HEALTH SERVICE FUND SUPPORT PROGRAMME CRIS

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1 ANNEX 1. IDENTIFICATION Title/Number HEALTH SERVICE FUND SUPPORT PROGRAMME CRIS no / Total cost EUR th EDF - B Envelope Aid method / Joint Management with UNICEF Method of implementation DAC-code Sector Health 2. RATIONALE 2.1. Sector context Under the new Government of National Unity (GNU), the Zimbabwean economy has been dollarized (March 2009) and the inflation rate is now minimal, but the downturn of the overall economic situation and the protracted nature of the crisis has lead to high levels of chronic poverty. Despite the recent improvement in the economic climate since the coming into effect of the GNU, and the significant support of donor community in making available human resources for health and essential medicines and medical supplies, health facilities are not yet functioning effectively, because of the lack of basic services (eg: electricity, water, communication, etc.), and day to day maintenance of infrastructures and equipment, which are becoming obsolete. The dollarization of the economy has resulted in user fees charges in forex and charging for services that would be normally free of charge. As a result user fees at health facilities continue to be barriers to accessing services. Since the middle of 2009, the GNU has created an environment that has allowed the health sector to move from emergency planning mode to the completion of an ambitious five year National Health Strategy ( ) 1 (NHS). The Ministry of Health and Child Welfare (MoHCW) realises that it is impossible under the current economic environment to implement the provisions of the NHS, since the major challenge facing the health sector is lack of resources (financial, human and material). 1 The National Health Strategy for Zimbabwe ( ), Equity and Quality in Health: A People s Right, MOHCW 1

2 Although in 2011 the government budget for the health sector is USD 256 million (9% of total budget), the actual disbursement depends on the availability of resources. For example in 2009 only USD 15 million (10%) out of the originally allocated budget of USD 150 million was disbursed. Significant external financing is needed to restore/maintain service delivery and improve health outcomes. As reported in the NHS over the last 12 months, Government has not been able to raise enough revenue to support the health sector to fulfil its mandate. In essence, health services in Zimbabwe have been running on material and financial contributions from the donor community. If the current funding levels and weak capacity of the public health system persist or deteriorate, Zimbabwe will not achieve health related Millennium Development Goals (MDGs). In this respect the "Health Sector Investment Case" identified the priority areas that need urgent attention over the period This plan aims to revitalise the health sector and scale up high impact interventions that will assist the country catch up on its MDGs targets. Among those, there is need to remove user fees making available financial resources for the day to day management of the primary level. To achieve the MDGs, Zimbabwe should be spending at least USD 34 per capita per annum on health. This is the minimum required to provide an essential package of health services. The 2009 revised budgetary allocation including donor contributions worked out to about USD 7 per capita per annum on health. Overall the challenge of the health sector in Zimbabwe is on the supply and not demand side. Consequently there is a strong interest from the government and development partners to identify a mechanism for pooling resources toward the delivery of a comprehensive health package based on a decentralised district health system. In order to avoid expensive and unsustainable mechanisms to finance the most peripheral level of the health service and to avoid duplication of already existing mechanisms, the proposed approach of this action is to re-launch the Health Service Fund (HSF) which has become almost dysfunctional and dormant due to lack of government funding and the hyperinflation that prevailed in Zimbabwe until early The HSF was initially established in September 1996 with the objective to decentralize funding to district level and Rural Health Clinics (RHCs) to expand and improve services delivery. The HSF is mainly financing non-capital investments at Rural Health Centres (RHCs) such as: 1) ensuring the availability of utilities services (water, electricity, communication, transport etc.); 2) purchase of commodities (soap and cleaning material, electrical bulbs, bed sheets and blankets, fuel, etc.); 3) minor maintenance and repair of existing equipment and vehicles; and 4) Facilitating community based interventions (health outreach activities, incentivise Village Health Worker interventions, etc.). The utilization of funds will be based on the Financial and Accounting Procedures Manual (Manual), which contains procedural and accounting information to guide administrative staff in the management and accounting of the HSF. It supports accounting staff in carrying out their functions and in maintaining adequate systems of internal control. The Manual specifies how the assets of the Fund will be managed and disposed of. The manual specifies the creation, composition, the role and responsibilities of the Management Committee from the MoHCW s head office right through to the district hospital level. Further the Manual explicates the investment procedures, maintenance of accounts and reporting requirements. 2

