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Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 78212-ZW

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT PAPER

ON A

PROPOSED ADDITIONAL GRANT

IN THE AMOUNT OF US$ 20 MILLION UNDER THE MULTI-DONOR TRUST FUND FOR HEALTH RESULTS INNOVATION

TO THE

REPUBLIC OF ZIMBABWE

FOR A

HEALTH SECTOR DEVELOPMENT SUPPORT PROJECT

July 26, 2013

Health, Nutrition, and Population - Eastern and Southern AfricaCountry Department AFCS3Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

CURRENCY EQUIVALENTS

(Exchange Rate Effective July 3, 2013)

Currency Unit = USD= US$1

US$ = SDR 1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AF Additional FinancingAIDS Acquired Immune Deficiency SyndromeANC Antenatal CareARI Acute Respiratory InfectionBEmONC Basic Emergency Obstetric and Neonatal CareCBO Community Based OrganizationCDD Community Driven DevelopmentCEmONC Comprehensive Emergency Obstetric and Neonatal CareCordaid Catholic Organization for Relief and DevelopmentDH District HospitalDHE District Health ExecutiveFBS Fixed Budget SelectionGDP Gross Domestic ProductGoZ Government of ZimbabweHCC Health Centre CommitteeHCWMP Health Care Waste Management PlanHF Health FacilityHIV Human Immunodeficiency VirusHMIS Health Management Information SystemHRITF Health Results Innovation Trust FundHSDS Health Sector Development SupportIBRD International Bank for Reconstruction and DevelopmentICB International Competitive BiddingIC Individual ConsultantIDA International Development AssociationIMF International Monetary FundIMNCI Integrated Management of Neonatal and Childhood IllnessesLCS Least Cost SelectionMCH Maternal and Child HealthM&E Monitoring & Evaluation

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MDG Millennium Development GoalsMNCH Maternal Neonatal and Child HealthMOF Ministry of FinanceMOHCW Ministry of Health and Child WelfareMOLSS Ministry of Labor and Social ServicesMOU Memorandum of UnderstandingMTR Mid-Term ReviewNGO Non-Governmental OrganizationNSC National Steering CommitteePAD Project Appraisal DocumentPDO Project Development ObjectivePHE Provincial Health ExecutivePIE Project Implementation EntityPME Process Monitoring EvaluationPMTCT Prevention of Mother to Child TransmissionQBS Quality Based SelectionPNC Post Natal CareRBF Results Based FinancingRHC Rural Health CenterRF Results FrameworkSSA Sub-Saharan AfricaSSS Single Source SelectionTA Technical AssistanceUNICEF United Nations Children’s FundWB World BankZDHS Zimbabwe Demographic and Health Survey

Vice President: Makhtar DiopCountry Director: Sector Director:

Kundhavi KadiresanRitva S. Reinikka

Sector Manager: Olusoji O. AdeyiTask Team Leader: Ronald U. Mutasa

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REPUBLIC OF ZIMBABWEHealth Sector Development Support Project – Additional Financing

Table of Contents

ADDITIONAL FINANCING DATA SHEET.......................................................................................5Project PaperI. Introduction................................................................................................................................10II. Background and Rationale for Additional Financing of US$20 million...................................10III. Proposed Changes......................................................................................................................17IV. Appraisal Summary (economic analysis and implementation arrangements, and technical appraisal)...............................................................................................................................................35V. Annexes......................................................................................................................................38

Annex 1 Revised Project Results Framework..................................................................................38

Annex 2 Operational Risk Assessment Framework (ORAF)..........................................................41

Annex 3 Progress to Date of the Original Project............................................................................45

Annex 4 Implementation Arrangements: Urban Sub-component....................................................50

Annex 5 Fiduciary Aspects..............................................................................................................54

Annex 6 Status of the Urban Health System in Zimbabwe.............................................................62

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REPUBLIC OF ZIMBABWE

HEALTH SECTOR DEVELOPMENT SUPPORT PROJECT

ADDITIONAL FINANCING DATA SHEET

Basic Information - Additional Financing (AF)Country Director: Kundhavi KadiresanSector Manager/Director: Olusoji O. Adeyi/Ritva S. ReinikkaTeam Leader: Ronald Upenyu MutasaProject ID: P144532Expected Effectiveness Date: August 15, 2013Lending Instrument: Investment Project FinancingAdditional Financing Type: Scale-up, Restructuring

