FOR OFFICIAL USE ONLY

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1 Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Report No: MG Public Disclosure Authorized PROJECT PAPER ON A Public Disclosure Authorized PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR 3.9 MILLION (US$6 MILLION EQUIVALENT) TO THE REPUBLIC OF MADAGASCAR FOR A SECOND MULTISECTORAL STI/HIV/AIDS PREVENTION PROJECT Public Disclosure Authorized MAY 17, 2012 Africa Health Nutrition and Population (AFTHE) Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank s policy on Access to Information.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2012) Currency Unit = Malagasy Ariary (MGA) Malagasy Ariary 2, = US$1 US$1 = SDR FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AF AFD AIDS ARV BCC CAS CBO CLLS CMU CNLS CRESAN DHS DO ES EU FM FMA GFATM GoM HIV IBRD IC IDA IFR IHP+ IMCI IP ISDS Additional Financing Agence Française de Développement Acquired Immuno Deficiency Syndrome Anti-retroviral drugs Behavior Change Communication Country Assistance Strategy Community-based Organization Local Committee to Fight Against AIDS Country Management Unit National Committee to Fight Against AIDS The Health Project Demographic and Health Survey Development Objective Executive Secretariat (National AIDS Secretariat) European Union Financial Management Financial Management Agency Global Fund to Fight AIDS, TB and Malaria Government of Madagascar Human Immunodeficiency Virus International Bank of Reconstruction and Development Individual counseling International Development Association Interim Financial Reports International Health Partnership Integrated Management of Childhood Diseases Implementation Progress Integrated Safeguards Data Sheet

3 ISN JHSSP M&E MCH MDG MICS MoH MSPP II MTEF MTR MWMP MS MU NGO NHA OF ONN OP/BP OPCS ORAF PAD PDO PHRD PIU PIM PLLS PLWHA PMPS II PNLS PNNC RBF RF SALAMA SDR SE SHSDP STI Interim Strategy Note Joint Health Sector Support Project Monitoring and Evaluation Mother and Child Health Millennium Development Goals Multiple Indicator Cluster Survey Ministry of Health Second Multisectoral STI/HIV/AIDS Prevention Project Medium-term Expenditure Framework Mid-term Review Medical Waste Management Plan Moderately Satisfactory Moderately Unsatisfactory Non-governmental Organizations National Health Account Facilitation Organism National Nutrition Office Operation Policy/Bank Policy Operations Policy and Country Services Operational Risk Assessment Framework Project Appraisal Document Project Development Objective Policy and Human Resources Development Fund Project Implementation Unit Project Implementation Manual Provincial Committee to Fight Against AIDS People Living with HIV/AIDS Second Multisectoral STI/HIV/AIDS Prevention Project National Program to Fight Against HIV/AIDS National Community-based Nutrition Program Results-based Financing Results Framework National Drug Procurement Agency for Standard Drugs and Medical Supplies Special Drawing Rights Executive Secretariat The Sustainable Health Sector Development Project Sexually Transmitted Infections

4 SW TORs UNAIDS UNICEF US$ VP WDR WHO Sex Workers Terms of Reference United Nations Aids Organization United Nations Children s Fund United States Dollars Vice President World Development Report World Health Organization Vice President: Country Director: Sector Director: Acting Sector Manager: Task Team Leader: Makhtar Diop Haleh Z. Bridi Ritva S. Reinikka Jean-Jacques de St. Antoine Jumana Qamruddin

5 REPUBLIC OF MADAGASCAR SECOND MULTISECTORAL STI/HIV/AIDS PREVENTION PROJECT TABLE OF CONTENTS Data Sheet... i Introduction... 1 Background and Rationale for Seeking Additional Financing... 1 Proposed Changes... 9 Appraisal Summary Annex 1: Revised Results Framework and Monitoring Annex 2: Operational Risk Assessment Framework (ORAF) Annex 3: Detailed Description of Modified Project Activities Annex 4: Revised Implementation Arrangements and Support Annex 5: Procurement Plan Annex 6: Target Regions, Catchment Populations, and Key Indicators MAP... 53

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7 MADAGASCAR SECOND MULTISECTORAL STI/HIV/AIDS PREVENTION PROJECT ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Country Director: Haleh Z. Bridi Acting Sector Manager/Director: Jean J. de St. Antoine/ Ritva Reinikka Team Leader: Jumana Qamruddin Project ID: Expected Effectiveness Date: Aug 31, 2012 Lending Instrument: Specific Investment Lending Additional Financing Type: Scale-up and Restructuring Basic Information - Original Project Project ID: P Project Name: Second Multisectoral STI/HIV/AIDS Prevention Project Lending Instrument: Specific Investment Loan Joint IFC: n/a Joint Level: n/a AF Project Financing Data Sectors: Health Themes: Population and Reproductive Health (25%); Nutrition and Food Security (25%); HIV/AIDS (25%); Child Health (25%) Environmental category: B, Partial Assessment Expected Closing Date: Sept 30, 2014 Joint IFC: n/a Joint Level: n/a Environmental category: B, Partial Assessment Expected Closing Date: Dec 31, 2012 [ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: Standard IDA Terms, 40 years maturity including a grace period of 10 years. AF Financing Plan (US$m) Source Total Project Cost: Total Bank Financing: IDA Recommitted Total Amount (US$m) i

8 Client Information Recipient: Republic of Madagascar Présidence de la République Comité National de Lutte contre le VIH/SIDA Nouvel Immeuble ARO Ampefilola, Porte B - 2ème Etage Antananarivo Madagascar Tel: Fax: n/a Secrétariat Exécutif du CNLS : secnls@moov.mg Responsible Agency: Contact Person: Dr. RAKOTOMALALA Rémi - Coordonnateur National - Tél:(261) Unité de Gestion des Projets d'appui au secteur Santé Immeuble Lot III M 39 Bloc 2, Anosy - Boîte Postale 8555 Antananarivo Madagascar Tel: / Fax: / cnugp@ugpsante.mg AF Estimated Disbursements (Bank FY/US$m) FY Annual Cumulative ii

9 Project Development Objective and Description Original project development objective: to support the Government of Madagascar s efforts to promote a multisectoral response to the HIV/AIDS crisis and to contain the spread of HIV/AIDS on its territory. The revised project development objective to increase utilization of STI/HIV/AIDS, maternal and child health and nutrition services in the project area. The proposed AF will support the implementation of activities that intensify the Project s impact and equity focus by reaching a number of vulnerable and at-risk groups in the context of a limited budget envelope. Specifically, the AF will finance the following activities: Component 2: Health, Nutrition, and HIV/AIDS Services (US$5.18 million). This component will continue to finance HIV and STI-related interventions inclusive of goods and technical assistance, focusing on testing, treatment and Behavior Change and Communication (BCC) for at-risk populations (sex workers, military and youth). In addition, the AF will finance the delivery of goods and technical assistance to health service providers to strengthen their capacity for the provision of mother and child health services and nutrition services to the population. Delivery of these key MCH services will maximize impact in the context of constrained resources, as they are carefully selected on the basis of cost-effectiveness, with the greatest impact on health outcomes. The Project will also support nutrition interventions at the community level, namely through support to the operational costs of community nutrition sites in selected districts and to the associated local NGOs that play a monitoring and supervision role. Support to the delivery of health and nutrition services will expand the types of services that will be provided through contracted NGOs. In addition, a pilot-based scheme for performance-based incentive payments to health facility teams and community health workers will be introduced. Some of the resources under the AF will support the development of the technical design of the model within the first six months after effectiveness, to be implemented in a selected number of intervention districts. An NGO will be recruited to provide implementation support to health centers and communities for this scheme. Component 4: Monitoring and Evaluation (US$0.42 million): This component will continue to fund activities based on the following objectives: (i) ensure that the national M&E system is operational; (ii) develop a functional monitoring system to measure and manage the performance of MSPP II; and (iii) track progress of project performance to ensure that the intended results of the Project are met. Component 5: Project Management and Capacity Building (US$0.40 million): This component will continue to provide support for technical supervision by the PIU and relevant functions within the MoH related to project activities, including SE and the National HIV/AIDS Council. iii

10 Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP7.50) Projects in Disputed Areas (OP/BP 7.60) Does the project require any waivers of Bank policies? Have these been endorsed or approved by Bank management? [X] Yes [ ] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [ ] Yes [X] No [X] Yes [ ] No [X] Yes [ ] No Conditions and Legal Covenants: Financing Agreement Reference Description of Date Due Condition/Covenant Section 4.01(a) of the FA Amended the PIM Effectiveness Section 4.01(b) of the FA Revision of the composition Effectiveness of the Conseil du PMPS to include a representative of the nutrition sector. Section I.A.3 of Schedule 2 to the FA Recruitment of consultant for Effectiveness + 3 months the design of the PBF pilot under Part 1(b)(i) of the Project Section I.B.2 of Schedule 2 to the FA Proposed annual work Effectiveness + 30 days program and budget for the period between effectiveness and December 31, 2013 submitted to the Association for review and approval. Section I.B.4 of Schedule 2 to the FA Recruitment of independent Effectiveness + 2 months agency for data collection and monitoring indicators for the Project Section I.B.5 of Schedule 2 to the FA Compliance with the schedule of repayment of the ineligible On-going according to plan expenditures incurred under the original financing Section II.B.4 of Schedule 2 to the FA Recruitment of independent auditors Effectiveness + 2 months iv

11 Section IV.B.1(b) of Schedule 2 to the FA IDA s agreement on the pilot designed for the PBF and adoption of a revised PIM to reflect provisions for the implementation of the PBF pilot. Disbursement of the funds allocated to the PBF financing v

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13 INTRODUCTION 1. This Project Paper seeks the approval of the Executive Directors to provide an additional credit in the amount of SDR 3.9 million (US$6 million equivalent) to the Republic of Madagascar for the Second Multisectoral STI/HIV/AIDS Prevention Project (Original Financing: P090615, Cr MAG). 2. The Additional Financing (AF) Instrument complies with OP (Additional Financing for Investment Lending) and will finance modified Project activities included as part of the restructuring of the Project that cannot be financed from the proceeds of the original financing and activities that scale up the Project s impact and development effectiveness. The proposed AF will expand the scope of the Project to deliver a low-cost, high-impact package of health, nutrition and HIV/AIDS interventions to vulnerable groups, including pregnant women and children under five, as well as to the most-at-risk 1 populations for HIV/AIDS, thus helping to mitigate some of the negative impacts of the country s current political crisis on the wellbeing of the population. Moreover, the Project will develop and introduce a results-based financing (RBF) pilot to improve the quality of health and nutrition services. The AF will also continue to strengthen Monitoring and Evaluation (M&E) by reinforcing existing verification and accountability mechanisms in response to the overall governance issues in the country. 3. In order to reflect the expanded focus of the Project under the AF, the Project Development Objective (PDO) and the related PDO indicators have been revised. Changes have also been made to the project component descriptions, especially to include the new project activities on maternal and child health, and nutrition. 4. The proposed closing date of the AF is September 30, This will provide adequate time for implementation of the activities and falls within the three-year maximum timeframe allowed from the closing date of the original financing, which is December 31, BACKGROUND AND RATIONALE FOR SEEKING ADDITIONAL FINANCING (i) Country& Sector Context 5. Over the past 15 years, the World Bank has developed a progressively stronger engagement with the health and nutrition sectors in Madagascar and is a leader in this sectors dialogue. Prior to the crisis, the Bank supported the Government in starting the transition in the health sector to a pooled financing and sector-wide approach culminating the signature of the International Health Partnership (IHP+) Compact between the Government and twenty-two 1 Targeted groups defined as youth aged (by gender), military and sex workers in project areas. 1

14 development partners. The Bank also supported a number of high-quality sector analyses 2 illustrating sector trends in Madagascar and gains achieved in health outcomes. 6. In January 2009, political tensions erupted in Madagascar and led to a military-backed transfer of power and to the establishment of an interim de facto government. On March 17, 2009, disbursements under the Madagascar portfolio were put on hold in accordance with OP/BP 7.30, Dealing with De Facto Governments. In November 2009, disbursements for certain key projects in Madagascar were exceptionally allowed to resume on humanitarian grounds, including three components under the Second Multisectoral STI/HIV/AIDS Prevention Project (MSPP II). These were: Component 2: Strengthening Health Sector Response; Component 4: M&E; and Component 5: Program Management. 7. The negotiated Joint Health Sector Support Project (JHSSP) in the amount of US$63 million slated for approval in January 2009 was pulled from the Board as a result of the political crisis. The JHSSP was a pooled financing effort with Agence Française de Développement (AFD), which has provided interim funding to Madagascar to move forward on key activities as a stop-gap measure until the Bank is able to provide new financing. 8. The Bank has also supported nutrition activities for more than a decade through a series of nutrition projects focused on community-based growth monitoring and behavior change activities, which are flagship for the region. This support has benefitted from a nationally representative multi-round impact evaluation series, which shows that the community nutrition model in Madagascar works. However, the Second Community Nutrition Project closed in July 2011 after 12 years of implementation. The Government had planned to assume the full cost of the Program after the Bank project closed; given the crisis, however, it is unable to take on these costs due to growing budgetary constraints. In response to significantly reduced funding from public resources, the National Nutrition Program has formally requested greater support for the sector through the preparation of a follow-up Bank-financed Project, which is to be the main source of complementary funding to the national program. (ii) Current Health, Nutrition, & HIV/AIDS Situation 9. While there has been significant progress in health over the past decade, Madagascar has lagged behind with respect to certain key health indicators, namely concerning pregnant women and children under five. Maternal mortality is estimated at 498 per 100,000 live births, 3 far from the Millennium Development Goal (MDG) of 149 per 100,000. This is partly attributable to inadequate access to skilled staff at delivery, the poor quality of antenatal care, a lack of emergency obstetric care services, a lack of adequate post-natal follow-up, and a persistently high unmet need for contraception. In addition, 27 percent of pregnant women are severely underweight and anemic. Child health outcomes had greatly improved prior to the crisis, showing a sharp decrease in child mortality. However, children under five continue to face a high morbidity risk due to poor nutrition status, with 50 percent of children in this age group 2 Setting Priorities in the Health Sector to be More Efficient, June 2010; Health, Nutrition and Population Outcomes in Madagascar , June Data in this paragraph from DHS 2008/2009 unless otherwise stated. 2

15 being stunted, severely underweight, and anemic. There is also an increased rate of acute malnutrition, which climbed from 4.7 percent in 2008 to 7.4 percent in 2011 in some areas While the prevalence of HIV/AIDS is low among the general population, at approximately 0.2 percent for adults aged 15 to 49 years 5, it is high among certain at-risk populations. The HIV prevalence rate among sex workers in 2010 was estimated at 12.9 percent. 6 In addition, rates of STIs are significant, 7 the prevalence of syphilis being particularly high among sex workers at 15.6 percent, pregnant women at 3.4 percent, 8 and the military at 16.7 percent Poverty levels increased by more than nine percentage points between 2005 and 2010, with 77 percent of households currently below the poverty line one of the highest rates in Africa. 10 While studies are underway to assess the full impact of the current political situation on health outcomes, program data from the Bank and partners suggest a rapidly declining situation, especially in poorer regions. This is mainly due to a drastic reduction in both external and internal financing of the health sector since the crisis, as well as increased fragmentation of resources and use of parallel systems for service delivery. For example, the commitment of external funding has decreased from 16.3 percent prior to the crisis in 2009 to 3.1 percent in In addition, the government budget for operational costs to health centers at the district level was reduced by approximately 30 percent in 2010 compared to the 2008 budget, thus resulting in the closure of approximately 10 percent of existing primary health care facilities. External consultations declined from 37.6 percent in 2008 to 30.3 percent in 2010, and antenatal care coverage decreased from 73.4 percent (2008) to percent (2010) as a result of the closure of health facilities and the lack of access to quality services, including access to basic technical equipment and trained human resources. (iii) Project Status 12. The Second Multisectoral STI/HIV/AIDS Prevention Project (MSPP II) is financed with a US$30 million equivalent credit (original financing), which was approved on June 13, The financing agreement for the original financing became effective on January 6, The closing date of the original financing account was December 31, 2009, but it was extended twice to the current closing date of December 31, The PDO for the original financing is to support the Government of Madagascar s efforts to promote a multisectoral response to the HIV/AIDS crisis and to contain the spread of HIV/AIDS on its territory. The Project aims to strengthen capacity to carry out the national response to HIV/AIDS and sexually transmitted infections (STIs), a key risk factor for and contributor to the spread of HIV/AIDS, and seeks to improve the quality of life of persons living with HIV/AIDS through increased access to quality 4 SMART UNICEF nutrition survey, March-April 2011 in Ampanihy, Betioky and Toliara II. 5 both sexes combined, UNAIDS estimate from 2010 Global HIV/AIDS report 6 Biological surveillance survey for syphilis and HIV infection, There is substantial biological evidence demonstrating that the presence of other STIs increases the likelihood of both transmitting and acquiring HIV. 8 Biological Surveillance Survey, Ministry of Defense Survey, World Development Indicators, 2011 and Madagascar ISN The project was initially extended by two years from the original closing date of December 31, 2009 to December 31, 2011, then extended again by one year to December 31, 2012, which is the current closing date. 3

16 medical care and non-medical support services. There is a strong focus on at-risk and vulnerable groups. 13. As of March 31, 2012, approximately SDR 17.6 million (US$27.6 million equivalent) has been disbursed, representing 87 percent of the credit. The Project is currently rated Satisfactory (S) on achievement of its PDO. The Development Objective (DO) rating for the Project was upgraded to Moderately Satisfactory (MS) from Moderately Unsatisfactory (MU) in July This does not comply with the requirement to maintain a 12-month consistent rating of Satisfactory or MS. Therefore, the team obtained an endorsement from Bank management on May 8, 2012, for a policy waiver to OP Additional Financing for Investment Lending. 12 The Project s failure to maintain a minimum rating of MS for 12 consecutive months is a direct result of the hold placed on all disbursements under the Madagascar portfolio in the wake of the political crisis, which erupted in January In accordance with the Bank s policy on dealings with de facto governments, project funds were frozen between March and November 2009, severely curtailing activities. It was decided at that time to downgrade progress toward the PDO, given the uncertainty of the situation. Since the April 2011 supervision mission 13 and spanning the recent ISRs 14, the DO rating of the Project has been gradually upgraded given the steady improvement in performance as reflected in progress on key indicators (e.g. improvements in knowledge and behavioral indicators). 14. The Government and the Bank teams have agreed on key actions to ensure that implementation stays on track and progress is sustained. These actions are closely monitored by the task team and updated as milestones are achieved. New milestones are added during every supervision mission and reflected in mission Aide-Memoires to ensure a commitment to the action plan being implemented in an acceptable and timely manner. Moreover, Implementation Progress (IP) has remained at MS or better throughout the majority of the project, indicating that the project has been implemented in a generally satisfactory manner despite a challenging country context. 15. Given disappointing progress in some of the major indicators due to the crisis and the subsequent hold on disbursements, contracts with NGOs 15 were put in place to accelerate progress and reach at-risk groups with critical interventions. 16 While an updated assessment of PDO outcome indicators is awaiting the results of the next combined Biological and Behavior Study scheduled to go into the field in December 2012, all of the intermediate indicators have already been achieved or are on track to being achieved. This significant progress on key intermediate indicators is a positive sign towards achieving the PDO. 12 The policy exception is with regard to OP 13.20, which states that the Bank provides additional financing only when it is satisfied that implementation of the project is satisfactory, which is measured against whether the parent project s ratings, including those for overall implementation progress (IP) and progress towards achievement of the project development objectives (PDOs), are rated Moderately Satisfactory (MS) or better for the last 12 months as per the Implementation Status and Results Report (ISR). 13 The archived ISR in the system, dated July 2011, reflects decisions agreed to with the Government during the April 2011 virtual supervision mission (please refer to April 2011 Aide Memoire). 14 July and November 2011 and April As indicated in the report of External Verification Agency and program data. Five NGOs were contracted. 16 At-risk groups include sex workers, military and youth aged

17 16. Safeguards continue to be rated Satisfactory based on adequate implementation of the medical waste management actions. Procurement and M&E are rated Satisfactory as well. 17. Ineligible expenditures under Component 3 of the original credit (Fund for STI/HIV/AIDS Prevention and Care-Taking Activities) have been addressed with a repayment plan acceptable to the Association under which payments are current 17. The ineligible expenditures were the result of an inadequate understanding of the difference between eligible and ineligible expenditures, as well as poor bookkeeping and accounting practices on the part of community-based organizations. In addition, there was poor supervision on the part of the Financial Management Agency (FMA), recruited to manage this Component. When these ineligible expenses were identified at the end of 2008, Component 3 was immediately suspended and appropriate mitigation measures were put in place to prevent future recurrences 18. In order to enable a one-year extension of the Project s closing date despite the outstanding ineligible expenditures, a policy exception was approved by the VP OPCS and the VP and Controller CTRLD on December 22, 2011 with respect to BP Annex A, Actions that the Bank Takes in Respect to Noncompliance with Financial Management Requirements. Until all payments have been made by the Government, Financial Management will continue to be rated MS. In all other areas of Financial Management, the Project has been rated Satisfactory. There are no outstanding audits. 18. In December 2011, 19 a Level 2 restructuring of the original Project was approved to enhance project effectiveness. 20 Specifically, the restructuring resulted in the following changes: (i) formally closing component 3 on STI/HIV/AIDS Prevention and Care-Taking, which had been suspended since 2008; (ii) increasing the health sector response through scaling-up Component 2 for delivery of services; (iii) revising the results framework, including strengthening linkages between project activities and intermediate and outcome indicators; and (iv) extending the closing date from December 31, 2011 to December 31, 2012, in order to consolidate achievements and measure the results and impact of project activities. (iv) Rationale for Bank Financing 19. In the current country context, the cost of inaction in the health and nutrition sectors is high and is already disproportionately affecting the poorest and most vulnerable quintiles of the population. Given the deteriorating situation and the long-term partnership and support to the country, the rationale for Bank engagement is strong. As noted in the Interim Strategy Note (ISN), Madagascar is at an increased risk of falling into a fragility trap of low growth, weak human capital, low capacity and poor governance, from which it would take substantial effort and time to emerge. The ISN proposes that the Bank intervene in a few areas in which it is 17 The Government has made three payments of reimbursement tranches totaling US$151,762 out of US$745,569 to be repaid. The outstanding ineligible expenditures are expected to be reimbursed before the current closing date of the original financing on December 31, 2012 as agreed under the repayment plan. 18 Eligible and ineligible expenditures were clarified in the PIM and the component was closed. For the Additional Financing, transaction-based disbursements will continue to be used which is considered the best method to indentify ineligible expenditures early on and address them. 19 Restated DCA was signed by the Government in February Decisions on the larger Madagascar portfolio restructuring and the preparation of the country s ISN took longer than expected. As a result, a Level 2 restructuring needed to be processed as a first step toward ensuring that the project had sufficient time to complete key activities and did not close before the AF became available. 5

18 demonstrated that the failure of Government and other partners to get involved is exacerbating the already fragile state of human capital. In this context, health and nutrition have been identified as priority sectors for the country s short-and long-term objectives. As indicated in the ISN, the proposed AF in the amount of US$6 million is being financed by resources that have been reallocated from existing funds that cannot be used by other operations as part of an extensive restructuring exercise of the Madagascar portfolio. 20. Building on the Bank s longstanding involvement in these sectors, the proposed AF will be instrumental in mitigating some of the negative impacts of the crisis on the population. To achieve this, the AF will increase the impact of the Project by providing focused support through the delivery of a low-cost, high-impact package of health, nutrition and STI/HIV/AIDS services directly to key target populations. The additional interventions that will be supported under the AF have proven successful in prior IDA-financed health and nutrition operations in Madagascar. The design of this AF has drawn on a strong analytic base, it builds on lessons learned from previous health and nutrition operations, and will use modes of service delivery that have proven effective (Box 1). 21. The proposed AF will also pilot RBF to improve the quantity and quality of basic services and to strengthen accountability. 21 Given the country s strong interest in using an RBF approach to improve health service delivery by addressing constraints in the system through motivating the existing human resource base, this AF is expected to play an important role in laying the preliminary groundwork on RBF in the health sector. It will also potentially leverage future additional resources 22 to complement new IDA lending operations in the medium term. In addition, the AF will allow for the implementation of key governance measures to improve health service delivery that have been lacking in the health system since the start of the crisis. Measures such as periodic audits on the supply chain system at facility level to ensure that drugs are getting down to primary health center level with minimum delays are critical interventions that will be implemented in project intervention areas, while the capacity built will benefit the system overall. 22. The proposed AF is the most viable option to continue providing IDA support to deliver urgent interventions in the health and nutrition sectors. In the short term, the operation serves as an entry point for delivering a cost-effective package of health, nutrition and HIV/AIDS services to mitigate the negative impacts of the country s current political crisis on the well-being of the most vulnerable and at-risk segments of the population. The AF also serves as a bridge to a new operation envisioned under the ISN for FY13 while protecting valuable and well established implementation and program management capacity in a partnership arrangement 23 with other key donors in the sector. Furthermore, the MSPP II allows the Bank to remain engaged in the sectoral policy dialogue as a lead donor during this critical time. 21 The original project supports a form of RBF in the context of performance-based contracting of the implementing NGOs; the AF will additionally develop a new pilot for incentive payments to health facilities and communities. 22 Through other existing funding mechanisms, such as the World Bank-administered Health Results Innovation Trust Fund 23 World Bank Project provides full support of the salaries and 70% of the operational budget of the Health PIU which now manages donor financing from other sources including Agence Française de Développement, The Global Fund, and the Government of Monaco. These partners contribute the remaining 30% in operational costs of the PIU. 6

19 23. The proposed AF will also leverage resources from AFD, which is currently funding regional- and district-level budgets in line with the activities envisioned under the JHSSP (planned as a pooled financing effort with AFD prior to the crisis). In addition, the Bank is working closely with the EU 24 to ensure that resources are complimentary with respect to geographic scope and interventions. Activities proposed under the AF will benefit from the wellfunctioning implementation and fiduciary mechanisms already in place. The recipient has sufficient capacity and a strong commitment to implementing the AF package, as evidenced by the significant improvement in progress toward the PDO and the satisfactory implementation of the original credit. 24. Additional Financing is the preferred mechanism. Alternative options to this additional financing arrangement were not possible because of the current country context and the nature of the Madagascar portfolio restructuring. The current political situation in Madagascar is not conducive to the use of other tools such as a new lending at this time. As previously discussed, the Madagascar portfolio is operating under OP 7.30 and the Madagascar portfolio restructuring aims to reallocate existing resources to operations that can support direct service delivery to the beneficiaries. 24 The EU has allocated approximately 30 million Euros to support the health sector at community levels through NGOs and will cover the regions where the Bank is not implementing this AF. Their funding will not be available until the end of the year; as such, the AF will be responding much sooner in delivering critical interventions. In addition, Madagascar is a recipient of financing from the Global Fund to Fight AIDS, TB, and Malaria (GFATM); due to the global financial crisis, however, the GFATM is facing a severe shortfall for current and future rounds of funding. This has significant implications for Madagascar, given that GFATM is the primary provider of commodities for those diseases. 7

20 Box 1: The MSPP II Additional Financing- Building on a Strong Analytical Base and Past Sector Operations The World Bank s support to the health sector has historically included a strong analytic base for developing the operational portfolio and guiding policies. The Bank has prioritized rigorous analyses as a central part of the policy dialogue through support and use of nationally representative surveys (e.g. Demographic Health Survey and facility level survey), impact evaluations, and other operational evaluations. Prior to the crisis, the World Bank had been supporting an evolution in the health sector in Madagascar; this led to a shift toward a pooled financing effort in the sector, which was derailed as a result of the crisis. Since 2009, the analytic work portfolio has expanded significantly to include the Country Status Report ( ) and the Joint Health Sector Policy Note (2010), the results of which are now used by all partners and the Government to inform sector policies and decisions. In addition, the analytic portfolio now includes the Health PHRD Grant, and the Results Based Financing (RBF) Knowledge and Learning Grant, which is providing support for key analyses that the RBF model will integrate in its design. During implementation, the AF will also benefit from two important surveys funded by the World Bank that are currently taking place: 1) the Multiple Indicator Cluster Survey (MICS), a joint effort with the United Children s Fund (UNICEF) which will provide current information on health, nutrition, and education status of the population; and 2) the 3rd round of the nationally representative health facility survey which will provide up-to-date information on the status of health facilities in the country. The design of the AF builds on this rich portfolio of analytic work. The financing will continue to support community-based nutrition interventions with a focus on children under three, provide a package of lowcost, high-impact mother and child interventions at the health center, exploit mobile technology to address health needs, and address the human resource constraints to service delivery at primary care and community levels by encouraging improved performance of health service providers through RBF mechanisms. Some of the key operations that the AF builds on include: The Sustainable Health Sector Development Project (SHSDP), a US$10 million credit (September December 2009) was the third in the series of World Bank sector support following Supplemental Credit for First and Second Health Project (CRESAN I and II) over a period of almost 10 years. SHSDP built on lessons learned and was a building block for the planned JHSSP, which was unable to go forward as a result of the crisis. The Project focused on addressing key system and institutional capacity issues, well as supported delivery of key health interventions and tested innovative solutions to address challenges that were disproportionately affecting the poor in rural and remote areas of the country. The Second Community Nutrition Project ( ), a US$47.6 million credit, focused on communitybased nutrition interventions to reduce malnutrition and benefitted from the lessons under the initial IDA-supported nutrition project (SECALINE ). The support of the Bank was critical in the institutionalization of nutrition priorities in Madagascar, which resulted in the creation of the National Office for Nutrition and the National Nutrition Council, as well as in the establishment of the Regional Nutrition Offices in 22 regions. In total, there are now 5,550 sites in the country covering the target population nationwide, resulting in just over 750,000 children less than three years of age enrolled in the community nutrition program. The results from the multi-round impact evaluation (1999, 2003, 2007, and 2011) have shown these sites to have a significant impact when it comes to improving nutrition outcomes for the target population. This nationally representative evaluation included one component that followed the same cohort of children from 1999 to 2011 and showed both the short-term achievements and long-term impact of these interventions on the general well-being and cognitive development of the children. The proposed AF will support the functioning of these community nutrition sites in targeted project areas. In addition, the AF will support the operationalization of a national nutrition surveillance system at lower levels of the health system, through the expanded use of mobile phones for the collection of data on health and nutrition interventions in the targeted regions. This model was piloted with very positive results. 8

21 PROPOSED CHANGES 25. PDO and PDO indicators: The PDO will be revised under the AF to read as follows: to increase utilization of STI/HIV/AIDS, maternal and child health and nutrition services in the project area. The Results Framework (RF) was revised during the restructuring of the Project. Some of the targets will be further revised to take into account the proposed closing date of the AF and new indicators will be introduced to reflect the expanded objective of utilization of maternal and child health and nutrition services (please refer to Annex 2 for the full revised RF). Table 1 below shows current and revised (proposed under the AF) project outcome indicators. Table 1: Revisions to the Results Framework For the Original Financing 25 (Current, Closing Date: December 31, 2012) Project Development Objectives Support GOM efforts to promote a multisectoral response to the HIV/AIDS crisis and to contain the spread of HIV/AIDS on its territory. PDO Indicators 1. Decrease in syphilis prevalence among sex workers (SW) (%) 2. Percentage of targeted groups who can cite three methods of HIV/AIDS prevention (%) 3. Percentage of men and women aged who report having sex with a non-regular partner in the last 12 months 4. Percentage of target population reporting the use of a condom in their last act of sexual intercourse with a non-regular sexual partner in the last 12 months (%) Proposed for the AF 26 (Expected Closing Date: September 30, 2014) Increase utilization of STI/ HIV/AIDS, and maternal and child health and nutrition services in project areas. New: Pregnant women tested positive and treated for syphilis during prenatal consultations in project areas (number) Percentage of targeted groups 27 who can cite three methods of HIV/AIDS prevention in project areas (%) 25 In this column empty cell denotes that indicator is not part of original financing under the Project. 26 In this column empty cell denotes the indicator not measured after December 31, Defined as youth aged (by gender), military, and sex workers in project areas 9

22 5. Percentage of SW reporting the use of a condom in their last act of sexual intercourse with a client (%) 6. Percentage of youth aged that have received an HIV test in the last 12 months and who know their results (by gender) 7. Percentage of SW that have received an HIV test in the last 12 months and who know their results 8. Direct Project Beneficiaries (number), of which female (%) Percentage of target 28 population reporting the use of a condom in their last act of sexual intercourse with a non-regular sexual partner in the last 12 months in project areas (%) New: Pregnant women receiving antenatal care during a visit to a health provider (number) New: Children 0-24 months obtaining monthly adequate minimum weight in project areas (number) New: Children immunized (number) 29 Changed to: Direct Project Beneficiaries (number), of which female (%): 1. For HIV interventions in project areas 2. For Health and nutrition interventions in project areas New: People with access to a basic package of health, nutrition, or population services (percent increase based on number of people) 26. Project Closing Date: The closing date of the AF phase will be September 30, 2014 to allow time for implementation of the activities, whose completion is expected to take approximately 24 months. This is a sufficient time period given that the AF resources will be 28 Defined as youth aged (by gender), military, and sex workers in project areas 29 Core indicator. In the project, this is defined as full immunization of children under 1 year of age (refer to RF Annex 2). 10

23 channeled through existing, well-functioning mechanisms to ensure efficient implementation and service delivery. As the current closing date for the original credit is December 31, 2012, the closing date of the AF phase is within the three-year limit. 27. Reallocation by Component: The original project components are: (1) Harmonization, donor coordination, and strategies; (2) Support for health sector response; (3) Fund for STI/HIV/AIDS Prevention and Care-Taking Activities (closed); (4) Monitoring and Evaluation; and (5) Project management and capacity building. Component 2 will be expanded to include delivery of health and nutrition interventions and will be renamed Health, Nutrition and HIV/AIDS Services. As a result of the recent restructuring, funds from the original Component 3 were reallocated to Components 2, 4 and 5. Some funds were also allocated to Component 1 to cover cost overruns of implemented activities. Table 2 presents the revised project costs by component, taking into account the proposed AF resources. The AF will mainly focus on Component 2 (Support to Health Sector Response), Component 4 (M&E), and Component 5 (Project Management and Capacity Building). Table 2: Revised Project Costs by Component with Additional Financing (in US$ millions) 30 Component Current Amount 31 Additional Financing Revised total Allocation 1 Harmonization, Donor Coordination and Strategies 2 Support to Health Sector Response Fund for STI/HIV/AIDS Prevention and Care Taking Activities 4 Monitoring and Evaluation Project Management and Capacity Building TOTAL Proposed AF Activities: The proposed AF will support the implementation of activities that intensify the Project s impact and equity focus by reaching a number of vulnerable and atrisk groups in the context of a limited budget envelope. Specifically, the AF will finance the following activities: Component 2: Health, Nutrition, and HIV/AIDS Services Continued financing of HIV and STI-related interventions inclusive of goods and technical assistance, focusing on testing, treatment and Behavior Change and Communication (BCC) for at-risk populations (sex workers, military and youth). In addition, the AF will finance the delivery of goods and technical assistance to health service providers to strengthen their capacity for the provision of mother and child health (MCH) services and nutrition services to the population. Delivery of these key MCH services will maximize impact in the context of constrained resources, as they are carefully selected on the basis of cost-effectiveness, with the greatest impact on health 30 Amounts are rounded to the nearest whole number 31 Amount as of Project restructuring 32 Difference in total US$ amount due to exchange rate fluctuation. 11

24 outcomes. The full package of interventions for maternal and child health and nutrition can be found in Annex 3. The Project will also support nutrition interventions at the community level, namely through support to the operational costs of community nutrition sites in selected districts and to the associated local NGOs that play a monitoring and supervision role. A detailed description of component activities is also presented in Annex 3. Support to the delivery of health and nutrition services will expand the types of services that will be provided through contracted NGOs. Design and implementation of a pilot for performance-based payments to health facility teams and community health workers in a few of the targeted districts. A key feature of the design will be a transfer of resources to health and nutrition service providers to deliver services on the basis of results. More specifically, based on carrying out a program of specific activities to deliver Packages of Health Services with a focus on maternal and child health, through the provision of quantity- and quality-adjusted outputbased grants. Some of the financing under the AF will fund an NGO consultant contract to support the implementation of the pilot, which will be carried out in a selected number of intervention districts to be identified during the pilot s design phase. 33 Support to the operations of the centers and associations engaged in the medical and psychosocial treatment of persons living with HIV/AIDS, through the financing of operating costs. Support to the implementation of the Medical Waste Management Plan. Component 4: Monitoring and Evaluation Provision of goods and technical assistance for the establishment of an information system to monitor Project activities and distribution of mobile phones to Health Service Providers and Nutrition Service Providers involved in the implementation of the Project. Carrying out: (i) independent verifications of the implementation of Project activities by the NGOs, Health Service Providers and Nutrition Service Providers, through independent entities; (ii) a second biological and behavioral surveillance study after completion of the Original Project; iii) periodic surveys to assess progress; and iv) a final evaluation of the activities included in the AF and the Original Credit and their performance. Component 5: Project Management and Capacity Building Provision of support to Project management and to capacity building of the entities involved in the management, supervision and implementation of the Project, at the central, regional, district and local levels. 29. Geographic scope and Target Population: Given the limited amount of resources, the geographic scope under the AF will be limited to have a greater impact on regions with high 33 The design phase of the project is expected to conclude by January 31,

25 poverty and low health outcomes, as determined by the 2011 poverty map and the latest Demographic and Health Survey (DHS) in 2008/09. Specifically, activities will primarily be focused in a subset of the poorest 26 districts in the regions of Androy, Atsimo Atsinanana, Vatovavy Fitovinany, Haute Matsiatra and Amoron i Mania. 34 Due to the nature of the interventions, the following selection criteria were used to ensure that there is sufficient implementation capacity for the additional interventions: i) availability of functioning health facility; and ii) functioning community nutrition sites referring up to the facility. The estimated direct beneficiaries represent about 20 percent of the total population in the intervention zones for the integrated services, out of which approximately half will benefit from only nutrition and health services, whereas the rest will receive an integrated package including health, nutrition and HIV/AIDS and STI interventions. The Project will also target the most-at-risk populations for HIV/AIDS and STIs with a package of specific interventions. The total beneficiaries under the Project (original financing and AF) are approximately 2,500,000 people of which the proposed AF is targeting approximately 560,000 people. Per capita unit cost is estimated at approximately US$9.75, which includes all costs related to delivering a full package of interventions to various target populations. 30. Implementation arrangements: The implementation arrangements will be further strengthened to ensure the successful implementation of new activities. At the central level, the Executive Secretary (SE) of the National AIDS Council (CNLS) will continue to assume a national role of coordination, monitoring and evaluation and resource mobilization. The central level of Government will play a policy coordination role but will not have direct oversight over project activities. As illustrated in Annex 4, these implementation arrangements have three levels: a. Coordination, management, oversight, and verification: As with the parent project, resources under the AF will flow directly to the health Project Implementation Unit (PIU), operating at technical levels of the Government (in line with Bank s current guidance to staff for sectoral engagement under OP 7.30). The PIU is responsible for the day-to-day management of the Project and is subject to World Bank IDA guidelines. World Bank funds support the majority of the operating costs of the PIU, as well as support all salaries of the PIU staff. PIU staff are hired under consultant contracts consistent with Bank procurement guidelines. The annual work plan of the Project is approved by the Conseil du PMPSII, which consists of technical specialists of the Government and representatives from NGOs and private community associations. The Conseil du PMPSII will add a nutrition specialist to ensure expertise on the Conseil for new activities envisaged under the AF. Finally, the external verification agency plays an essential 3 rd -party verification role in ensuring that services are delivered efficiently through periodic operational audits. b. Implementation: Implementation of AF activities will utilize mechanisms that are existing and well-functioning and will be further enhanced to ensure effective delivery of 34 Out of 26 districts, eight will focus specifically on HIV/AIDS intervention, whereas the rest will be on all integrated interventions, including health and nutrition. This is translated into 147 communes of intervention covering 143 basic health centers. Selection of the districts was done with the MoH in consideration of other partners involved and poverty levels. See Annex 6 for more details on poverty levels. 13