3 The Fund is managed at local level by District and Municipal Health Management Boards and at the provincial and central level by Hospital Boards. One of the advantages for district and provincial health administrations to use the HSF is that it allowed them to procure and pay for goods and services at the facility level rather than have the payments made by the Central Payments Office (CPO) in Harare. Several donors 2 already contributed to the HSF in the past, including the EC through the Health Sector Support Programme (HSSP) verifying the opportunity for basket funding to support the health sector Lessons learnt The Assessment of Primary Health Care Study in Zimbabwe (2009) is proposing that a package of essential services and resources be defined and cost at primary level and that priority be given to ensuring that this basic level of provision is funded and universally delivered by all providers of primary care clinics (central, local government, mission and other private). The EU funded Access to Health Care Services Study (2008) provides some insight into the user fees subject which will be mitigated by the re-launch of the HSF. The study found that the majority of communities in the study (59%) paid to access health care services especially in the urban areas, commercial farming areas and mines. In rural areas, people are paying user fees at the district hospital level and also in most rural health centres/clinics. The study also found that most people (66%) could afford to pay the fees charged, while the other 36% could not. Key informants in the study perceived that consultation and user fees were affordable before dollarization and strongly believe that patients should pay to access health care services to enable the institutions to replenish stocks and maintain health facilities and equipment. They also argued that since the government could no longer afford to adequately finance health services, users should pay; otherwise the whole system would collapse leaving the users worse off. The argument that the whole system would collapse leaving the users worse off is now being used by health facility managers, whom are charging for services that would normally be free. The impact of re-introducing user fees in some of these areas has affected the utilization of health services. In the DFID funded Maternal and Perinatal Mortality Study (2007) user fees were the commonly mentioned reason for lack of access to ante- post-natal and institutional delivery services. It has to be highlighted that from the year 2005 donors could no longer contribute to the HSF due to unrealistic and unsustainable official exchange rates of the Zimbabwe Dollar (Z$) and hyperinflation. Also, the application of art. 96 of the Cotonou Agreement made the financing of the HSF trough the MoHCW and Ministry of Finance accounts no longer possible. Due to the recently changed environment in Zimbabwe, especially related to the dollarization of the Zimbabwe economy (March 2009) and the proposed adaptation of certain financial modalities of the HSF, such as the direct disbursement of funds directly to the bank accounts of rural health centres (RHCs) and district hospitals (DHs), it is now possible to overcome those constraints that caused the donor decision to stop their contributions to the fund in Danida, DFID, The Neatherlands and Norad 3

4 2.3. Complementary actions In the short and medium term, this action complements and strengthens EU interventions and those of other donors UK's Department for International Development (DFID), United States Agency for International Development (USAID), the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM), Canadian International Development Agency (CIDA), UN agencies etc.) such as: 1) the harmonised retention allowance for health staff (30 Million USD per annum); 2) the provision of vital medicines and other medical supplies (26 Million USD per annum); 3) the training of middle level cadres (e.g. Midwifery Training, Environmental Health assistant Training, etc.) 4) the direct interventions of health partners in favour of MCH, HIV-AIDS, Tuberculosis and Malaria. This action is also complementary and will be in synergy with the most recent EU direct interventions related to the reduction of the Maternal Mortality Rate (MMR) and Peri-Natal Mortality Rate (PNMR) such as the Midwifery Training and the supply of safe blood and medical gases to the peripheral level. The re-launch of the HSF at peripheral level would come at a time when the health sector requires an injection of an innovative way of financing a defined package of health services, whilst building on existing systems, structures and capacities. Currently the income of the HSF is primarily from user fees and there is no contribution from donors, but the system and structure on which it has been designed have remained sound and relevant for decentralised health financing. A 2010 World Bank (WB) mission confirmed that HSF structure and system were being used by the District Health Executive Teams (DHET) for the financial management of the user fees revenues under the supervision of the Provincial Medical Directorates (PMDs) 3. However, because of low volume of collected user fees, funding for facility maintenance and the provision of services at RHC level is constrained. The World Bank (WB) is currently in an advanced stage of dialogue with the MoHCW in order to channel USD 17 Million to the peripheral level utilising the HSF procedures associated to a Result Based Approach (RBA). The EU contribution will be implemented in close coordination with the WB intervention. Overall there is a need to increase funding to ensure predictable and responsive service delivery at the RHC level which will complement the centralised harmonised retention allowance for health staff, their training, the provision of vital medicine, medical supplies and basic equipment (the last provided trough the Maternal and Child Health (MCH) Donor coordination Donor coordination in the health sector continues to improve. The "Health Informal Group" (EU, DFID, USAID, CDC) is meeting "ad hoc" when necessary and the "Health Development Partners Coordination Group" (HDPCG) composed by Bilateral and Multilateral Donors, UN Family, major NGOs is now being converted into the "Health Coordination Forum" (HCF) chaired by the MoHCW. Health and Water and Sanitation Clusters under the OCHA are still active to provide coordinated responses to possible outbreaks (cholera, measles, antrax, etc.). Although the application of Article 96 of the Cotonou Agreement and other limitation imposed by the US Government remain in place, the establishment of the National Inclusive 3 PMD is the provincial office of the health system, which major task is to provide technical assistance and supportive supervision for the correct implementation of national health policy, strategies, technical and administrative procedures. 4

5 Government and its consequent Global Political Agreement (GPA) further facilitates coordination and alignment of donors' intervention to the Zimbabwe Government health policy and strategy. Donors also play a relevant coordination, planning and monitoring role within the Country Coordinating Mechanism (CCM) of the GFATM. Particularly this Delegation is an active member of the CCM and related committees. In line with what has been observed by the recent "EU Brussels Transition Mission" (2010) within this political and economic transition phase, "Multidonors Pool Funding Mechanisms" (MPFM) are proved to be the most suitable instrument for programmes implementation, donor coordination and visibility. Within the social sector practical example of MPFMs are the "Harmonised retention package for health staff ", the "The provision of Vital Medicines" the "Education Transition Fund" the "Programme of Support to OVC" and the "Protracted Relief Programme". A concept note for the establishment of an umbrella multi-donor health pool fund the "Health Transition Fund"(HTF) has been defined and it will be managed by "UNICEF" with the oversight role of a Donor Steering Committee. The HTF foresees the following thematic areas: Maternal, newborn, child health and nutrition; Essential medicines and commodities; Health policy planning and financing, including the support to the Health Service Fund; Human resources for health While the HSF remains essentially a Government programme, donor funding to it, managed by UNICEF, is an integral part of the " Health Transition Fund ". A letter addressed to the Head of Delegation dated 19 January 2011 formally confirmed DFID support to the HTF and its components. The approach has also been officially presented and discussed with other major donors such as Norway, Japan, CIDA, SIDA, Irish Cooperation, in December 2010, who expressed their verbal commitment to participating in the pool fund. The US Government Agencies (USAID and CDC), because of their internal financial mechanism, will not be able to directly contribute to the fund, but they expressed their interest and support and they will be associated to the process. It is understood that interventions to be financed trough the pool fund will be in line with the MoHCW Annual Plan and they will be prioritised according to the availability of funds. Pooling funds for the health sector would assist in providing coherence for existing donors under one national programme and set of objectives while also ensuring gaps unable to be met by one donor are covered by another and therefore help mitigate risks. It would also allow restrictions that some donors may have on funding government staff, technical assistance, salary incentives or capacity building to be offset by other donors without such restrictions. Coordinated use of resources will maximize impact and reduce the risk of duplication of efforts. The fund will also allow for continuity of critical health system functions under all contingencies, even under the possible scenario of humanitarian funding becoming essential once more. 5

6 3. DESCRIPTION 3.1. Objectives The Overall Objective of this action is to contribute to a better health and reduced poverty of the Zimbabwean population through the improvement in quantity and quality of health services delivery at peripheral level. Its purpose is to contribute to the development and maintenance of the health services at District Hospitals (DHs) and Rural Health Centres (RHCs), directly decentralising financial resources utilising revised Health Service Fund (HSF) mechanisms. The injection of donor funds into the HSF and the foreseen tight monitoring and evaluation will enhance the good governance at the most peripheral level of already available HSF resources deriving from fees for services. Funds injected at peripheral level will be utilized to improve the service delivery. In the medium term it is expected that the HSF will facilitate the delivery of a primary care health package free of charges to the under five years, pregnant women, the above 65 years of age and a few selected special conditions, as indicated in the Government policy. In a comprehensive response to decrease Maternal Mortality Rate (MMR) and Perinatal Mortality Rate (PNMR), as a contribution for the achievement of the MDGs, n. 1, 4, 5 and 6, and to contribute to the development and the day to day running of peripheral health facilities (DHs, RHCs), this action intends to increase the availability and the effective management of financial resources at primary care level Expected results and main activities The expected results of the action are also detailed in the logical framework and they are summarised as follow: Result 1: Result 2: Result 3: Result 4: Revised and consolidated HSF procedures including the possibility to their alignment to the Result Base Approach proposed by WB. Availability in each health facility of a prioritised and cost Annual Plan of Action approved and monitored by District Health Executives Team (DHETs) and a sound information system recording data on provided services. HSF financial resources available at each peripheral health facility and their effective utilization. Effective coordination among stakeholders (Donors, MoHCW, UNICEF, etc.) and continued improvement of HSF financial mechanism and related procedures. Overall all activities will be implemented according to the HSF Financial and Accounting Procedures Manual with the facilitation of a Management Consultant Firm (MC) hired by UNICEF. Major stakeholders such as UNICEF, UK and MoHCW have been consulted in the elaboration of this action. 6

7 Activities corresponding to Result 1: It is necessary to perform a rapid revision of the HSF Financial and Accounting Procedures Manual through a participative workshop with the direct participation of the MoHCW, the WB, UNICEF and other stakeholders. The revision of the Manual will be followed by the reorientation and training of MoHCW accountant and financial officers directly involved in the management of the HSF at central and peripheral levels. The MC will facilitate the process. Activities corresponding to Result 2: Funds will be allocated to peripheral health facilities according to their "Annual Action Plan" with prioritised and cost activities defined by local staff and by a community participative process. EU funds will be complemented by WB project funds, which will be disbursed according to number and quality of services provided to the population by each health facility "Result Based Financing" (RBF). To access RBF health facilities need to be accredited based on the achievement of minimal required standards. The EU funds will be mainly utilised by each health facility to achieve the minimal required standards. The WB project is expected to perform a baseline assessment per each health facility.. DHEs will aggregate and approve the plans of the peripheral health facilities under their catchment s area and their performance reports. DHEs are also expected to provide technical guidance to those health facilities with weaker performances. Activities corresponding to Result 3: According to the MoHCW list of countrywide health facilities the Management Consultant will transfer on regular basis funds in each peripheral health facility of the Zimbabwe 8 Provinces (excluding Harare and Bulawayo cities) according to the estimated indicative amount in the following table: Type of Health Facility No. of Health Facilities Monthly Allocation in Euro Clinics and Rural Centres 1252* 150 District and Mission Hospitals DHEs Office *Excluding Harare and Bulawayo health facilities The utilization of funds at health facility level will be according to the procedures and guidelines of the HSF Financial and Accounting Procedures Manual. DHEs and PMDs Offices will provide supportive supervision and where necessary technical guidance. Also they will be responsible for the data collection on funds utilization (amount, purpose, etc.) and they will transmit the information to the MoHCW central level and to the Management Consultant. Activities corresponding to Result 4: The Management Consultant will report to UNICEF and the Donor Steering Committee in order to monitor the implementation of the programme and to ensure effective coordination among the different stakeholders. Overall the Management Consultant will provide relevant information on implemented HSF procedures, funds disbursement and fund utilization and will summaries and implement indicated corrective and improvement measures. The Management Consultant will also provide an annual auditing on expenditures done by the different MoHCW levels and will design and implement the programme visibility activities. 7

8 3.3. Risks and assumptions The risks associated with this programme can be summarised as follows: Risk The uncertain macro-economic and political environment in the country and unpredictable funding by Government and bilateral donors. Insufficient human resources for health in number and quality Lack or intermittent availability of essential medicines and medical supplies Markets do not recover as quickly as necessary and goods and services remain high in price and scarcely available. No substantial improvement in the capacity of Government National Authorities to deliver basic service for the functioning of the health facilities (pipe-water, electricity, sanitation etc.). Major infrastructural and major equipment constraints negatively affect the deliver health services (severe damaged to structures and obsolete major equipment) Mitigation A multi-donor pool fund mechanisms through a international agency will be used to reduce related risks and flexible financial implementation arrangements will be maintained. Health Stakeholders need to ensure the necessary financial resources for the continuation of the "Harmonised Retention Allowance for Health Staff". Also a financial and non financial retention policy should be redefined. This is one of the four thematic areas of the Health Transition Fund Health Stakeholders need to ensure the regular flow of necessary financial resources to cover the country needs. Same as above. This will be kept under control by the realistic revision and evaluation of the RHCs and Districts Health Plan. Overall there is an indication that basic services are slowly recovering. Alternative way to provide electricity and pipe-water to health facilities need to be addressed with specific "ad hoc" interventions. Different mechanisms need to be identified in other overcome this issues, which are usually not severely affecting the primary level health facilities Crosscutting Issues Directly strengthening the capacity of peripheral health centre to deliver health services, the intervention will facilitate the implementation of national strategies and programmes, especially related to the prevention, mitigation and control of most prevalent diseases and mother and child care Stakeholders The EU contribution for this action will be pooled with those of a number of donors in the "Health Transition Fund" as stated in the EC 2011 Short Term Strategy for Zimbabwe. Therefore, core stakeholders of the project and of the wider "HTF" of which it is an in integral part include: Donors contributing to the Health Transition Fund (UK, CIDA, Swedish International Development Cooperation Agency and Irish Cooperation) whom will provide directives for the interventions to be prioritised and financial allocation of unearmarked funds; MoHCW nationally, which provides policy direction; Provincial and District Health Officers who will provide support, supervision and policy direction and, within their resources, contribute to project monitoring and sustainability; UNICEF, which will provide coordination and financial management of the health pool fund; Management Consultant firm with the role to implement the Health Service Fund intervention; Development Partners through the Donor Steering Committee and its direct oversight role; 8

9 Community Health Committees at the health facility level (Municipal Health Management Boards); Those supportive Development Partners who, while they cannot be directly involved in the Fund, will implement complementary activities and participate fully in the dialogue. The final beneficiaries of the programme are the entire rural population (about 7 Million people) of Zimbabwe and the approximately public health facilities of the country. 4. Implementation issues 4.1 Method of implementation The project will be in joint management with UNICEF through the signature of a Contribution Agreement in accordance with Article 29 of the Regulation (EC) No 215/2008 on the financial regulation applicable to the 10 th European Development Funds and with the appropriate measures of article 96 of the revised Cotonou Agreement adopted by the Council Decision 2002/148/EC. UNICEF complies with the criteria provided for in the applicable Financial Regulation and is covered by the Financial Administrative Framework Agreement (FAFA) concluded with the Commission. The funds of this project will be channelled thought the multi-donor pool fund "Health Transition Fund" (HTF) into the Health Service Fund (HSF). The HSF project Contribution Agreement will only be signed once the multi-donor pool fund (HTF) has indeed been established. A Steering Committee composed by bilateral donors, multilateral donors (WHO, UNICEF and UNFPA) and MoHCW will have an oversight role on the HTF. UNICEF has been chosen due to its comparative advantage in the health sector in general and for its maternal and child health UN mandate. Moreover, in the past years, UNICEF has proven to have a strong capacity in managing pool funds, such as the Programme of Support to the National Action Plan on OVC and the Vital Medicines Fund. UNICEF will be responsible to manage the "Health Transitional Fund" pool fund. For the implementation of this specific intervention (HSF), UNICEF will hire the services of a Management Consultant (MC) who will facilitate the implementation of the following activities: Revision of the HSF Financial and Accounting Procedures Manual; Re-orientation, of MoHCW administrative officers, as well as opening of necessary bank accounts; Health Facilities to develop Annual Action Plans and to implement the recording system; Funds transfer to each health facility and financial monitoring; Funds utilization and data registration; Supportive supervision and technical guidance to health facilities; Programme communication and visibility. 9

10 In view of Art. 96 Cotonou and appropriate measures in place, the Ministry of Health and Child Welfare (MoHCW) will not be used as a conduit for funding. However, since the Health Service Fund is originally a Government mechanism that is currently almost dormant for lack of Government funding, the MoHCW and its financial officers will benefit from training, in order for them to be able to use it when Government funding the HSF resumes. The change of management mode constitutes a substantial change except where the Commission "re-centralises" or reduces the level of tasks previously delegated to the beneficiary country, international organisation or delegatee body under, respectively, decentralised, joint or indirect centralised management. 4.2 Procurement and grant award procedures All contracts implementing the action are awarded and implemented in accordance with the procedures and standard documents laid down and published by the relevant International Organisation 4.3 Budget and calendar The total EU contribution for this initiative is entirely financed from the 10 th EDF ad hoc allocation for 2010 B - Envelope in the framework of the Revised Cotonou Agreement of the European Union. Financial resources of the Health Service Fund will be channelled through the multi-donor pool fund into the Health Transition Fund. The estimated value of the multi-donor pool fund "Health Transition Fund" is around EUR over a period of five years, with an average of EUR per year. It is forecasted that the initial EU contribution to the "Health Service Fund will be complemented by EUR from the World Bank for a total of EUR Million (WB EUR and EU EUR ) during the first two years. The WB initiative in support to the HSF utilising a RBA will not be able at this stage to join the pool funding arrangements, but close coordination and complementarities are foreseen between the two actions. According to the draft WB proposal a management consultant firm will be responsible for their action implementation. More detailed information on the multi-donor health pool fund and HSF contributions are presented in paragraph 2.4 and 3.5 respectively of this AF. Categories EU contribution EUR Contribution Agreement with UNICEF Foreseen duration of the operational implementation period is 24 months, with a total execution period of 48 months as from the adoption of the Commission Decision. 4.4 Performance monitoring (a) Day-to-day technical and financial monitoring will be a continuous process as part of the beneficiary responsibilities. To this aim, the beneficiary (MoHCW) shall establish a permanent internal, technical and financial, monitoring system to the project, which will be used to elaborate the progress reports. (b) The management consultants recruited directly by UNICEF on specifically established terms of reference will also carry out monitoring. 10

11 (c) UNICEF will be responsible for the project financial management, coordination and monitoring. Donors will have an oversight role trough the HTF Donors Steering Committee. 4.5 Evaluation and audit The HSF evaluation will be managed jointly with other donors within the multidonor pool fund mechanism the "Health Transition Fund" and audit will be managed by UNICEF in line with FAFA" 4.6 Communication and visibility Communication and visibility related to the action will be in line with Chapter 11 of the FAFA. It will in particular follow the "Joint Visibility Guidelines for EU-UN actions in the field" united_nations/document/joint_guidelines_reporting_2011_en.pdf 11