Sectors: Health (70%); Public administration-Health (30%)Themes: Health system performance (40%); Population and reproductive health (40%); Participation and civic engagement (20%).Environmental category: B-Partial AssessmentExpected Closing Date: October 30, 2015Joint IFC:Joint Level:

Basic Information - Original ProjectProject ID: P125229 Environmental category: B-Partial

AssessmentProject Name Health Sector Development Support Project

Expected Closing Date: July 31, 2014

Lending Instrument: Specific Investment Grant

Joint IFC:Joint Level:

AF Project Financing Data[ ] Loan [ ] Credit [ X] Grant [ ] Guarantee [ ] Other:Proposed terms:

AF Financing Plan (US$m)Source Total Amount (US $m)

Total Project Cost: Co-financing: HRITF Borrower:

Total Bank Financing: IBRD IDA New Recommitted

$21 million$20 million$1 million

Client InformationRecipient: Republic of ZimbabweResponsible Agency: Ministry of FinanceContact Person: Willard Manungo, Permanent SecretaryTelephone No.: 263-4-250967Fax No.: 263-4-792750

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Email: C/O : [email protected]

Project Implementing Entity: CordaidContact Person: Inge Barmentlo, Program Manager, HealthcareTelephone No.: +31703136638Fax No.: +31703136511Email.: [email protected]

AF Estimated Disbursements (Bank FY/US$m)FY 2014 2015 2016Annual 8 8 4Cumulative 16 20

Project Development Objective and DescriptionOriginal Project Development Objective: To increase coverage of key maternal and child health interventions in targeted rural districts consistent with the Recipient’s ongoing health initiatives.

Revised Project Development Objective: To increase coverage of key maternal and child health interventions in targeted rural and urban districts consistent with the Recipient’s ongoing health initiatives.

Project Description: The original project components are: (i) Results-based contracts with Provincial Health Executives (PHEs), District Health Executives (DHEs), District Hospitals (DHs) and Rural Health Centers (RHCs)/Health Center Committees (HCCs) for the delivery of a package of key maternal and child health (MCH) services; (ii) Management and capacity building of relevant Ministry of Health and Child Welfare (MOHCW), faith-based non-governmental and Local Government owned health structures in results based financing (RBF); and (iii) Monitoring and documentation.

Component 1: Delivery of Packages of Key Maternal, Child and Other Related Health Services

Delivery of: (1) packages of basic health services in the targeted rural districts with a focus on maternal and child health, (2) packages of services for the supervision of the delivery of such health services,(3) vouchers for access to packages of basic health services in the targeted urban districts with a focus on maternal and child health, (4) packages of basic health services in the targeted urban districts with a focus on maternal and child health, (5) packages of services for the supervision of the delivery of the above-mentioned health services, and (6) performance-based Grants to CBOs under a Performance-based Grant Agreement, for the delivery of community-based monitoring and verification of services, in accordance with eligibility criteria and procedures set forth or referred to in the Project Implementation Manual.

Component 2: Management and Capacity Building in Results-Based Financing

Carrying out of a program to strengthen the capacity of Health Service Providers and Health Supervision Providers to provide and oversee health services, through the provision of: (1) basic medical equipment and other related goods, and (2) training and technical assistance to improve capacity to manage results-based financing by the MOHCW, MOF, and MOLSS, including, quality of data, financing, management, monitoring, reporting and evaluation and financial management of health services, including of the services provided under Component 1.

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Component 3: Project Monitoring and Evaluation

Supervision, monitoring, documentation, reporting, evaluation, and verification of results under performance-based contracts for the Project.

Safeguard and Exception to PoliciesSafeguard 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/BP 7.50)Projects in Disputed Areas (OP/BP 7.60)

[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

Does the project require any waivers of Bank policies?Have these been endorsed or approved by Bank management?

[ ]Yes [X] No[ ]Yes [X] No

Conditions and Legal Covenants:Financing Agreement

ReferenceDescription of

Condition/CovenantDate Due

Effectiveness Conditions

Institutional Arrangements: National Steering Committee; District Level Committees

The Subsidiary Agreement has been executed on behalf of the Recipient and the Project Implementing Entity.

The Project Implementation Manual has been approved by the Recipient and the World Bank, and adopted by the Project Implementing Entity.

The terms of reference have been adopted by the MOF and MOHCW satisfactory to the World Bank.

If the World Bank so requests, the condition of the Project Implementing Entity, as represented or warranted to the World Bank at the date of the Project Agreement, has undergone no material adverse change after such date.

The Recipient shall maintain, throughout the Project period,

Effectiveness

Implementation

vi

External Verification of Results

with composition, mandate and resources satisfactory to the World Bank, a national level steering committee, to be chaired by the Permanent Secretary of MOHCW (or his or her designee), and to be responsible for providing overall guidance and strategic support to the Project, including, inter alia, endorsing the proposed Annual Work Program and budget for the Project.

Prior to the conclusion of any Results-based Contract for services to be provided in a Targeted Rural District or a Targeted Urban District, the Recipient shall establish and thereafter maintain, throughout the Project period, with composition, mandate and resources satisfactory to the World Bank, a district-level steering committee to provide supervisory support to the Project at the level of such Targeted Rural or Targeted Urban District (“District Health Steering Committee”).

The Recipient through the MOF shall engage an external firm acceptable to the World Bank with terms of reference, qualifications and experience satisfactory to the World Bank to undertake external verification of the Project in accordance with the requirements set forth or referred to in the Project Implementation Manual.

Verification of Health Service Package delivery. Prior to each payment to a Health Service Provider under a Results-based Contract, the Recipient, through the Project Implementing Entity, shall, in accordance with the requirements elaborated in the

Determined in the PIM

vii

Project Implementation Manual: (a) verify the number of Health Service Packages delivered; and (b) ensure that the relevant DHE (or PHE, as the case may be) verifies the quality of the Health Service Packages so delivered.

External verification of Health Service Package delivery. The Recipient shall maintain an independent expert whose terms of reference, qualifications and experience shall be satisfactory to the World Bank, to conduct verifications of the delivery of Health Service Packages by each Health Service Provider and of Health Supervision Packages by each Health Supervision Provider, including through interviews with consumers of such packages and inspections of the Health Service Provider’s and the Health Supervision Provider’s documentation and facilities.

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I. INTRODUCTION

1. This Project Paper seeks the approval of the Africa Region Vice President of a US$20 million grant by the Health Results Innovation Trust Fund (HRITF) for Additional Financing (AF) to the ongoing Health Sector Development Support (HSDS) Project.1 The original grant of US$15 million from the HRITF to the Republic of Zimbabwe was approved by the Board on March 3, 2011 and signed on September 27, 2011 (P125229, Grant TF010748). The original grant is scheduled to close on July 31, 2014. The proposed closing date for the AF is October 30, 2015. The HRITF supports results based financing (RBF) approaches in the health sector toward achievement of the health-related Millennium Development Goals (MDGs). HRITF donors include the Governments of Norway and the United Kingdom.

2. The AF complies with OP 10.00 (Investment Project Financing) and will fund activities that will enable the scaling-up of the HSDS Project’s impact and development effectiveness. The proposed AF will: (i) expand the package of primary and secondary services in the current 18 rural districts; (ii) introduce demand- and supply-side performance-based financing interventions on a pilot basis in two low-income urban health districts; and (iii) extend the project implementation period to October 30, 2015. In addition, the Project will strengthen Monitoring and Evaluation (M&E) by rolling out and implementing Process Monitoring Evaluation (PME). The PME will generate evidence on contextual factors linked to performance of health providers and access to and utilization of maternal and child health (MCH) services in low-income urban areas supported by demand- and supply-side RBF mechanisms. The PME will strengthen the evidence base for RBF which Government policy makers, program managers and development partners can use to inform key decisions concerning the program and broader health sector financing.

3. The Project Development Objective (PDO) has been revised to reflect the expanded focus of the project to low-income urban health districts under the AF. In addition, project component descriptions have been adjusted to include new project activities in urban areas and some modifications have been made in response to the mid-term review (MTR) of the original project conducted in February 2013.

4. Demonstrating its commitment to the project, the Government will provide US$1 million co-financing to the AF following the approval of a new budget line item for RBF in the Government of Zimbabwe (GoZ) Budget from January 2013.

II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING OF US$20 MILLION

Country and Sector Context5.Zimbabwe is a landlocked country in Southern Africa with an estimated population of nearly 13

million—the majority of whom live in rural areas (Census, 2012). The combined effects of the HIV/AIDS epidemic, which peaked in 1998, and the socio-economic crises of 2000-2008 unraveled the impressive human development achievements the country made between 1980 and the mid-1990s. In 2000, Zimbabwe’s well-organized public service delivery system fell into

1 On March 3, 2011, the Board approved the use of the Multi-donor Trust Fund for Health Results Innovation to finance projects in Zimbabwe in line with BP 14.40, as an IDA member in arrears. This AF is being processed on the basis of this Board approval. As such, the Africa Region Vice President’s approval will be the final step in the processing of the AF.

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steady decline toward near-collapse in 2008. Gross Domestic Product (GDP) fell by more than 35% during this eight year period.

6. The 2008 historic power-sharing agreement between the Zimbabwe African National Union-Patriotic Front (ZANU PF) and the two Movement for Democratic Change (MDC) formations laid the foundation for an Inclusive Government. In February 2009, the new Government introduced economic reforms to stabilize the economy. These Government reforms have had some positive effect on Zimbabwe’s citizens: the GDP has enjoyed consistent growth since 2009, reaching 9.4% in 2011 (World Bank, 2013), but the growth has recently started to slowdown; and the social sector ministries have been enabled to restore delivery of basic services. The GoZ has recently agreed to an IMF Staff Monitored Program (SMP) to underpin the macroeconomic stabilization efforts.

7. In addition to implementing economic reforms, the GOZ has made significant progress to revitalize the country’s health system. The MOHCW has revived the Village Health Worker (VHW) program and enhanced the coverage of Environmental Health Technicians countrywide. With the support of the Global Fund to Fight AIDS, Tuberculosis and Malaria, the MOHCW successfully re-equipped and enhanced the supervision and mentorship of Community Health Workers (CHWs). The MOF also recently unfroze 2000 health sector posts for recruitment in a promising move to address the numerical inadequacies of the health workforce negatively impacting service delivery—especially at primary and secondary levels of care. With the return of normal service delivery in the past two years, the MOHCW has increased its focus on quality aspects of health service delivery. A Quality Assurance Strategy is currently under development with a view to establish national standards of care and to develop quality improvement frameworks for different levels of care in the public health system. With funding by the MOF, the MOHCW is implementing the Results Based Budgeting pilot.

8. Through domestic and development partners funding, HIV/AIDS indicators, including coverage of Prevention from Mother to Child (PMTCT) have increased over the past four years. In addition, the MOHCW has launched and led a large multi-donor Health Transition Fund to support health systems strengthening interventions. Evidence from the Joint Review Mission of the Health Transition Fund (March 2013) and from the HSDS Project February 2013 Mid-term Review (MTR) confirm the improvement of key supply side indicators within the public health system.

9. Despite Zimbabwe’s encouraging progress on malaria and HIV/AIDS related MDG indicators, the country has made only limited progress towards MCH and nutrition related MDGs. Poverty and mortality trends continue to lag behind those of other countries in the region. One assessment of ten select urban areas reveals a Total Consumption Line poverty rate of 70% (ZimVac 2012), and the corresponding figure is presumably higher in rural areas. Infant mortality is 57 per 1,000 live births, higher than the pre-crisis ratio of 49 per 1,000 in 1988 (ZDHS 2011). The maternal mortality ratio estimate from the 2010/2011 ZDHS is 960 per 100,000 births, one of the highest in the world. Life expectancy at birth was only 51 years in 2011 (World Bank, 2013).

Policy Context10. In response to the above challenges, since 2009 the Government’s key stabilization and recovery

plans have emphasized health sector recovery with a particular focus on reviving primary health

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care service delivery. Both the Zimbabwe National Health Strategy 2009-2015 and Health Sector Investment Case (2010-2012) highlight strategies to address the high rates of maternal and neonatal mortality rates. The Government has also committed to supporting the health sector in the Short Term Emergency Recovery Plan, in the Medium Term Plan 2010-2015, and in its plans for Government work programs. The Bank’s support through the original project contributes to the implementation of Government policies with specific focus on: (i) removal of user-fees for select high impact MCH services; and (ii) operationalizing the Results Based Management Strategy through a specific fee for services mechanism which rewards health providers based on performance.

Zimbabwean Health System 11. The structure of the Zimbabwean health care system is well-defined in its authority, resource

allocation, information reporting, division of care services and patient referrals (Health System 20/20, 2010). Major providers of health services include: (i) central government; (ii) local government authorities, including municipalities in urban areas and district councils in rural areas; (iii) faith-based not-for-profit (mission) facilities; and (iv) private for-profit providers (mostly found in urban areas).

12. The public sector plays a major role in service provision. The health care service delivery structure of the MOHCW consists of primary, secondary, tertiary and quaternary levels. The primary level consists of a network of CHWs and health centers. Here, services focus on promoting actions that families and communities can take to improve their health and nutritional status. The district hospitals (secondary level of care) provide referrals and supervisory support to all clinics in the district. District hospitals also offer in-patient medical and surgical services as well as training of nurses and midwives in some cases. District hospitals refer patients to provincial hospitals (tertiary care facilities), which in turn refer to central hospitals (quaternary level) where specialist services are provided. See Annex 6 for a detailed description of the structure of the urban health system.

Health Financing and Challenges for Low-Income Households13. According to the National Health Accounts (2010), household out-of-pocket spending increased

from 36% in 2001 to 39% of total health expenditures in 2010. Household out-of-pocket spending represents the largest share of all financing sources in 2010, which can be partially attributed to the country’s economic decline and of the drop in the overall public sector budget envelope. Less than 10% of the population has health insurance, of which employer-based health insurance accounts for 50%. Thus, most of the population, especially those not formally employed, remains vulnerable to financial risk from health care expenditures.

14. The decline in central government funding has resulted in a transfer of the financial burden onto patients in the form of user fees. These fees obstruct the poor’s access to health services. The 2007 Maternal and Perinatal Mortality Study shows, for example, that 39% of the population could not afford to pay hospital user fees. Although Government policy is to provide free basic services—in particular MCH services—many health institutions continue to collect various forms of user fees to partially cover their operational costs.

15. User fee collection varies between and within the public and private institutions, depending on the level of subsidies the facilities can secure from other sources. City clinics typically collect US$25 for a normal delivery while central hospitals collect US$80 for a normal delivery and

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US$450 for a C-section. In the private facilities, the fees can range from US$400-500 for a normal delivery and US$1050-$1400 for a C-section—costs that are prohibitive given prevailing household poverty and low coverage by insurance schemes.

The Maternal and Child Health Issues of the Poor16. As in many other countries, poor people in Zimbabwe lag behind the rest of the population in

both access to health services and in health outcomes. The Maternal and Perinatal Mortality Study of 2007 documented that among cases referred for childbirth complications, 14% of patients did not follow through with the referral for financial reasons, despite the fact that professional care for complications during pregnancy and childbirth is crucial in preventing maternal mortality.

17. In the area of MCH, the most recent DHS report reveals major disparities in financial coverage, service utilization, and health outcomes across income groups. While insurance coverage among the richest quintile is 20%, insurance is virtually non-existent in the poorest quintile (Table 1). The proportion of women delivering in a health facility is almost twice as high among the richest versus the poorest quintiles (90% vs. 46%). In particular, the rate of C-section is almost four times higher among the richest quintile (9.2% vs. 2.5%). Such a major difference can only be explained by socio-economic factors, especially differential physical and financial access to services. The MOHCW’s Equity and Quality of Care study of 2012 confirmed that fees for services represent one of the major barriers to accessing and utilizing services by the two bottom wealth quintiles.

Table 1. Inequality in financial coverage and key MCH indicators reported by surveyed women 15-49 years

Poorest Quintile

Richest Quintile

Financial CoverageHealth insurance coverage (%) 0.5 20.0Service UtilizationAt least one ANC check-up (%) 88.4 94.6Institutional delivery (%) 46.2 89.9C-section (%) 2.5 9.2PNC checkup within first 2 days after birth (%) 15.7 46.6Children 12-23 months reported receiving all basic vaccines (%) 54.6 72.8Children with diarrhea who received no treatment (%) 25.3 11.8Health OutcomesInfant mortality (per 1,000 live births) 55 48U5 mortality (per 1,000 live births) 85 58Source: ZDHS 2011

Select Health Outcomes and TrendsMDGs 1c, 4 and 5 are all off track. More specifically in 2010/11:

The nutritional status of children indicators worsened, with stunting increasing from 29.4% in 1999 to 35% among children under 5 years old (MDG 1c);

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Maternal mortality levels reached an unacceptably high level, increasing from 725 deaths per 100,000 live births (Zimbabwe Maternal and Perinatal Mortality Study, 2007) to 960 deaths per 100,000 births (ZDHS 2010/11). It is important to note that this same ratio has reduced significantly in most of SSA in the last 20 years (MDG 5);

The institutional deliveries rate was only 66%, which implies that 34% of pregnant women deliver at home (MDG 5); and

The unmet need2 for family planning among married women aged 15-49 was 13% (MDG 5).

Project Status

18. In this country and sector context, the Bank has been supporting the Government to address health challenges and make progress towards MDGs 1c, 4 and 5 to reduce child mortality and improve maternal health. This support has been facilitated through the HSDS Project with a Specific Investment Grant in the amount of US$15 million (original financing) to innovate new approaches. This original project was approved on March 3, 2011 by the Board and became effective on December 8, 2011 with a closing date of July 31, 2014. The original project has performed satisfactorily in terms of progress towards the PDO and implementation progress. During the February 2013 MTR, it was determined that most Year 1 performance targets had been achieved. At present, 100% of the grant has been disbursed. The project has been rated satisfactory for the past 16 months and the audit report for the first year of the project was unqualified. The Government and PIE have complied with the Bank’s reporting requirements.

19. The PDO for the original project is to increase coverage of key maternal and child health interventions in targeted rural districts consistent with the Recipient’s ongoing health initiatives. The project aims to remove financial barriers to access on the demand side as well as strengthen service delivery and a focus on results on the supply side in rural and urban pilot districts. The Bank’s support through the HSDS Project is seen as an important instrument to: (i) increase demand and utilization of priority MCH services; (ii) strengthen performance of health facilities; and (iii) restore basic services that collapsed during the economic and political crises.

20. The original project supports contracting of health facilities for the delivery of a specified package of essential MCH services in 18 rural districts. Facilities are paid on a fee-for-service basis based on quantity and quality achieved in a given period. An internal and external verification process is in place to audit the reported data. Community Based Organizations (CBOs) undertake client tracer and satisfaction surveys. Client feedback and assessment of services received constitutes 20% of the overall quality score received by a health provider in a given quarter. Quarterly quality audits verify the quality of services provided based on a standard protocol. DHEs and PHEs are contracted to strengthen quality of supervision. Remote facilities receive additional payments for the delivery of the package of services. Project components are: (i) performance-based contracts with health facilities in urban and rural areas; (ii) management and capacity building in RBF; and (iii) monitoring and documentation.

21. The project’s MTR confirmed an upward trend across priority high impact MCH interventions financed by the project. As reflected in figures 1 and 2 below, based on data from the first 13 months of the RBF pilot, the project is contributing to increased coverage and utilization of high

2 Refers to the percentage of women with an unmet need for family planning as a percentage of women in reproductive age in marriage or a union with an unmet need for family planning.

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impact MCH services. Also, there is no observed perverse effect of RBF on non-incentivized services.

22. