Component 3 will support a review of the hospital HMIS and hospital BSC, with a view to simplifying reporting requirements, and increasing the focus on measures of output, quality and efficiency (relative to the current focus of the hospital BSC on structure and process indicators). 9. Component 4 can also support testing of innovations in the hospital sector to strengthen incentives for better performance, such as: piloting innovations in medical staff rosters and results based financing to improve the incentives of staff with dual private practice to provide more efficient, timely and responsive care. 10. If additional funding becomes available for the program, MOPH may request targeted support to expand access to EPHS, in coordination with support from other donors. Support will be provided to hospitals that also commit to implementation of hospital reform to ensure professional hospital management, stronger governance, and improved clinical quality. In some areas, contracted NGO support 14

21 for district and provincial hospital services may continue to be a preferred option; in others, it may be possible to provide support to reformed hospitals through the MOPH strengthening mechanism. The Project s support will be targeted to focus on hospitals and hospital functions that are critical for reducing maternal and child mortality and morbidity and on access for the poor. It will also include a focus on coordination with BPHS service provision to foster efficient referral practices. Component 3: Strengthening MOPH stewardship functions 1 1. This component will support management and public health functions that MOPH has prioritized based on: (a) expected impact on the health status of Afghans, especially the poor; (b) affordability; and (c) feasibility. 12. Support for PHO functions; By strengthening coordination between MOPH and PHOs, SHARP will contribute to the organization of semi-annual National Health Coordination Workshops. Through the workshops provincial health directors and central MOPH staff will come together and discuss challenges of health services delivery in the various provinces, as well as policy developments in the health sector. SHARP will also contribute to improve communication between provincial and central MOPH through computerizing the PHOs and ensuring internet connection. The project will also support the upgrade of the MOPH website as a vehicle for information sharing between center and the periphery. To improve coordination among the stakeholders at provincial level, SHARP will support regular Provincial Health Coordination Meetings. 13. Strengthening Information Education Communication (1EC)Behavioral Change Communciation (BCC) activities: Promotion of healthy behavior is crucial to prevention of disease. The Ministry has an IEC policy and strategy which is under resourced for its implementation. The Project will support IEC and BCC at all levels of the sector. NGO contracts will contain an explicit clause and indicators of success about awareness raising both at facility and community level. This will be tracked in the household surveys and by health facility assessments via BSC. 14. Technical Assistance for the MOPH: TA provided by the previous project allowed the MOPH to perform its stewardship and fiduciary functions very well, as confirmed by the increasing number of donors that channel their funds through MOPH. The GCMU is not a project implementation unit but a group of competent individual consultants helping different departments of the MOPH to carry out their stewardship functions. Thus, SHARP will continue the efforts of the previous project in terms of supporting the GCMU and line managers, monitoring and evaluation, strengthening the health care financing unit of the MOPH, supporting IEC department and public relation activities. GCMU consultants will be competitively recruited at market rates. This TA will be in line with the priorities in the health sector; it will be determined based on an agreed annual budget envelope. The arrangements for GCMU will be adapted in line with the ongoing broader public administration reform of GOA. SHARP will also support renovation of GCMU offices to create a more suitable working environment. 15, Monitoring and Evaluation: To strengthen evidence-based decision making in the health sector, SHARP will contribute to enhancing the M&E capacity in the MOPH, including financing of a third party evaluation to conduct household surveys, health facility surveys, and evaluation of pilots. Component 4: Piloting innovations 16. The objective of this component is to rapidly increase utilization of health services for women and children. Achieving MDGs 4 and 5 requires that women and children have access to and utilize the health system to receive the services of BPHS and EPHS. However, data from a 2006 household survey 15

22 of women in rural areas suggests that utilization of health services is improving but still far too low to put the country on track for reaching MDGs 4 and To increase utilization of essential child and maternal health services, this component will pilot a supply-side RBF. The pilot will target health providers and facilities by paying providers extra for performance. Lessons learned from previous health project with performance-based contracts will be incorporated in designing the component. This component will offer NGO, which are contracted to deliver health services under component 1, a performance-based payment for achieving improved coverage of essential child and maternal health interventions. The payment will be more substantial than under the previous project and its impact will be carefully evaluated. 18. Under the component an annual performance-based payment up to 10% of the contract value will be awarded for each NGO that achieves the performance standard (Le., a fixed amount for each indicator reaching the agreed target). The RBF contract will stipulate that a minimum of 70% of this will be distributed to the health workers. To this effect the NGO will be required to have explicit contracts with health facilities. The NGO will be free to use up to 30% of the payment on other aspects of service delivery it deems important.' To ensure alignment of incentives between PHOs and NGO, the PHOs may receive a payment for participating in the monitoring of the implementation of the component. As noted above, MOPH has already a mechanism in place for results-based payments, thus the component will not require the establishment of any new financing mechanisms. 19. In the first year, a portion of the performance-based payment will be given to both NGO and the PHOs at six months to lend credibility to the RBF system. This payment will be based on HMIS data. However, because of concerns about the reliability of HMIS, particularly in the context of performance incentives, and the need for independent confirmation of coverage, payments after the first six months will be based on results from the household surveys, health facility surveys and regular monitoring as well as HMIS. 20. To ensure the credibility and independence of data collected, a qualified research organization will be contracted to gauge annual performance, conduct annual facility surveys and full household surveys at the beginning and at the end of three years of implementation. 21. An impact evaluation will be conducted to assess and document the effects of RBF. A randomized experiment design will be used to ensure a robust evaluation. The design involves two levels of selection. First, provinces will be selected from a set of eligible provinces based on: (a) accessibility for regular monitoring; and (b) a single NGO management of health care delivery. Second, BPHS facilities within a province will be stratified on the basis of current performance in maternal and child health services, estimated from series of HMIS data. Then similar or consecutive ranking facilities will be paired and from each pair one will be randomly assigned to treatment and the other to control. The remaining 30% will largely be used to cover the extra magement costs at the NGO and health facility levels 16

23 ANNEX 2: RESULTS FRAMEWORK AND MONITORING Project Development Objective Contribute to improving the health and nutritional status of the people of Afghanistan, with a greater focus on women and children and under-served areas of the country. Intermediate Outcomes Outcome 1: Sustaining and Strengthening the delivery of the Basic Package of Health Services (BPHS) Outcome 2: Expanding the delivery of the Essential Package of Hospital Services (EPHS) Intermediate Outcomes Outcome 3: Strengthening MOPH stewardship functions Outcome 4: Piloting innovations Project outcome indicators 1. Contraceptive Prevalence Rate - % of women years currently using a family planning method [modem] 2. Tuberculosis (TB) treatment success rate 3. Proportion of newborns who were breastfed within one hour of birth 4. DPT3 coverage among children months. 5. Proportion of births attended by skilled attendants 6. Proportion of parents knowing the appropriate care of a sick child less than 5 years with AM. 7. Coverage of antenatal care-% of all pregnant women receiving at least one antenatal care visit ~ Intermediate Outcome Indicators 8. Score on the balanced scorecard examining quality of care in BHCs, CHCs and DHs 9. Number of consultations per person per year. 10. Proportion of the lowest income quintile using BPHS services when sick in the last month. 11. Score on the hospital balanced scorecard that examines quality of care, amount of services, equity and management processes in referral hospitals. Intermediate Outcome Indicators 12. Amount of supervision of BPHS and EPHS facilities carried out by MOPH officials (based on BSC) 13. Timely payment of contractors 13. Successful completion of impact evaluations that test resultsbased financing (RBF) approaches. Use of project outcome information Track whether targeted groups have access to curative and preventive services known to improve health and nutritional status. Identify poorly performing provinces which require additional supervision. Where progress is not satisfactory, MOPH and its implementing partners will re-assess their delivery strategies and work to overcome demand-side constraints. Use of Intermediate Outcome Monitoring Facilitates holding NGO accountable (in near real time) for progress in improving access and quality of care. Determine whether the poor, who most often live in remote areas, are able to access services. Facilitates holding hospital managers accountable (in near real time) for progress in improving quality of care and use of hospital services. Use of Intermediate Outcome Monitoring These two indicators serve as a proxy for key stewardship functions. The impact evaluations will determine whether these approaches should be scaled up. 17

24 Arrangements for Results Monitoring: A. Institutional Issues 1. All of the indicators described in the results framework and defined in Table 1 (below) are in line with GOA strategy and come directly from the ANDS, the HNSS, and the Mop s Monitoring and Evaluation Strategy. As such, the indicators for the Bank-financed project conform to a programmatic approach. 2. The project will support sector-wide monitoring and evaluation (M&E). Much of the data collection to be financed by the project, such as the household surveys and health facility surveys, will be nation-wide in scope, and not just focused on the area financed by the project. The project will also take advantage of support to M&E provided by other donors. For example, much of the work on strengthening HMIS has been supported by USAID. 3. Given the need to avoid self-evaluation by NGO, hospital managers, and MOPH program managers, that could result in conflicts of interest, independent, third party evaluation will be extensively used. This will allow the MOPH to hold NGO and hospital managers accountable for tangible results. It will also allow all stakeholders to have an independent assessment of progress in health service delivery. 4. For some indicators the baseline data in Table 1 is from a household survey in This baseline data will be updated once a new household survey is carried out in The new baseline will allow a judgment on progress since 2006 and may result in a re-assessment of the targets. 5. The targets in table 1 are meant to be indicative and not exact. Given the fairly broad confidence intervals around the point estimates it is inappropriate to over-specify targets. In addition, the fluid, and often difficult, security situation makes it hard to set reasonable targets given that conditions on the ground can change quickly. Overall, what will matter is significant progress along the parameters selected and not whether exact targets have been accomplished or not. For some indicators, the task team has deviated from targets that the GOA has set, which in our judgment are too ambitious. 6. The proposed project will use a randomized controlled trial to assess the effectiveness of RBF to improve performance on some of the key indicators in the Mop s plan. The RBF impact evaluation will be carried out by MOPH with technical assistance from Bank-financed TA, while data collection will be handled by a third party. B. Data Collection 7. Given the challenges of tracking performance of a dynamic health system in a very insecure environment, there exists a greater than usual need for multiple sources of information. The MOPH is very committed to using its resources to ensure careful M&E and will rely on a number of data collection mechanisms, including: (a) household surveys; (b) health facility surveys; (c) HMIS; (d) RBF evaluation; and (e) other special studies financed by other development partners. 8. The project will support household surveys to be conducted in 2009 and that will provide province-level estimates of many of the key indicators in Table 1. The survey will build on the Afghanistan Household Survey carried out in 2006 and will be used to assess coverage and sources of key services, out-of-pocket expenditures, effectiveness of CHW, and will provide Under Five Mortality Rate (U5MR) estimates. Support for household surveys will be flexible in case other surveys (such as multiple 18

25 indicator cluster survey by United National Children s Fund (UNICEF) or the National Risk and Vulnerability Assessment by Central Statistics Office (CSO) provide the needed data. 9. The project will support annual surveys of facilities delivering the BPHS to assess quality of care, availability of inputs, staffing, and supervision. This effort will build on the successful experience with the balanced scorecard assessments that have provided annual data on more than 630 health facilities nation-wide and form a rich source of information on quality of care, availability of key inputs, and human resources. 10. The project will support bi-annual hospital assessments that build on two rounds of hospital assessments that have been carried out in all public hospitals in the country. The surveys that have been conducted provide almost all the credible quantitative information available on the hospital sector and regular assessments will use similar instruments but simplify the presentation. 11. The MOPH has made great strides in having a well-functioning HMIS that provides near realtime data coming from the administrative recording and reporting system. Quarterly reports from the national HMIS will be used by the project to assess progress and identify critical issues. Household survey data will be used to confirm HMIS data, as HMIS data has tended to seriously overstate immunization coverage and prenatal care. In addition, the HMIS cannot provide data on contraceptive prevalence, health behaviors, equity, and expenditures. 12. The evaluation o f the randomized controlled trial of the RBF pilot will entail baseline and followon household surveys and health facility surveys in 2009 and To the extent possible these will take advantage of existing or planned data collection efforts. The RBF evaluation will also require a special study to verify the HMIS data used in paying health workers. 13. Special studies, such as a national maternal mortality study will be carried out in A pilot for demographic surveillance, will provide data on infant mortality rate (IMR) and USMR and is being supported by Global Alliance for Vaccines and Immunization (GAVI-HSS). 14. Arrangements for data collection are described in the table below. A third party will be responsible for the actual data collection for the household surveys, health facility surveys (both BPHS facilities and hospitals), and the RBF evaluation. The MOPH will continue to be responsible for HMIS data management. The Grants and Contract Management Unit (GCMU) will manage the contract for the third party which will work very closely with the M&E Department of the MOPH. Data on the timeliness of contractor payment will come from routine project reporting. 15. The budget allocated for M&E is expected to be approximately US$llmillion, a considerable amount that reflects the importance MOPH gives to this stewardship function. C. Capacity Issues 16. The MOPH has done well in establishing a strong M&E Department that has demonstrated the capacity to analyze and use information coming from the HMIS, facilities and household surveys. The department was built up under the first Bank project and has now received resources from a number of other development partners including USAID, EC, and GAVI-HSS. 17. The MOPH has developed a clear M&E strategy that has been endorsed by its development partners. In addition to stipulating the MOPH s 22 priority indicators for the sector, the strategy describes the means of data collection, and how the M&E Department will be strengthened. 19

26 18. The results of the HMIS and surveys are disseminated in a number of ways, including through regular coordination meetings, publication on the MOPH s website, and through a well-attended annual results conference. The annual strategic planning retreat of the MOPH and its partners uses the information for policy formulation. 19. Given the security situation in Afghanistan, it is important to build the capacity of Afghan institutions to collect, analyze and present data. The M&E firm contracted under the project will be required with local institutions to build their capacity. 20

27 g Q\ A g P4 s m d s W p C ed ii 3 (u s 11, g Q\ A s m 00 A ii g d s m e0 A s Q\ A s m d 62 s 0 0 c\1 W m 00 D s r- W m D s 9 d m

28 n e 0 00 T 3 s F d c? 3 n E c! P E g m T 3 n F 0 0 c?

29 21 n *2 a E

30 ANNEX 3: SUMMARY OF ESTIMATED PROGRAM/PROJECT COSTS Table 1: Estimated Program Costs (HNSS ) I Funds I I hl.."...".. 1: BPHS 1.1 BPHS through NGO 1.2 BPHS through MOPH-SM Subtotal (1) 2: EPHS*** 2.1 Expanding the delivery of EPHS Result based financing Grand Total Subtotal(4) Table 2: Estimated Project Costs (SHARP ) 1 * RPFTS Funds Required Norway Component I Subcomponent in US% Million IDA* Trust Fund ( ) JSDF ARTF"* 1.1 BPHS through NGO : Strengthening MoPH Stewardship Functions 3.1 Monitoring and evaluation : Testing innovations Grand Total 126 I 30 I

31 * ** *** IDA support includes retroactive financing of expenditure incurred 12 months before project effectiveness. A request for ARTF funding support for BPHS and EPHS in the amount of US$163 million for the period was sent by the Minister of Finance to the ARTF Management Committee on January 3 1,2009. EPHS funding requirements are based on a limited expansion of current EPHS activities. However, the requirements for EPHS could be higher, should MOPH decide to expand more rapidly and more widely into the country. 25

32 ANNEX 4: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS Country Issues 1. The Bank has gained substantial experience and understanding of the financial management environment in Afghanistan through the large number of projects under implementation over the past four years. The Public Administration Capacity Building Project (PACBP) and the Public Financial Management Reform Project (PFMR) are the primary instruments to continue and enhance the fiduciary measures put in place during the past years to help ensure transparency and accountability for the funding provided by the Bank and other donors. 2. A PFM performance rating system using 28 high-level indicators that was developed by the PEFA multi-agency partnership program was applied in Afghanistan in June PEFA is comprised of the World Bank, International Monetary Fund (IMF), EC, and several other agencies. The system is structured around six core dimensions of PFM performance: (a) budget credibility; (b) comprehensiveness and transparency; (c) policy-based budgeting; (d) predictability and control in budget execution; (e) accounting, recording, and reporting; and (f) external scrutiny and audit. Afghanistan s ratings against the PFM performance indicators generally portray a public sector where financial resources are, by and large, being used for their intended purposes. This has been accomplished with very high levels of support from international firms; this assistance will continue to be needed over the medium term if these ratings are to be maintained. There is also much room for improvement. 3. In spite of undeniable gains made in reconstruction since the end of 2001, the challenges facing Afghanistan remain immense; not least because of the tenuous security situation in the region and continued prevalence of a large illegal economy. The policy framework benchmarks have not yet been fully costed so various priorities are funded through the annual budgeting process. The rising costs of the security sector constitute the major constraint on attainment of fiscal sustainability. With regard to executive oversight, the national assembly will play an increasingly active role. All in all, the new national strategy has created high expectations of the executive which could prove to be quite difficult to meet. 4. The public sector, in spite of considerable efforts to reform its core functions, remains extremely weak outside of Kabul. The lack of qualified staff in the civil service and the absence of qualified counterparts in GOA after many years of war and conflicts is a binding constraint. Delays in reforming the pay structure and grading of civil servants have severely crippled the public administration of the country. Domestic revenues lag behind expenditures by a factor of ten to one. Large-scale corruption could emerge to undermine the government s efforts to enhance aid flows through national accounts. Capacities to track expenditures and monitor expenditure outcomes have improved, but they need rapid and substantial strengthening if progress toward the attainment of national development targets is to be monitored. Currently, 75% of external revenues bypass appropriation systems. 5. The World Bank is financing a Financial Management Advisor to assist the Ministry of Finance, an Audit Advisor to assist the Control and Audit Office, and a Procurement Advisor to assist in procurement-related activities. Also an Internal Audit function is being developed within the Ministry of Finance with World Bank financing. USAID, and earlier the Indian Aid Assistance Program, is financing a team of consultants and advisors to assist the Da Afghanistan Bank in local as well as foreign currency operations. The activities carried out under the existing Public Administration projects have helped the GOA to ensure that appropriate fiduciary 26

33 standards are maintained for public expenditures, including those supported by the Bank and the donor community. 6. Progress has been slower than expected in shifting from operations support provided by the three Advisors to capacity development and knowledge transfer to the civil servants. It is expected that the Advisors will continue to be required for the medium term. Challenges remain in attaining and enhancing the agreed upon fiduciary standards. In addition to the above, the regulatory environment in Afghanistan has advanced significantly in the past three years but civil servants do not yet have sufficient capacity to effectively work in the new environment. Risk Assessment and Mitigation 7. The table below identifies the key risks that the project may face and indicates how these risks are to be addressed. The overall FM risk rating is High, but the residual risk rating after application of the mitigating measures is Substantial. Risk Inherent Risk Countrv Inherent Risk Project Financial Management Risk Perceived Corruption Overall Inherent Risk Risk Rating M H H H Risk Mitigation Measures Source - PFM study Minimize use of Designated Account, maximize direct payments to consultants, contractors, etc., all major procurement through Procurement Advisor GOA commitment, internal controls and internal audit will help to reduce the high level of perceived corruption 1 Risk I Residual M S S I Effectiveness Condition of negotiations, Board or (my) N N N Control Risk 1. Weak Implementing Entity H Bulk of the implementation will be through contracts issued to NGO. S N MOPH has adequate staffing in GCMU to implement the program; GCMU has years of experience in the implementation of Bank hnded projects; Oversight fimction for the project shall be performed by the MOPH Executive Board. 2. Funds Flow S Payments will be made to consultants, Suppliers, etc. from the Designated Account (DA) by the Special Disbursement Unit M N 27

34 3. Budgeting 4. Accounting Policies and Procedures 5. Internal Audit 6. External Audit 7. Reporting and Monitoring Overall Control Risk Detection Risk S S H H H H S Risk rating: H=high, (SDU)-MoF. In addition to payments out of DA funds, the implementing entity can also request the SDU to make (i) direct payments from the Credit Account to consultants or contractors, etc., and (ii) special commitments for contracts covered by letters of credit. These payments will only be made by SDU after due processes and proper authorization from the implementing entity. A budget committee will be appointed to coordinate the preparation of annual work plan and annual budget. Representatives from GCMU & Health Care Financing Department, Provincial Health Coordination Committee, Policy and Planning, Monitoring & Evaluation Department and Afghan Public Health Institute will be part of the Committee and shall report to the oversight body - MOPH Executive Board. Will follow international standards. Project accounting procedures and details of the FM arrangements will be documented in an FM Manual to be approved by the Bank Internal audit departments of MoF and MOPH will review project - - internal control systems Will be audited by CAO with support from Audit Advisor Strengthening the SDU is a priority for the new FM Advisor, in order to provide information in compliance with agreed format of financial reports. Adequate accounting, recording, and oversight will be provided in project procedures. AccountingIRecordingloversight by SDU - MOF of all advanceshl- 16 supported by Financial Management Advisor. rk; S=substantial risk; M=modest ri, M M S S S S M ; L-low risi N N N N N N 28

35 Strengths and Weaknesses Strengths 8. GOA provides assurance to the Bank and other donors that the measures in place to ensure appropriate utilization of funds will not be circumvented. GOA support for the PACBP and the Public Financial Management Reform Project (PFMRP) is strength in itself to enhance financial management in Treasury operations, public procurement, internal audit in the public sector, and external audit by the Auditor General. This is the third IDA-funded credidgrant for MOPH so the agency has experience in implementing Bank projects and following Bank procedures. Weaknesses and Action Plan 9. The main weakness in this project, as in many others in Afghanistan, is the ability to attract and retain suitably qualified and experienced counterpart staff especially for Financial Management. The availability of FM staff in GCMU, some of whom are to be funded by the project, together with intensive training programs included in this project, is expected to strengthen the fiduciary arrangements. Significant Action Responsable Weaknesses Agent Project internal controls and Financial Management MOPH procedures are not Manual developed adequately defined Interim reports lack required Un-audited interim financial IDAMOF/ information report formats confirmed MOPH (DBER) Completion Date April 1,2009 April 1, 2009 Implementing Entity 10. Central Level: The project will be implemented by the MOPH. MOPH at the central level will have overall responsibility for project oversight and supervision through its Executive Board. The Deputy Minister for Technical Affairs of the MOPH will be the Project s Manager and focal point. The day to day responsibilities for project implementation will rest with the Director of Grants and Contracts Management Unit and Health Care Financing, and heads of the relevant administrative units of the MOPH. 11. Provincial Level: The Provincial Health Coordination Committee will ensure that (a) international and internal inputs to the health sector enable the system at this level to function more effectively; and (b) needs and priorities of the sector are met. The Provincial Health Director will chair the committee. The Lead Donor will support the provincial health director to ensure coordination of all donor support in the province, reduce duplication of efforts, prevent gaps in service, enhance efficiency in service delivery and expand delivery of the BPHS. Regular joint monitoring visits by the PHCC and sometimes solely conducted by the PHO team will improve supervision and ensure adherence to national policy and strategies. 12. Grant and Contracting Management Unit (GCMU): The Head of the accounting department for GCMU in MOPH will take responsibility for the financial management activities of the program. GCMU will carry out the day-to-day financial management operations of the project, preparation of M- 16 forms (payment orders), preparation o f summary reports/simplified statements of expenditures, coordination with other line ministries involved in the program and 29

36 overall contract and project management. This department is adequately staffed with FM personnel who are efficiently managing all external grants including IDA Health Sector Project. Budgeting 13. A budget committee will be appointed to coordinate the preparation of annual work plan and the derivation of annual budget. This committee will be made up of representatives from GCMU & Health Care Financing Department, Provincial Health Coordination Committee, Policy and Planning, Monitoring & Evaluation Department and Afghan Public Health Institute, and shall report to the oversight body - MOPH Executive Board. The Budget Committee shall also coordinate quarterly budget reviews to ensure adequate budget discipline and control. The committee will be responsible for ensuring that project expenditures for each fiscal year are captured in the Governmental Development budget of that fiscal year. The MOPH must get approvals from the presidential office and the parliament and attach them to B27 and PCS forms at the time of requesting yearly allotments for contracts under the project to avoid delays in payment processing. Funds Flow 14. The standard funds flow mechanism in Afghanistan will be followed in this project. Project funds will be deposited in the Designated Account (DA) to be opened and maintained at DAB or in a local commercial bank, if approved. The DA, in keeping with current practices for other projects in Afghanistan, will be operated by the Special Disbursement Unit (SDU) in the Treasury Department of MoF. Requests for payments from the DA will be made to the SDU by the implementing entity when needed. 15. In addition to payments out of DA funds, the implementing entities can also request the SDU to make (a) direct payments from the Grant Account, and (b) special commitments for contracts covered by letters of credit. These payments will follow World Bank procedures. All project payments will be made to either international firms or local firms that have bank accounts in DAB, a local commercial bank, or an overseas bank. All payments will be made either through bank transfers into the account of such firms or by check. Expenditures for each component will be paid centrally from MOPH in accordance with the approval mechanisms documented in the SHARP FM Manual. 16. Payments to NGO for the RBF component will be based on the approved performance agreement, and as stipulated in the contracts for each participating NGO. Release of first tranche payments, where necessary, will be based on the terms of the performance agreement. Subsequent release of funds will be dependent on the achievement of performance milestones stated in the agreement, submission of statement of expenditures (SOE) and relevant supporting documents, and submission of financial and physical progress reports as at that date. Where it is observed by GCMU that an NGO has utilized the funds to finance activities other than those stated in the performance agreement and contract, these will be considered as ineligible expenditures and the amounts will need to be refunded to the project. 17. Retroactive financing of up to US$l2 million is envisaged for expenditures made after October 1, 2008 and prior to the signing of the Financing Agreement. Retroactive financing can be disbursed only after the grant becomes effective. 30

37 FUNDS FLOW CHART f Payment Requests 1 I Designated Account in DAB denominated in US$ Project transactions processed through SDU and +, paid in US$ or Afghanis Payment + t / \ Direct Payments to Contractors, Consultants, NGO, Suppliers, etc. after approval of W.A initiated by the project and submitted through SDU \ / Requests \ Legal requirements for authorized signature 18. Ministry of Finance has authorization to disburse funds from the Grant. Specimen signatures of authorized signatories in MoF are on file with the Bank. Accounting 19. The SDU will maintain a proper accounting system of all expenditures incurred along with supporting documents to enable IDA to verify these expenditures. The FM staff of GCMU in MOPH will: (a) supervise preparation of supporting documents for expenditures; (b) prepare payment orders (Form M16); (c) obtain approval for M-16s by the Minister or Deputy Minister depending on the payment amount; and (d) submit them to the Treasury Department in MoF for verification and payment. Whilst original copies of required supporting documents are attached to the Form M16, the project is required to make and keep photocopies of these documents for records retention purposes. The FM Advisor in the MoF/SDU will use the government's computerized accounting system, Afghanistan Financial Management Information System (AFMIS), for reporting, generating relevant financial statements, and exercising controls. GCMU FM staff will maintain essential project transaction records using Excel spreadsheets and generate required monthly, quarterly, and annual reports. 31

38 20. The FM Manual, to be prepared by MOPH and approved by the Bank, will include: (a) roles and responsibilities for all FM staff; (b) documentation and approval procedures for payments; (c) project reporting requirements; and (d) quality assurance measures to help ensure that adequate internal controls and procedures are in place and are being followed. The FM Manual will also establish project financial management in accordance with standard GOA policies and procedures including use of the GOA Chart of Accounts to record project expenditures. The use of these procedures will enable adequate recording and reporting of project expenditures. Overall project accounts will be maintained centrally in SDU, which will be ultimately responsible for recording of all project expenditures and receipts in the Government s accounting system. Reconciliation of project expenditure records with MoF records will be carried out monthly by the assigned FM staff in GCMU. FU3F Component 2 1. The MOPH proposes two supply-side RBF pilot projects aimed at increasing utilization of maternal and child health services. MOPH has experience with RBF financing, they have implemented performance based contracting for more than 4 years (one NGO had its contract terminated for poor performance). They have also experimented with performance-based payments for NGO but it is unclear whether these have yielded results, in part because the payments were small. Building on this experience, the MOPH proposes to test a simple and large performance-linked payments for NGO to increase the coverage of maternal and child health services (Pilot 1). They also want to implement a complementary bonus system for hospitals aimed at increasing the volume of maternal and child services (Pilot 2). These will be worth up to 15% of annual funding for participating NGO and 10% of annual funding for hospitals. The pilots will support the main objective of the Bank s IDA grant, the expansion of the BPHS (contracts with NGO to deliver the BPHS accounts for almost 75% of IDA financing). 22. Disbursements under the RBF will be based on signed performance agreements (contracts) between the MOPH and the NGO. The performance agreements will delineate each party s responsibilities, record procedures for procurement and financial management. It will also define performance milestones in project implementation that, when verified, serve as triggers for the release of additional payments, after the initial tranche payment made based on the contract. 23. Independent consultants will be appointed to carry out verification of NGO s performance claims. NGOs are required to ensure that their financial statements are audited annually, and the audit reports will be submitted to MoPH. Furthermore, MoPH can also appoint on its own auditors to review the financial transactions of any NGO. 24. For financial reporting from the NGO, reports will be submitted quarterly or at the time of request for release of tranche funds, which ever is earlier. The reports shall consist of financial and physical progress. MOPH will design common reporting formats or templates to enable easier assembly of financial information from mulitple participating institutions into an aggregate report for onward submission to the Bank (as part of the quarterly interim unaudited financial reports). Details and formats will be included in the project s financial management manual. Internal Control & Internal Auditing 25. Project-specific internal control procedures for requests and approval of funds will be described in the FM Manual to be developed before disbursements begin including segregation of duties, documentation reviews, physical asset control, and cash handling and management. 32

39 26. The Head of the FM unit of GCMU will be responsible for coordinating FM activities of the project with the SDU. 27. Annual project financial statements will be prepared by SDU/MoF detailing activities pertaining to the project as separate line items with adequate details to reflect the details of expenditures within each component. 28. The project s financial management systems will be subject to review by the internal audit directorate of the MOPH, with support, where required, from the internal audit directorate of the MoF, according to programs to be determined by the Director of Internal Audit using a risk-based approach. External Audit 29. The project accounts will be audited by the Auditor General, with the support of the Audit Advisor, with terms of reference satisfactory to IDA. The audit of the project accounts will include an assessment of the: (a) adequacy of the accounting and internal control systems; (b) ability to maintain adequate documentation for transactions; and (c) eligibility of incurred expenditures for Association financing. The audited annual project financial statements will be submitted within six months of the close of fiscal year. All agencies involved in implementation and maintaining records of expenditures will need to retain these as per the IDA records retention policy. 30. The following audit reports will be monitored each year in the Audit Reports Compliance System (ARCS): Responsible Agency MoF, supported by Special Disbursement Unit Audit Auditors Date SOE, Project Accounts and Auditor General Sep 22 Designated Account Financial Reporting 31. Financial statements and project reports will be used for project monitoring and supervision. Based upon the FM arrangements of this project financial statements and project reports will be prepared monthly, quarterly, and annually by the GCMU in the MOPH. These reports will be produced based on records kept on Excel spreadsheets after due reconciliation to expenditure statements from SDU (as recorded in AFMIS) and bank statements from DAB. 32. The quarterly project reports will show: (a) sources and uses of funds by project component; and (b) expenditures consolidated and compared to governmental budget heads of accounts. MOPH will forward the relevant details to SDU/DBER with a copy to IDA within 45 days of the end of each quarter. GOA and IDA have agreed on a pro forma report format for all Bank projects; a final customized format for SHARP will be agreed prior to project negotiations. 33. The annual project accounts, to be prepared by SDU from AFMIS after reconciliation with records maintained at the GCMU, will form part of the consolidated GOA Accounts for all development projects. This is done centrally in the Ministry of Finance Treasury Department, supported by the Financial Management Advisor. Disbursement Arrangements 33

40 34. Disbursements procedures will follow the World Bank procedures described in the World Bank Disbursement Guidelines and the Disbursement Handbook for World Bank Clients (May 2006). 35. Table 1 shows the allocation of IDA proceeds in a single, simplified expenditure category and Table 2 presents the expected co-financing. The single category for goods, works, consultancy services, training, and operating costs is defined in the financing agreement to facilitate preparation of withdrawal applications and record-keeping. Project funds will be disbursed over 45 months. A final disbursement deadline will be four months after the closing date. During this additional four months grace period, project-related expenditures incurred prior to the closing date are eligible for disbursement.). Table 1: IDA Financing by Category of Expenditure Category (1) Goods, works, consultants services, training and Incremental Operating Costs* under Parts 1,2 and 3 of the Project TOTAL AMOUNT Amount of the Grant Allocated (expressed in SDR) 19,900,000 19,900,000 Percentage of Expenditures to be Financed (inclusive of Taxes) 100% I I I Table 2: Estimated Co-financing (US% million) Components BPHS EPHS MOPH Stewardship RBF TOTAL Financing Norwegian IDA requirement Trust Fund JSDF ARTF Summary Reports. Summary reports in the form of SOE will be used for expenditures on contracts above US$25,000; for all training programs, operating costs regardless of whether Bank procurement prior review is required or not. 37. Designated Account. A single designated account will be opened at DAB or in a local commercial bank in U S dollars for a maximum amount of US$6,000,000. The SDU in MOF will manage payments, expenditure reporting, and requests for new advances to this account. Transfers to other accounts are authorized. Cash advances may be taken from the DA, and held and managed by MOPH. This agency s controls, holding, accounting, and preparation of SOEs have been satisfactorily assessed. New cash advances will only be made when all other prior cash 34

41 advances have been justified through submission of SOEs to the SDU. The designated account will be replenished on a monthly basis. 38. Direct Payments. Third-party payments (direct) and Special Commitments will be permitted for amounts exceeding 20% of the advance in the Designated Account (US$400,000). All such payments require supporting documentation in the form of records (copies of invoices, bills, purchase orders, etc.). 39. Preparation of Withdrawal Applications. MOPH will prepare summary reports (simplified SOE, based on those in A Guidance Note on Disbursement Procedures - World Bank SHARP and forward these reports to the SDU for further processing as a reimbursement application. The SDU will review withdrawal applications for quality and conformity to Treasury procedures, and then obtain signature. Selected MOPH and SDU finance staff will be registered as users of the World Bank Web-based Client Connection system, and take an active hand in managing the flow of disbursements. Financial Management Covenants 0 MOF shall submit audited financial statements for the project within six months of the end of each fiscal year. The Project s audit report will cover the financial statements, the Designated Account, and SOEs, in accordance with terms of reference agreed with the Association. 0 Un-audited project interim financial reports will be submitted by MOPH on a quarterly basis to the World Bank and a copy to SDU-MoF within 45 days after the end of each quarter. 0 MOPH will ensure that there are adequate FM staffing in the GCMU, and that they are retained throughout the duration of the project in order to ensure smooth project implementation. Supervision Plan 40. During project implementation, the Bank will supervise the project s financial management arrangements. The team will: Review the project s quarterly un-audited interim financial reports as well as the project s annual audited financial statements and auditor s management letter. Review the project s financial management and disbursement arrangements (including a review of a sample of SOEs and movements on the Designated Account and bank reconciliations) to ensure compliance with the Bank s minimum requirements. Review agency performance in managing project funds to ensure that it is timely, accurate, and accountable. Particular supervision emphasis will be placed on asset management and supplies. 0 Review of financial management risk rating and compliance with all covenants. Conclusion 35

42 4 1. The FM arrangements, including the systems, processes, procedures, and staffing are adequate to support this project - subject to implementation of the items listed in the action plan. 36

43 ANNEX 5: PROCUREMENT ARRANGEMENTS A. Country Context 1. The Bank has gained substantial experience and understanding of the procurement environment in Afghanistan through its involvement in the interim procurement arrangements put in place under the Emergency Public Administration Project. In addition experience gained working with the institutions with current responsibility for procurement functions including Afghanistan Reconstruction and Development Services. As part of the broader review of Afghanistan s Public Financial Management (PFM) system, the Bank carried out two assessments of the procurement environment in the country based on the baseline and performance indicators developed by a group of institutions led by the World Bank and Organiation for Economic Cooperation and Development (OECD)/DAC in June 2005 and September The first key issue identified through the procurement assessment was lack of ownership and a procurement champion in the Government. This is a serious impediment to reform and to inter-ministerial dialogue. A second, related issue is the lack of capacity in the line Ministries, as evidenced by their inability to define and communicate effectively their desired technical specifications and develop an effective terms of reference in their procurements/hiring the consultants. The major issue in procurement across the ministries is lack of capacity to evaluate bids in procurement of goods/works, evaluation of expression of interests received in response to Request for Expression of Interest (REOI) and technical evaluation of proposals received in response to RFPs in a timely and transparent manner. Further the Ministry of Public Health doesn t have capacity to procure health sector goods. The lack of capacity is also evident in the local private sector. While the number of bids is reasonably high, there is a lack of understanding on application of public procurement rules in preparation of responsive bids. 3. A new Procurement Law (PL) has been adopted in November 2005 which radically transformed the legal and regulatory framework. A Procurement Policy Unit (PPU) was established to provide oversight for implementation of the PL. The PPU has issued several circulars regarding implementation of the PL including issuance of Rules of Procedures for Public Procurement (Circular: PPU/COO5/13 86 of April 12, 2007) and Procurement Appeal and Review Mechanism (Circular: PPU/NOO1/1385 of March 18, 2007). The PPU has developed several standard bidding documents and standard request for proposal for national and international procurement of goods/works and consulting services following national procedures as per PL. 4. In the absence of adequate capacity to manage procurement activities effectively, a central procurement facilitation service (ARDS-PU) has been established under Ministry of Economy (MOE) to support the line ministries and project implementing agencies. The MOE has hired international TA to provide procurement facilitation service under Bank financed PACBP/PFMRP. The Bank and GOA have agreed on a program for procurement reform and capacity building that will lead from a centralized to a more decentralized procurement system. The program is implemented by international TA under the supervision of PPUMOF and financed under PACBPRFMRP. Several training programs have been conducted at basic and intermediate levels. The implementation of the procurement reform component of the PFMRP should be given priority to ensure that fiduciary standards are further enhanced and that capacity is developed in the GOA to maintain these standards. 5. The revised PL has been issued by the Ministry of Justice in the circular on July 23, The Rules of Procedures for Public Procurement are being revised by the 37

44 PPU/Ministry of Justice (MOJ). IDA has reviewed the PL and comments have been provided to MOF. General 6. Procurement for the proposed project would be carried out in accordance with the World Bank s Guidelines: Procurement under IBRD Loans and IDA Credits dated May 2004 and revised in October 2006 and Guidelines: Selection and Employment of Consultants by World Bank Borrowers dated May 2004 and revised in October 2006, and the provisions stipulated in the Financing Agreement. The general description of various items under different expenditure categories are described below. For each contract to be financed by the grant, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frames are agreed between the Borrower and the Bank project team in the Procurement Plan and Procurement Activity Schedule. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements to the institutional capacity. 7. The Bank and MOPH discussed two options for selection of NGOs for delivery of BPHS Services in provinces either following Procurement Guidelines by using Standard Bidding Document (SBD) for Non-Consulting Services or Consultant Guidelines. The quality of delivery of service is very important in delivery of BPHS services. The Procurement guidelines follow post qualification verification by pasdfail criteria and they not allow evaluation of technical competence of NGOs. Following the Consultant Guidelines provides an opportunity to evaluate the technical proposal. In the ongoing health project, the NGOs were selected using Consultant Guidelines and the outcomes are satisfactory. Hence the Bank and MOPH agreed to initiate selection of NGOs for delivery of BPHS Services following Consultant Guidelines Procurement of Works 8. The project will finance small civil works to rehabilitatehenovate GCMU office in Kabul. MOPH shall use the sample National Competitive Bidding (NCB) works bidding documents and/or ITQ small works issued by World Bank office in Kabul. All contracts estimated to cost less than US$5 million per contract will be procured following NCB procedures. Contracts estimated to cost less than US$50,000 per contract shall be procured following Shopping Procedures in accordance with paragraph 3.5 of Bank s Procurement Guidelines. Procurement of Goods and Non-Consulting Services 9. Goods procured under this project would include pharmaceuticals and medical consumables, IT equipment, vehicles and internet access. The procurement will be carried out using Bank s SBD for Goods and Health Sector Goods for all contracts following International Competitive Bidding (ICB) procedures. National SBDs agreed with IDA or satisfactory to IDA will be used for procurement of Goods following NCB procedures. Shopping shall be in accordance with paragraph 3.5 of Bank s Procurement Guidelines. All contracts estimated to cost more than US$200,000 per contract shall be procured following ICB procedures. Contracts estimated to cost more than US$50,000 equivalent per contract and less than US$200,000 per contract shall be procured following NCB procedures. All contracts estimated to cost less than US$50,000 equivalent per contract shall be procured following Shopping procedures. Contracts for procurement of standard computer software or contracts meeting the conditions in accordance with paragraph 3.6 of Bank s Procurement Guidelines may be procured following Direct Contracting procedures with prior agreement with IDA in the procurement plan or separately. Procurement of non-consulting services such as Provision of internet access shall be procured based on the Bank s SBDs for Procurement of Non Consulting Services. 38

45 Selection of Consultants 10. The proposed project would finance several high value assignments to deliver BPHS, M&E services, hiring of international TA for quality inspection of drugs dispensed by NGOs during mid term review and inspection of pharmaceuticals purchased for strengthening mechanism (SM) provinces, hiring of international auditing firm to carryout financial auditing of delivery of BPHS contracts and a number of individual national and international consultants to support stewardship component of the project. During initial phase of the project, EPHS will largely be technical assistance on various options and related analytical work. The project will also provide technical assistance and analytical work to support the RBF initiatives. The actual contractual payments to implement the RBF will be financed by a Norwegian Trust Fund to be managed by IDA. The initial contracts for delivery of BPHS shall have provision for amending the contract to introduce RJ3F at a later stage. The international TA shall include short term TA to carry out bid evaluation for procurement of pharmaceuticals and medical consumables and a long term TA for general procurement operational support and capacity building. 11. At present, there are thirteen consultancy services contracts to deliver BPHS in various provinces and TA for M&E Services. These contracts were extended following Single Source Selection (SSS) procedures up to June 2009 to be financed under ongoing Health projects (PO78324 and P098358). The Bank and MOPH noted that sufficient funds are not available in the ongoing Health project to finance these contracts till June These contracts need to receive retro-active financing under the SHARP project following SSS procedures. The list of contracts to be migrated is available in the attached initial procurement plan. 12. There are number of national individual consultants working under the ongoing health project whose continued services are required for the SHARP project. These consultants will be migrated to the SHARP project following SSS procedures based on performance evaluation after June The list of consultants is available in the attached initial procurement plan. The method and criteria of performance evaluation shall be agreed with IDA before April Short lists of consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 14. The selection methods applicable for consultants are Quality and Cost Based Selection (QCBS), Quality Based Selection (QBS), consultant s qualification selection (CQS), least cost selection (LCS), Fixed Budget Selection (FBS) and SSS for firms and Section V of the Bank s Guidelines for Individuals including SSS. 15. Incremental Operational Costs: IDA will finance any incremental operational costs. Incremental Operating Costs means the incremental expenses incurred on account of project implementation and management, including the operation and maintenance of vehicles, office supplies, communication charges, insurance costs, office administration costs, banking charges, utility charges, rental charges, domestic/international travel and per diem allowances, but excluding salaries and any top-ups of the officials of the Recipient s civil service. 16. Staff Development: There will be number of capacity building trainings both within the country and overseas for MOPH staff. The staff development plan shall be prepared and agreed with IDA. 39

46 B. Assessment of the agency s capacity to implement procurement 17. Procurement activities will be carried out by GCMU under the supervision of the Deputy Minister for Technical Affairs and the Deputy Minister for Administration, MOPH. 18. An assessment of the implementing agency to carryout procurement including health sector goods, storage and distribution of drugs was carried out in November A full time Head of GCMU is responsible for project implementation and is reporting to Deputy Minister for Technical Affairs. Procurement of goods is carried out under the supervision of Deputy Minister for Administration, MOPH by the procurement directorate headed by Director of Procurement and he reports to the Director General Administration. The procurement department of the MOPH has 151 regular and 239 contract-based staff. 147 staff are working in procurement unit, 164 staff work in central MOPH workshops and another 79 staff in central pharmaceutical warehouse. Some of the staff in the procurement unit is supported by different development partners including the Bank, who have been trained and are experienced in managing procurement of small value goods, while the rest are under GOA payroll. The GOA staff lack English language skills and computer skills. Though other departments of the MOPH are undergoing the ity Reform and Restructuring (PRR), the administration department which includes procurement has not started PRR. 20. Ministry of FinancePPU has hired an international technical assistance (TA) for implementation of Procurement Reform (Ref Para A.4). As part of the assignment the consultant proposed the organization structure and staff required under PRR for MOPH. The report contains functions, job description and staff required. MOPH will need to decide on the proposal and its implementation. 21. At present, the consulting services - firms are hired by GCMU utilizing the services of PPA consultants. They are not part of procurement department. Similarly the individual consultants are hired by the human resources department and this department is also outside procurement. During procurement post review in FY 07 and FY 08, it was recommended to consolidate all procurement activities which are spread over three departments under Director, Procurement. MOPH is in the process of re-organizing the procurement department. The scope of services to be delivered by procurement department is: (a) procurement of goods including health sector goods; (b) procurement of works; (c) supply management; (d) procurement of services; (e) warehouse management; (f) distribution of medicine and medical equipment to health facilities; and of (g) small value goods for the MOPH departments. The procedures and processes regarding these will be reviewed during supervision missions. 22. The procurement capacity assessment indicates MOPH has capacity to procure small value goods and services. There is no capacity to procure health sector goods. The ministry has adequate capacity to hire individual consultants in a fair and transparent manner. The capacity for performance evaluation requires to be strengthened. The capacity to manage the hiring of consultants - firms/ngos is limited. The ministry requires long term international procurement specialist initially to provide operational support and then to build MOPH capacity to implement the projects thorough development budget and donor funds. 23. Storage and distribution of pharmaceuticals. As part of the capacity assessment, the Bank team visited the Central Medical Store (CMS) and also held discussions with the head of the pharmaceutical department. The main findings are: 40

47 The space of the warehouse is adequate. There is no proper raking system in the old warehouse. The raking system in the new warehouse (constructed by United Nations Population Fund (UNFPA)) is good. The CMS needs to add some more equipment for handling materials. Lots of pharmaceuticals and medical consumables are lying in the containers and on the ground. As there is no cold storage in the CMS, it cannot maintain a cold chain. The CMS is managed without a computerized warehouse management system. It is not possible to do any forecasting of drugs/consumables for procurement. The store keeper told that the stock controller goes around the stores every week to find out the drugs that are expiring and takes action to liquidate the stocks. Expiry of drugs was reportedly not a major issue. However it is difficult to know the extent of the problem in the manual system. 0 The documentation in the receipt section shows no proof of Good Manufacturing Practice (GMP), Certificate of Pharmaceutical Product (COPP), test certificate for the batch and manufacturing license. The receipt section verifies the quantity and accepts based on customs clearance. There is no documentation to show the quality of accepted drugs. CMS is not responsible for distribution of drugs. The provincial health department in the MOPH gets the demandhequirement of drugs from provinces. After verification, the department authorizes CMS to issue and advises the provinces to collect. There is no way of knowing the quantity of expired drugs at the health facilities and there is no way of distributing these drugs before expiry to other needy health facilities. MOPH has national formulary and Essential Drugs List. The registration procedure involves verification of GMP, COPP, manufacturing license etc., MOPH does not have the capacity to control and enforce registration of all drugs on the market. Registration of productlmanufacturer may take between 4 to 8 weeks. MOPH estimates that 60 % of drugs sold in the market are imported outside legal system. 24. Strengthening the storage and distribution of pharmaceuticals requires investments and it may not be fully achieved under the current project. To mitigate the risks involved in distribution and expiry of drugs, the pharmaceutical procurement will be split into number of delivery schedules indicating quantity to be delivered (say three months requirements) based on the rate of consumption. The firms shall not be allowed to dispatch fixed quantities and shall dispatch based on quantities requested by MOPH based on consumption. This does not fully mitigate the risk and considering the investments required in warehouse management, this measure could be considered a practical approach in the Afghanistan context. 25. Misprocurement declared by IDA: IDA issued a show cause notice to declare misprocurement of Procurement of Pharmaceuticals by MOPH following ICB Items of Essential Drugs (IFB : MOPH/479/CB) financed under Health sector Emergency Reconstruction and Development [Project ID: PO98358 & PO78324 and Grant # H043-AF and H206-AFI on February 14, MOPH responded on February 24, 2008 by proposing action plan to mitigate the risks indicated in the IDA notice. After considering the response of the ministry, IDA declared misprocurement without cancellation of grant on Mayl4, 2008 for the following reasons: (a) an unacceptable delay in the bid evaluation, and (b) not providing adequate justifications for rejection of bid as required under paragraph of the Bank s Procurement Guidelines.. 41

48 26. MOPH and the Bank agreed on a ten point program for reforming the procurement department o f MOPH in January, MOPH provided an update o f the status of risk mitigation measures on February 24, Progress of the reform was further reviewed during project preparation. The status of the action plan is given below: Ten Point Action Plan as AM of January 2008 MOPH will recruit a line manager for the procurement unit through an open and competitive process. The position will be at market-base rates and will be financed by the World Bank project. The candidate will have to be very experienced in procurement methods of donors and the Government, display computer skills, and demonstrate advanced English abilities. The TORs will be drafted by January 3 1, 2008, the position advertised by February 15, 2008 and the candidate recruited by March 3 1, An interim procurement unit line manager will be appointed by MOPH from among existing procurement consultants working in the Ministry by February 15, The current procurement unit will be disbanded and the staff re-deployed to positions not related to procurement by February 15, Thereafter, none of these procurement staff will be involved in any procurement by MOPH. A new procurement unit Zomprising no more than 8 highly skilled professionals, with the requisite procurement, computer, and English skills will be Risk Mitigation measures proposed by MOPH on Feb 24, 2008 A procurement unit has been established for development budget which is led by a consultant The Director of procurement has been removed from his post and assigned to another position in MOPH who is no more involved in procurement. An interim procurement line manager has been assigned who would be reporting directly to Deputy Minister Administration. Members of new procurement team are constituted of five procurement consultants currently working with MOPH. More consultants will be recruited through a competitive process with Current Status and Action Plan Procurement Line Manger not yet recruited. MOPH has initiated recruitment to be fmanced by ARTF - Management Capacity Program [Project ID # PO Action completed Not implemented Procurement unit partially constituted. 42

49 Ten Point Action Plan as AM of January 2008 constituted from among existing procurement consultants and others to be recruited. The Unit will be functional by February 2 1, The manager of the new procurement unit will report directly to the Deputy Minister, Finance and Administration. A letter or order from the Minister confirming this new arrangement will be signed by February 15,2008. The terms of reference for each member of the newly constituted procurement unit will be completed by March 1,2008. Service standards will be developed by March 15, 2008, for the amount of time the unit will take to process different types of procurement. An electronic system for tracking each important procurement process will be developed by March 3 1, The disbursement rate of MOPH core budget will increase to over 60% by the end of Computers, s and other reasonable office equipment will be provided for the new procurement unit by March 3 1,2008. A permanent bid evaluation committee comprising staff of the new procurement unit will be established and trained by March 1,2008. Risk Mitigation measures proposed by MOPH on Feb 24, 2008 support from IDA. The TOR for the position of procurement line manager is drafted and sent to IDA for commission and the position will be fhded by IDA. Current Status and Action Plan An interim procurement manager was assigned and he is reporting through Admin DG to the Deputy Minister Administration. TOR not sent to IDA so far. The service standards are included in the Project Implementation Plan of SHARP Not yet done Provided for existing staff. There are 5 members. One representative from administration unit, MoF, and relevant department and 2 members from GCMU. This is not a permanent bid evaluation committee. The composition is permanent and members change 43

50 27. It has proven very difficult under the present circumstances in the country to find the necessary expertise and therefore MOPH could not complete/implement all actions agreed upon in January The procurement department is not yet reorganized. 28. During project preparation the ministry agreed to (a) hire an international procurement specialist for operational support and capacity building [This consultant will not deal with the pharmaceutical tender as it is difficult to get a person with expertise in selection and contract management of large consultancy services and procurement of health sector goods]; (b) hire a short-term international procurement specialist to finalize bid evaluation of procurement of pharmaceutical goods; and (c) utilize the services of ARDS-PU of MOE as and when needed. With this approach the procurement risks are reduced and implementation of these actions and ten point action plan of January 2008 will be monitored. 29. Further, the following mitigation measures are proposed: (a) Bank staff or Bank hired consultant to carryout a training program for MOPH procurement staff to carryout procurement of health sector goods; (b) the procurement staff to continue to attend training programs conducted by PPU/MOF at basic and intermediate levels; (c) procurement staff to attend international programs outside Afghanistan; and (d) ARDS-PU to support MOPH for procurement of health sector goods and selection of consulting firms till MOPH mobilizes the international TA. Despite these arrangements the procurement risk is rated as High. 30. MOPH will ensure that all invitations for bid, EOIs are given wide publicity using its own website, Afghanistan Reconstruction and Development Services (ADS), United Nations Development Business (UNDB)/DG market and national newspapers. Further for individual consultants the REOI/vacancy notice will be published on the following websites and With regard to the procurement complaints, MOPH will be guided by Article 7 1 and 72 of PL MOPH will inform IDA as soon as the procurement complaint is received. The IDA will also monitor resolving of procurement complaints. MOPH should have system to register and monitor the receipt and disposal of complainants. The progress will be reviewed and documented during supervision missions. 32. MOPH will prepare a procurement monitoring/activity schedule for procurement of goods and selection monitoring/activity schedule for consultants to be updated on a monthly basis. The above schedules will facilitate to monitor the time taken for procurementhelection activities and take remedial actions for delays. It has been agreed that all bidproposal evaluations will be completed within: (a) five to seven working days following shopping procedure; (b) working days following NCB/ICB procedures; (c) 10 working days for individual consultants; and (d) 15 working days for firms for REO1 evaluation, 21 working days for Techncial Evaluation Report (TER) and 15 working days to conclude the contract negotiations. 33. The framework of the procurement risk mitigation monitoring plan as given below has been agreed with the MOPH. This will be updated during implementation suppodsupervision missions (ISP) (at least once in six months) and will be part of each mission s aide memoire. S No Procurement Procedstep General I - Procurement Process Indicator Sources of Information and Use of Performance means of verification information target to be for risk achieved. mitigation GPN Published Documentary evidence filled in To ensure 100% GCMU GPN is 44

51 - S No Procurement Procedstep Notice REOUInvita tion for Bids and Bidding process Preparation of Bid Documents/ RFPs Bid Submission Bid EvaluationDZ EO1 and proposal evaluation Process Indicator Number of responses received against GPN REO/IFB Published Minimum bidding time provided [4 weeks in NCB and RFP and 6 weeks in ICB and RFP with complex assignments] Attention of the fms/individuals who expressed interest against GPN while issuing REOI/SPN was called Number of Bid Documents sold and Number of firms confirmed participation against RFP issued Clarificatiordaddendums issued Cleared by IDA without seeking clarifications/comments Bid opening minutes sent to all bidders Formation of bid evaluation committee before bid closing. Timeliness of Evaluation: (a) 5-7 working days following shopping procedure; (b) working days following NCB/ICB procedures; (c) Sources of Information and means of verification Existence of updated responses registration file in GCMU Copy to be available in the file. 10% of the procurement files will be verified Deviations to be collected from procurement files Copy to be available in the file. 10% of the procurement files will be verified Sale of bid documents register and confirmation from consultants about receipt of RFP. 10% procurement files will be verified Copy to be available in the file. 10% of the procurement files will be verified Number of cases to be collected from procurement files Timeliness to be verified from procurement files 10% of the procurement files will be verified Deviations to be collected from procurement files Deviations to be collected from Procurement Activity Schedule Use of I Performance information target to be for risk achieved. mitigation widely published to increase transparency To increase 100% competition. To ensure 100% SPNREOI is widely published to increase transparency To ensure 100% competition competition competition transparency Capacity building measures initiated by international procurement specialist To ensure I Continued progress 100% 1 evaiuation. I Finalizing I 20% reduction during every in timely manner. 45

52 - S No Procurement ProcessMep Bid Evaluation Report and Technical Evaluation Report Contract Award Delivery/ Completion Payment Eomplaints Process Indicator 10 working days for individual consultants; and (d) 15 working days for firms for REO1 evaluation, 21 working days for TER and 15 working days to conclude the contract negotiations after commencement of contract negotiations. Number of Re-bids Cleared by IDA without seeking clarificationskomments Contract award within the original bid validity (a) Contract award published within 14 days of NOA (b) Average time taken for publication of award (c) Number of cases award not published Delivery time: Percentage of Contracts completed delivered within the original schedule as mentioned in Contract Liquidated damage: Percentage of Contracts having liquidated damage imposed for delayed deliverykompletion Completion rate: Percentage of Contracts fully completed and accepted Average number of days taken to release payment Late payment: Percentage of cases (considering each installment as a case) with delayed payment Procurement complaints pending over 60 days Sources of Information and means of verification Procurement files Data to be collected from procurement files Deviations to be collected from Procurement Activity Schedule Data to be collected from procurement files Data to be collected from procurement files Data to be collected from procurement files Data to be collected from procurement files Data to be collected from procurement files Data to be collected from procurement files Complaint register Use of information for risk mitigation To improve procurement process. To improve procurement process. To improve procurement process. Toimprove procurement process. To improve procurement process. To improve procurement process. To ensure transparency I Performance target to be achieved. procurement process. To ensure I 100% transparency 20% reduction during every six months period 60% 90% 15 days 20% 90% 46

53 - S No Procurement Process/step Contract dispute resolution Procurement Capacity Building Process Indicator Resolution of complaints resulted in modification of contract award Resolution of complaints within 15 working days Complaints forwarded to MoF for independent review Unresolved Disputes over 60 days Number of procurement staff trained in Civil Service Institute Number of staff trained in Health Sector Goods Number of staff trained outside Afghanistan Number of CIPS certified staff [PPU/MoF Capacity Building Program] Sources of Information and Use of Performance means of verification information target to be for risk achieved. mitigation Complaint register and To ensure 0% Procurement files transparency Complaint register To ensure 70% Complaint register transparency To ensure 100% transparency Procurement files To ensure 10% transparency Procurement training plan To improve procurement 80% staff to be trained during process. frst year and 100% by second year. To improve procurement Ten staff to be trained process. To improve Four staff procurement during first 18 process. months To improve Three staff procurement during first 18 process. months 34. Governance and Anticorruption (GAC) agenda: IDA and GOA is in the process of conducting vulnerability to corruption study in MOPH. The MOPH will implement the findings/recommendations of the study in the procurement process. All the contract opportunities and contract awards will be widely published in the internet, ARDS website, MOPH website and when required in DG MarketKJNDB. The MOPH will set up a system to ensure that the staff/consultants who handled the procurement process/contract managementkontract execution does not join the consultants/contractors. This will be reviewed during supervision missions. C. Procurement Plan 3 5. The Borrower, at appraisal, developed a Procurement Plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team and is available at GCMU of MOPH. It will also be available in the Project s database and in the Bank s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. D. Frequency of Procurement Supervision 36. In addition to the prior review of procurement, based on the capacity assessment of the implementing agency it is recommended to have at least two Bank supervision missions every year. E. Procurement Post Review 47

54 37. In addition to prior review, IDA staff or an IDA-appointed consultant shall carry out annual procurement post reviews. 48

55 Attachment I Details of Procurement arrangements involving International Competition (a) Works, goods and non-consulting services 1. List of contract packages which will be procured following ICB and Direct Contracting procedures: Ref. Contract Estimation Procure- Prequalifica Domestic Review Expected ment tion Preference by Bank Bid-Opening No (Description) Cost (US%) Method i Yes/No (Yes/No) Date Post 9 Comments SH RA P.G. 1 SH AR P.G. 2 SH AR P.G. 4 Pharmaceuticals (MOPH-SM) Vehicles Internet services 3,200,000 ICB July, 2009 No Yes 200,000 ICB July, 2009 No Yes 300,000 ICB July, 2009 No Yes 2. ICB contracts for goods estimated to cost above US$200,000 equivalent per contract and all Direct Contracting regardless of value shall be subject to prior review by IDA. 3. Works estimated to above US$500,000 equivalent per contract and all Direct Contracting regardless of value shall be subject to prior review by IDA. (b) List of consulting assignments with shortlist of international firms or individuals 1 Ref. No. AFGMOPHISHARPIOI AFGIMOPHISHARPI02 AFGMOPHISHARPI03 Description of Assignment Estimated Selection Review Expected Comments Cost (US%) Method by Proposals Bank Submission ( Date i Post) Implementation of BPHS in 11,396,150 FBS Feb 2009 Helmand Implementation of BPHS in 9,071,362 FBS Feb 2009 Farah Implementation of BPHS in 6,805,039 FBS Feb

56 Ref. No. AFG/MOPH/SHARP/04 AFGIMOPHISHARPI06 AFG/MOPH/SHARP 07 AFGMOPHISHARPIOS AFG/MOPH/SHARP/08 Description of Assignment Implementation of BPHS in Nimroz Implementation of BPHS in Samangan Implementation of BPHS in Balkh Implementation of BPHS in Wardak Implementation of BPHS in Saripul Estimated cost (US%) 2,501,479 6,158,036 18,195,173 8,442,764 7,897,608 Selection Method FBS Review by Bank ( I Post) Expected Proposals Submission Date Feb 2009 Feb 2009 AFGIMOPHISHARF'I09 TA for Feb 2009 Monitoring and 11,000,000 QCBS Evaluation AFG/MOPH/SHARP/lO Quality LCS July ,000 and 11 inspection of Drugs dispensed by NGOs during mid term review and Inspection of Pharmaceuticals purchased for SM provinces [in two packages] AFGIMOPHISHARPII 2 Financial Audit and 13 of PPA contracts [twice during 300,000 IC 48 project life] International Procurement Specialist to evaluate the pharmaceutical bids 35,000 IC 49 International 150,000 Procurement Specialist LCS LCS LCS LCS QCBS IC Post Feb 2009 Feb Comments 4. Consultancy services estimated to cost above US$lOO,OOO per contract and all single source selection of consultants (firms/individual) for assignments will be subject to prior review by the Bank. IC I January

57 5. Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than US$lOO,OOO equivalent per contract, may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 51

58 Procurement Plan A. Project information Project Name : Strengthening Health Activities for the Rural Poor (SHARP) Project Country : Afghanistan Project ID : P Bank's approval Date of the procurement Plan [Yet to be approved] 2. Date of General Procurement Notice: UNDB Issue # 734 of 16 September Period covered by this procurement plan: Initial period of 12 months B. Works, Goods and non-consulting services 1. Review Threshold: Procurement Decisions subject to Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement: I I Procurement I Review Threshold I Comment I Goods and non-consulting services Works Direct-contracting 200,000 Equivalent or more 500,000 Equivalent or more All, irrespective of value 2. Prequalification: Bidders for Packages is not applicable in this project. 3. Procurement Packages with Methods and Time Schedule 3.1 Procurement Plan for Works I Works I SH RA '' w. 1 Renovation of GCMU Finance rooms 50,000 and GCMU new offices. 52

59 3.2 Procurement Plan for Goods and Non-Consulting Services Goods and Non-Consulting Services SH Pharmaceuticals 3.200,OOO ICB FL4 (MOPH-SM) P.G.1 No Yes SH Vehicles 200,000 ICB AR P.G.2 No Yes SH IT Equipment 50,000 Shopping Post AR P.G.3 No No SH Internet services 300,000 ICB Post AR P.G.4 No Yes July, 2009 C. Selection of Consultants 1. Review Threshold: Selection decisions subject to Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants: Selection Method I Review Threshold I Comments Competitive Methods (Firms) Competitive methods (individuals) Single Source Selection Firms/Individuals (US$) 100,000 or more 50,000 or more All, irrespective of value 2. Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than US$lOO,OOO equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 53

60 3. Consultancy Assignments with Selection Methods and Time Schedule 3.1 Consultancy Assignments - Firms Ref. No. AFG/MOPH/GCMU/65/06 AFG/MOPH/GCMU/69/06 Description of the Assignment Implementation of BPHS in Khost Implementation of BPHS in Badkhshan Estimated cost (US9 344,250 Selection Method sss 129,600 sss Implementation of BPHS in Baghlan AFG/MOPH/GCMU/63/06 238,560 sss AFG/MOPH/GCMU/66/06 AFGIMOPHIGCMUI6 1/06-1 Implementation of BPHS in Paktika Implementation of BPHS in Nimroz 300,398 sss 628,480 sss Review by Expected Proposals Comments Bank Submission ( Date I Post) I Ongoing Financing for the period from Nov 1,2008 to March 30, 2009 Implementation of BPHS in Farah AFG/MOPH/GCMU/76/06 1,045,200 sss contract with HNI under Project ID: PO98358 & PO78324 On going contract with CAF/SHDP 1 under Project ID: PO98358 & On going contract with BDN under Project ID: PO98358 & PO78324 On going contract with SCA under Project ID: PO98358 & PO78324 On going contract with BRAC under Project ID: PO98358 & PO78324 On going contract with CHA under Project ID: PO98358 & PO78324 Financing for the period from Nov 1,2008 to March 30, 2009 Financing for the period from Nov 1,2008 to March 30, 2009 Financing for the period from Nov 1,2008 to March 30, 2009 Financing for the period from Nov 1, 2008 to June 30, 2009 Financing for the period from Nov 1,2008 to June 30,

61 ~~~~ Ref. No. Description of the Assignment Estimated cost (US$) Implementation of BPHS in Badghis AFG/MOPH/GCMU/l 8/04 737,815 AFG/MOPH/GCMU/77/06 AFG/MOPH/GCMU/ 17/04 Implementation of BPHS in Helmand Implementation of BPHS in Saripul 2,025, ,730 Selection Method sss sss sss Review by Bank ( I Post) Implementation of BPHS in Balkh AFG/MOPH/GCMU/15/04 3,066,600 sss Implementation of BPHS in Wardak AFG/MOPH/GCMU/ 16/04 1,016,145 sss Implementation of BPHS in Samangan AFG/MOPH/GCMU/2 1/04 870,675 sss AFG/MOPH/GCMU/19/04 TA for Monitoring and Evaluation 1,303,4 16 sss Expected Proposals Submission Date On going contract with BRAC under Project ID: PO98358 & PO78324 On going contract with IBNSINA under Project ID: PO98358 & PO78324 On going contract with IBNSINA under Project ID: PO98358 & PO78324 On going contract with BRAC/BDN under Project ID: PO98358 & PO78324 On going contract with SCA under Project ID: PO98358 & PO78324 On going contract with AMI under Project ID: PO98358 & PO78324 On going contract with John Comments Financing for the period from Nov 1, 2008 to June 30, 2009 Financing for the period from Aug 1, 2008 to June 30, 2009 Financing for the period from Nov 1,2008 to June 30, 2009 Financing for the period from Aug 1, 2008 to June 30, 2009 Financing for the period from Nov 1, 2008 to June 30, 2009 Financing for the period from Nov 1,2008 to June 30, 2009 Financing for the period 55

62 Ref. No. Description of the I Estimated Selection Method Review by Bank ( I Post) Expected Proposals Submission Date Hopkins under Project ID: PO98358 & PO78324 AFGIMOPHISHARPIO 1 Implementation of BPHS in Helmand 11,396,150 FBS Feb 2009 AFGIMOPHISHARPI02 Implementation Feb 2009 of BPHS in 9,071,362 FBS Farah AFGIMOPHISHARPI03 Implementation Feb 2009 of BPHS in 6,805,039 FBS AFG/MOPH/SHARP/04 Badghis Implementation of BPHS in 1 2,501,479 FBS Feb 2009 Nimroz AFG/MOPH/SHARP/06 Implementation Feb 2009 of BPHS in 6,158,036 LCS Samangan AFGIMOPHISHARPI07 Implementation Feb 2009 of BPHS in 18,195,173 LCS Balkh AFGIMOPHISHAWIO5 Implementation Feb 2009 of BPHS in 8,442,764 LCS AFG/MOPH/SHARP/08 Wardak Implementation of BPHS in I 7,897,608 LCS Feb 2009 Comments from Nov 1,2008 to Feb 28, 2009 AFGIMOPHISHARPI09 AFGMOPHISHARPI 10 and 11 Evaluation inspection of Drugs dispensed by NGOs during mid term review and [nspection of Pharmaceuticals purchased for SM provinces [in two 300,000 QCBS LCS Feb 2009 July AFGMOPHISHARPI 12 and 13 July and January 56

63 Ref. No. PP Number IC 1 IC 2 IC 3 IC 4 IC 5 IC 6 IC 7 IC 8 IC 9 IC 10 IC Consultancy Assignments - Individual Consultants Description of the Assignment Policy & Planning G.Director Advisor for Deputy Minister in Technical affairs Head of GCMU Public Relation consultant of MOPH Assistant to Technical Deputy Minister IEC consultant Head of Reproductive Health department Policy & Planning consultant International Relation Dept. Director Deputy GCMU Consultant Average Remuneration 4,839 2,229 2,575 4,054 2,903 4,121 Staff to Estimated be Cost for migrated Project from Name of life of 45 ongoing the Staff Months in Health US$* Project ** Yes Dr. Ahmad 217,743 Jan Naeem 4,927 Dr. Ahmad 221,723 4,214 Dr. Amir 2, ,648 Ansari I Mr. Faizan 96,230 Yes Ahmad Dr. M. Tawab 100,300 Yes Saljuqi Dr. Hamida 115,897 Yes Ebadi Dr. M. Daud 182,414 Yes Karimi Dr. Habibullah I Dr. I I I Gh.Sanvar PPA Grant 2,520 I Yes I Dr. Review Comments Post) IC -SSS IC -SSS IC-SSS IC-SSS I- IC-SSS 57

64 ~ PP Number IC 12 IC13 IC 14 IC15 IC16 IC17 IC 18 IC 19 IC20 IC21 IC 22 IC 23 IC24 Description of the Assignment IC25 Finance 2,882 consultant of GCMU IC 26 Accountant of 1,273 GCMU + IC 27 Accountant of 1,273 GCMU IC 28 Cashier of 1,498 2,825 consultant ~ 3,075 2,435 Average Monthly Remuneration consultant 113,391 1 PPA Grant 2,520 Consultant 113,391 PPAGrant 3,637 Consultant PPA Grant Consultant PPAM&E Consultant PPAM&E Consultant PPAM&E Consultant PPAM&E Consultant Communication officer Adminof GCMU Admin. Assistant of GCMU Administrator Managere M& E Director HMIS consultant 2,520 2,520 2,520 2,520 2,520 2,520 1, ,029 2,903 2,903 Estimated Cost for Project life of 45 Months in US%* 163, , , , , , , ,443 91, , , ,708 57,268 57,268 67, , , ,573 Staff to be migrated from ongoing Health Project ** Yes Yes Name of the Staff S.M.Karim I Alawi New Recruitment Dr. Sarwar Homai Dr. S. Maroof Hofiani Selection Method 1 IC-sss IC IC -SSS IC -sss Review by Bank ( or Post) Comments i 58

65 PP Number IC 32 IC 33 IC 34 IC 35 IC 36 IC 37 IC 38 IC 39 IC 40 IC 41 IC 42 IC 43 IC 44 IC 45 IC 46 IC47 IC 48 Description of the Assignment PRR consultant Average Monthly Remuneration 1,974 HRD 2,3 10 consultant HRD 2,185 consultant RBF 2,520 Consultant Procurement 1,273 Assistant MOPH-SM 1 4,355 Coordinator MOPH-SM 1,249 Project I Assistant MOPH-SM I 2,100 Finance Panvan Technical advisor MOPH-SM I 1,873 Panvan Finance I advisor MOPH-SM I 1,750 Kapisa Technical advisor MOPH-SM I 1,795 Kapisa Finance advisor MOPH-SM 1,820 Panjshir Technical advisor MOPH-SM 1,951 Panjshir Finance advisor I MOPH-SM I 1,951 Kabul Technical 1 idvisor MOPH-SM I 1,561 Kabul Finance I Estimated Cost for Project life of 45 Months in US%* 88, ,956 98, ,391 57, ,967 56,190 94, ,444 84,289 78,744 80,777 81,894 87,802 87,802 70, Staff to be Review migrated by from Name of Selection Bank ongoing the Staff Method ( Health or Project Post) Yes ** Yes Yes Yes Yes Yes Yes Yes Yes Yes Dr. Raziq IC -SSS Rahimi Dr. IC -SSS I Foshangi I IC-sss I Dr. Wahidi New IC Recruitment New IC Recruitment I Dr.Abdu1 I IC-SSS 1 I Qadir Dr. Shakir Hadad Mr. Mustafa Kamal Dr. Faridullah Dr. M. Ayub Azmoon Mr. Ab. Zahir Jahed I IC-sss IC -SSS IC -SSS IC-SSS IC I I Haidari I Mr.M. I IC-sss I Sediq Dr. Sher Yes I Kohistani I I Mr. 1 IC-sss I 1 New I I Recruitment I I Karim Shersha New IC Post I Mr. Ahmad I IC -SSS Comments 59

66 PP Number IC 49 Description of the Assignment I I Estimated Average Remuneration Cost for Project life of 45 Months in Specialist to evaluate the pharmaceutical bids International I $12,500 I 150,000 Procurement Specialist Staff to be migrated from ongoing Health Project ** Name of the Staff Recruitment New Recruitment Selection Method IC ~ Review by Bank ( or Post) * Staff to be migrated from ongoing health project based on performance evaluation to be agreed with IDA Comments months 4. Capacity Building The following programs are proposed to enhance the knowledge of the staff of MOPH. Expected outcome/activity Description Familiarity of staff in procurement of health sector goods and hiring of Consulting Estimated Cost Bank Budget Estimated Duration 4 days Start date February 2009 Comments Bank staff or Bank hired Consultant will conduct training in English with Procurement under Bank TBD Procurement staff of MOPH 5. Any Other Special Selection Arrangements: There will be retroactive financing of 13 Consultancy Service Contracts of approximately value US$12.7 million. 60

67 Agreed Procedures for National Competitive Bidding Standard bidding documents approved by the Association shall be used. Invitations to bid shall be advertised in at least one (1) widely circulated national daily newspaper and bidding documents shall be made available to prospective bidders, at least twenty eight (28) days prior to the deadline for the submission of bids. Bids shall not be invited on the basis of percentage premium or discount over the estimated cost. Bidding documents shall be made available, by mail or in person, to all who are willing to pay the required fee. Foreign bidders shall not be precluded from bidding. Qualification criteria (in case pre-qualifications were not carried out) shall be stated on the bidding documents, and if a registration process is required, a foreign firm determined to be the lowest evaluated bidder shall be given reasonable opportunity of registering, without any hindrance. Bidders may deliver bids, at their option, either in person or by courier service or by mail. All bidders shall provide bid security or a bid security declaration form as indicated in the bidding documents. A bidder s bid security or the declaration form shall apply only to a specific bid. Bids shall be opened in public in one place preferably immediately, but no later than one hour, after the deadline for submission of bids. Evaluation of bids shall be made in strict adherence to the criteria disclosed in the bidding documents, in a format, and within the specified period, agreed with the Association. Bids shall not be rejected merely on the basis of a comparison with an official estimate without the prior concurrence of the Association. Split award or lottery in award of contracts shall not be carried out. When two (2) or more bidders quote the same price, an investigation shall be made to determine any evidence of collusion, following which: (i) if collusion is determined, the parties involved shall be disqualified and the award shall then be made to the next lowest evaluated and qualified bidder; and (ii) if no evidence of collusion can be confirmed, then fresh bids shall be invited after receiving the concurrence of the Association; Contracts shall be awarded to the lowest evaluated bidders within the initial period of bid validity so that extensions are not necessary. Extension of bid validity may be sought only under exceptional circumstances. 61

68 (m) Extension of bid validity shall not be allowed without the prior concurrence of the Association (i) for the first request for extension if it is longer than eight (4) weeks; and (ii) for all subsequent requests for extensions irrespective of the period. (n) Negotiations shall not be allowed with the lowest evaluated or any other bidders. (0) Re-bidding shall not be carried out without the Association s prior concurrence; and (p) All contractors or suppliers shall provide performance security as indicated in the contract documents. A contractor s or a supplier s performance security shall apply to a specific contract under which it was furnished. 62

69 ANNEX 6: IMPLEMENTATION AND MONITORING ARRANGEMENTS 1. The Project's design supports a flexible sector-wide approach, providing funding for priority programs and functions of the Ministry on a need basis. The content of the components may be revised if annual reviews reveal shifting needs and changes in donor support. GOA will be able to use Bank funding for the underfunded parts of its priority programs. Supervision and implementation support provided by the Bank will be carried out in close coordination with other Development Partners such as EC, USAID and JICA which all support BPHS. 2. The project will be implemented by the regular structures of MOPH at central and provincial level. 3. For the last five years, the Ministry has functioned with the support of TA, part of which works under the authority of line directors. TA is also forming a GCMU, which works under the guidance of the Deputy Minister for Policy and Planning. Based on the satisfactory track record of the GCMU under the previous health project, the SHARP project's implementation will be supported by this Unit. The GCMU is composed of a competent team of contracted staff with public health, financial management and procurement skills. It is responsible for: (a) procurement of services financed by core budget of the MOPH, WB, EC, USAID, and many other development partners; (b) contract management; (c) providing technical support to various line departments in MOPH; (d) coordination of donors; (e) providing technical assistance to different coordination for the sector such as the Consultative Group for Health and Nutrition (CGHN), National Technical Coordination Committee (NTCC), etc. 4. The GCMU will manage procurement of all technical assistance under the Project. The main contracts under the various components of the project are: (a) consultancy services for provision of BPHS in the selected provinces through a competitive selection process of the NGO and non state firms; (b) services to monitor and evaluate the performance of the Ministry and NGO in the delivery of BPHS; (c) analytical work re. EPHS. 5. GCMU will be equally responsible for the management of procurement of goods under the project, the requirements for which will be provided by the line directors of the various departments. This will include pharmaceuticals, medical supplies, medical equipment, IT and office equipment and transport. 6. The GCMU will also be responsible for program coordination, management and provision of technical assistance to implementing partners in order to make sure that programs are implemented in accordance with GOA and donor requirements. It will organize annual reviews of the program. 7. Similar to the previous health project, SHARP will finance the provision of BPHS in the three provinces of Parwan, Kapisa and Panjshir and three districts of Kabul city through MOPH- SM. Technical assistance will be provided to both central MOPH and the Provincial Health Officer(s) (PHOs) to smoothly carry out the project. 8. The GCMU will monitor the implementation of all contracted services and technical assistance As for the previous health project, the GCMU will supervise the performance of PPA and MOPH-SM through regular supervision and the analysis of data collected by an M&E firm. 63

70 GCMU will further ensure that contractors and suppliers are paid on time, and that transfer of resources to the PHOs takes place efficiently and in a timely manner. It will prepare the withdrawal applications to be sent to the Bank. A. Responsibility for Implementation and Supervision Project activities PPA (BPHS, EPHS) MOPH Strengthening mechanism (BPHS, EPHS) Implementers Primary Supervisor Secondary Supervisor NGO MOPH-GCMU and 3rd party Provincial Health Directors Evaluation fm Provincial offices SM Coordinator through Auditing fm and of MOPH (PHO) Director General Health 3rd party Services Evaluation fm Training of CHW, CHCs, community mid-wives and community nurses Strengthening stewardship functions Household and Health facility Surveys I evaluationfm I Departments NGO and GCMU and the MOPH- 31d party evaluation MOPH-SM Human Resource fm department Individual MOPH- GCMU consultants 31d party MOPH- M&E and HMIS RBF I NGO MOPH-GCMU and 3rdParty I Provincial Health Directors I Evaluation firm Monitoring and evaluation arrangements are further detailed in Annex 2. 64

71 ANNEX 7: PROJECT PREPARATION AND APPRAISAL TEAM MEMBERS No I Name Designation M. Arif Rasuli Senior Environment Specialist SASDI Asila Wardak Jamal Consultant (Social Development Specialist) SASDI Asta Olesen Senior Social Development Specialist SASDI Sheila Braka Musiime Senior Counsel LEGES 65

72 ANNEX 8: ENVIRONMENTAL AND SOCIAL SAFEGUARDS FRAMEWORK A. Background 1. Afghanistan s health system has been poorly functioning for most of the past decades. As a result of prolonged civil war, limited availability of services in rural areas, lack of clear objectives, shortage o f staff, especially female, in rural areas, and absence o f explicitly articulated national priorities, the coverage o f preventive and curative health services has been among the lowest worldwide. A multiple indicator cluster survey (MICS) carried out in 2003 found skilled birth attendance and prenatal care coverage of 5% and vaccination coverage (DTP3) of 19.5%. IMR in 2001 was estimated at 165 per 1,000 live births and under-5 mortality rate (U5MR) was 257 per 1,000 live births. The situation was particularly dire in rural communities where, for example in rural Badakshan, the maternal mortality ratio (MMR) (6,507 per 100,000 live births) was nearly ten times higher than the average for low income countries. Afghanistan s high fertility rate contributes to this. 2. The provision of basic health care services needs to be further strengthened. Over the past five years, donors have been supporting the Basic Package o f Health Services (BPHS) throughout the country, which is a critical element of Governments Health and Nutrition Strategy. Progress so far is encouraging, but much remains to be done, e.g., more than 60% of the population live more than one hour from a health facility. Vaccination coverage is still very low by international standards (35% vs. 65% average for low income countries). Increasing access to contraceptives will reduce MMR, improve women s lives and the health of their children. It will ultimately also reduce the dependency ratio which often has been a prerequisite for sustained economic growth. 3. Progress in environmental management has been made in the health sector over the past few years, but there are still important gaps. The MOPH had issued sound health care waste management policies which were informed by the environmental assessment carried out in Data have been regularly collected at primary health care level through annual facility surveys conducted over the past four years: the results show encouraging improvement in waste management. However, the implementation of these policies has not been appropriately tracked at all levels, especially in public hospitals. The country still lacks a sound biomedical waste management system. There is not yet any legislation or regulation in place. The MOPH lacks the handling and disposal methods, facilities and trained staff, without which proper health care waste management will not be possible. The World Health Organization is helping MOPH to assess health care waste management issues and to strengthen the current management system. B. Purpose of the Environmental and Social Management Framework (ESMF) 4. Management capacity for social and environmental issues in Afghanistan is very constrained. Therefore, the Bank uses a framework approach to checkhcreen programs it supports to avoid potential adverse impacts. The ESMF has been developed specifically for operations as the one proposed to ensure due diligence, avoid causing harm or exacerbating social tensions, and to ensure consistent treatment o f social and environmental issues by the Government. 5. Consistent with existing national legislation, the objective of the Framework is to help ensure that activities under Bank-supported projects will: 66

73 0 Protect human health; 0 Prevent or compensate any loss of livelihood; 0 Prevent environmental degradation as a result of either individual subprojects or their cumulative effects; 0 Minimize impacts on cultural property; 0 Enhance positive environmental and social outcomes, and 0 Ensure compliance with the national and World Bank safeguards policies 6. Recognizing the emergency nature of the proposed operation, and the related need for providing assistance, the ESMF provides general policies, guidelines, codes of practice and procedures to be integrated into the implementation of the proposed operation for providing assistance, while at the same time ensuring due diligence in managing potential environmental and social risks. This Framework is based on the following principles: 0 The proposed operation will comprise several sub-projects, the detailed designs of which may not be known at appraisal. To ensure the effective application of the World Bank's safeguard policies, the Framework provides guidance on the approach to be taken during implementation for the selection and design of sub-projects, and the planning of mitigation measures; 0 The proposed operation will be in line with the National Environmental Act passed by the both the Cabinet and the Afghan Parliament and proposed by NEPA. 0 All proposed sub-projects will be screened to ensure that the environmental and social risks can be adequately addressed through the application of standardized guidelines; 0 The proposed operation will finance feasibility or pre-feasibility studies for subsequent investments, which will include environmental and social impact assessments, as required by World Bank safeguard policies; 0 Project design and sub-project selection will aim to maintain regional balance, and equity between genders, and ethnic and religious groups, considering variations in population density, and security considerations. Employment opportunities within the projects will be available on an equal basis to all, on the basis of professional competence, irrespective of gender, or ethnic or religious group. In all projects which require consultations with local communities or beneficiaries, consultations will be conducted to elicit the views of both the male and the female population, even if requiring gender segregated consultations; and 0 Consultation and disclosure requirements will be simplified to meet the special needs of this project. to approval by the World Bank Board, this Environmental and Social Management Framework will be disclosed in Afghanistan in Dari and Pashto, and in the World Bank Infoshop. C. Responsibilities for Safeguards/ESMF Implementation and Mitigation 7. The overall responsibility of project implementation rests with the MOPH. A designated safeguards focal officer will be identified with responsibility for overseeing the proper application of the ESMF and Management Plan within the GCMU at the MOPH. The MOPH focal point will be responsible for coordinating and monitoring the joint efforts of all relevant stakeholders during operations and make sure that the work is in accordance with the provisions of the social and environmental management framework. The officer will report any gaps, constraints in the implementation of the ESMF to the MOPH Management. 67

74 D. Safeguard Screening 8. There is no construction work funded under this project. Subprojects will be screened at the start and during implementation to ensure that the implementing agencies understand the requirements of the ESMF and waste management. This will also be reflected in the bidding and contractual documents of the subprojects and the implementing partners. E. Consultation and Disclosure 9. The ESMF will be disclosed by the Islamic Republic of Afghanistan in Dari, Pashto and English. It will also be made available at the World Bank s Infoshop. It is worth noting that GOA intends to make all project documentation publicly available to the relevant stakeholders and through the Afghan Information Management System (AIMS). F. Project Description 10. The proposed project will support the HNSS objectives and will contribute to improving the health and nutritional status of the people of Afghanistan, with a greater focus on women and children and under-served areas of the country. 11. The project design incorporates lessons from previous Bank-assisted projects. A number of important lessons have been learned from the Bank s engagement in the health sector in Afghanistan, including: (a) the BPHS contributes to improving health outcomes and is strongly pro-poor; (b) contracting with NGO for delivery of services is a successful approach partly due to the NGO s flexibility, creativity and responsiveness to identified problems; (c) investing heavily in monitoring and evaluation (M&E) is critical to identifying and solving problems, tracking changes in a rapidly evolving health system, and providing the evidence needed for rational policy formulation; (d) testing innovations on a reasonable scale and evaluating them carefully is an effective way of moving the health sector forward; (e) providing local consultants to the MOPH that are competitively recruited and paid market salaries is central to the Ministry being able to effectively carry out its stewardship function; and (f) there are a number of activities the MOPH and its NGO partners have implemented that will have a greater impact if expanded, including the establishment of sub-centers (simple facilities serving 3,000 to 7,000 people) and the training of community midwives. 12. The Bank will follow the government s programmatic approach for the health sector by providing flexible financing for interventions not financed by GOA or other partners. Within this approach, the Bank will focus on the following areas: 13. Component 1. Sustaining and Strengthening BPHS Delivery: The project will support the implementation of the BPHS through Performance Partnership Agreements (PPA), i.e., contracts between the MOPH and the implementing NGO. It will also support the government s own efforts at delivering the BPHS through contracting in management services in the provinces GOA selects. There will be support for expansion of sub-centers, training of additional community mid-wives and of community nurses. 14. Component 2. Strengthening EPHS Delivery; despite MOPH increased interest on EPHS, there is little evidence of which hospital model may be best for Afghanistan. For this reason, in the initial phase the program will provide technical assistance to support evaluation of EPHS delivery implemented so far. The program will also support the formulation of hospital policy, as well as the monitoring and evaluation of hospital performance. 68

75 15. Component 3. Strengthening MOPH Stewardship Functions: This component will support: (a) the monitoring and evaluation system (through contracting of an independent agency); (b) the Grant and Contract Management Unit and related line managers; and (c) the provincial health offices. 16. Component 4. Testing Important Innovations: The project will pilot-test supply side interventions (e.g. pay for performance for health workers) on a large scale results- based financing study. The study is financed by a Norwegian grant that the MOPH recently obtained through a competitive process. G. Potential Impact and Risks of Various Components and Mitigation of Risk 17. There will be no physical works funded by this project and hence no acquisition of land, so OP 4.12 is not triggered and neither is OP. 4.20, as there are no communities classified as Indigenous Peoples in Afghanistan. Overall the project which focuses on providing services for the rural poor, especially women and children is expected to have significant positive social impacts and no negative impact. 18. Activities under the project should not entail significant negative environmental impact either, provided they are designed and implemented as planned. The project classified as a category B project for environmental issues (OPBP Environmental Assessment is triggered). The present Framework is adopted as a mean of ensuring due diligence in managing potential environmental and social risks in the different sub-projects. Proper management of health care waste is critical in efforts to control health risks associated with exposure to this waste. The MOPH has been requested to prepare a comprehensive bio-medical waste management plan in the first 4-6 months after project effectiveness. 19. The key issues and risk mitigation measures from the environmental point of view are the following: Waste can constitute a danger for the environment and its inhabitants even at far distance. The main danger is contamination of underground water reservoirs, fountains and wells and the land itself. This may constitute a direct hazard for humans and animals in case insects and rodents have access to those areas. Such animals are well known vectors for various infectious diseases. The risk mitigation measures consist of implementing proper waste management procedures (collecting in closed containers and disposing in environmentally safe land fills or if it is not available at least in safe dumps). Healthcare waste is of concern to human health and the environment. While a large fraction of healthcare waste is similar to household waste, the rest may contain microorganisms potentially harmful to hospital patients, their visitors, health care employees, and the general public. In addition, used needles, syringes and other sharps present risks of injury and infection (such as Hepatitis B and C, and HIV) for health care employees. National guidelines for safe handling of sharp and waste disposal should exist and should be enacted. MOPH will createhtrengthen and implement regulations on safe handling, disposal, transportation and destruction of hazardous waste. Proper training will be delivered to the healthcare personnel and adequate procedures will be enforced. Public awareness training will be provided and the implementation of procedures will be monitored. Where necessary appropriate mechanisms for safe disposal of health care waste (based on WHO guidelines) will be provided under the Project. 69

76 Environmental Waste Management Plan Sharps: Needles Scissors Razors Broken glass, etc. Pathological waste: Body tissue Fetuses Body fluids, etc. Potentially infectious waste: Dressings Containers with blood products Waste management method Segregation into puncture-resistant containers. Deep burial. Deep burial. Deposit into colorcoded bag. Deep burial. Use training provided to vaccinators as the basis for staff handling this type of waste. Teach staff to dispose of this material immediately and properly. Make staff more aware of the dangers of this kind of waste and how to store these materials Remarks Currently, only limited segregation of needles and syringes used in immunization is carried out. Will need designs for deep burial pit covers that allow waste to be dumped in easily. Little experience with segregating and proper disposal of these materials. PVC tubing Culture dishes Test tubes Vials, etc. 20. The environmental management plan (EMP) has been prepared in order to integrate the possible environmental issues in the design and implementation of the project. The EMP will be revised to include: follow-up procedures in the operational processes of MOPH, local health authorities and the Epidemiological Surveillance and Prevention network; follow-up responsibility for the designated staff in the MOPH structure; training of staff from health care centers in the use of equipment for handling the health care waste; and site specific environmental and epidemiological clearance for construction works. The project supported activities for renovation / construction of health care centers in primary health care will be subjected to a site-specific environmental screening and review process aimed at minimizing impact and using a an appraisal format that includes but is not limited to the review of current environmental issues at sites (soil erosion, water contamination, air pollution) carried out by local health and environmental authorities, and potential environmental impacts, if any, due to project activities (contamination by infectious wastes and etc.). The project is expected not to support any construction. 21. The EMP will support the handling of medical and non-medical waste. Regulation regarding medical waste management will be strengthened with regard to collection, wrapping, temporary storing, transportation and disposal of medical waste. 70

77 22. The segregation of waste shall be mandatory in all medical units (big, medium and small) and the monitoring procedures should be developed. The waste generated in clinics and hospitals is to be categorized as follows for management purposes: 0 0 non-dangerous waste (waste assimilated to domestic waste) and dangerous waste The dangerous waste is classified as follows: o o o o anatomical-pathological waste - this includes any human tissue; infectious waste - this includes all waste which may contain pathogens such as used syringes, needles, scalpel blades, razor blades, gloves, and linens; Sharps - this includes hypodermic needles and syringes, scalpel blades, razor blades etc; and chemical and pharmaceutical waste - such as expired vaccines, drugs, laboratory reagents. 23. Waste generated in the clinics and hospitals shall be segregated as follows: Dangerous waste (infectious waste, sharps, chemical and pharmaceutical waste) - Yellow bags; Sharps - Special puncture-resistant containers; and Non-dangerous waste - Black bags. A special logo indicating Biological danger shall be used for infectious waste. For chemical and pharmaceutical waste MOPH a special logo meaning Toxic or Flammable shall be used. The sharps will be collected in special puncture-resistant containers. Infectious waste will be treated by steam sterilization, incineration, microwave or ultraviolet heating systems, ionizing radiation or chemical treatment. The choice of technique depends on the category of infectious waste. After treatment, infectious waste may be mixed with and disposed of as ordinary solid waste, provided the waste does not pose other hazards that are subject to national regulations. 24. The non-dangerous waste shall be treated as domestic waste, which includes plastics, aluminum cans, cardboard packaging etc, and domestic organic waste, such as food waste and garden refuse. All dangerous waste generated in clinics shall be removed by specialist contractors for proper disposal. It is necessary to provide fully equipped lockable waste disposal storage in clinics for full control of the medical waste awaiting off-site transportation. A universal biological hazard symbol is posted on the door of the store. 25. In accordance with the HNSS, SHARP primarily targets women and children and aims at reaching the poor by increasing access and utilization of health services in rural areas. The use of NGOs for service delivery shall ensure closeness to the people in need and responsiveness to their demands. SHARP plans to involve communities for the selection of CMW and CNs, so that trained health personnel can remain and provide services in the communities of origin. Communities, and particularly health Shuras, will help in addressing concerns/conflicts over community norms regarding sensitive health issues and practices. Community-based monitoring will also be encouraged through the involvement of community development councils to channel grievances to DHOs. Overall the project, which focuses on providing services for the rural poor and especially women and children is expected to have significant positive social impact. 71

78 H. Monitoring and Evaluation 26. The MOPH will work in close collaboration with the Epidemiological Surveillance staff and its network for the coordination and supervision of the environmental plans and risk mitigation measures undertaken in the project and will: coordinate training for health staff and contractors; disseminate existing environmental management guidelines and when necessary develop new ones in line with best international practices; ensure contracting for construction and supply of equipment includes reference to the appropriate guidelines; conduct periodic visits to inspect and improve measures and monitor compliance. 27. SHARP will closely monitor progress on social aspects and particularly on mother and child s health indicators, including breastfeeding practices, immunization coverage, antenatal care coverage, etc. SHARP will also track progress on BPHS utilization by the lowest income quintile. It will also make use of balanced scorecards to check progress on equity both at hospital and primary care levels. 72

79 ANNEX 9: STATEMENT OF LOANS AND CREDITS Emerg Transport Rehab - Add PO78284 F~ 7/15/05 6/30/ Sustamable Dev of Nat p Resources 9/20/06 7/31/ Emergency Power p083g08 Rehabittation 7/27/04 9/30/ Emerg Communications p Development 12/ /30! Oveinl Result Tohl 1,1411.ti IS.1 73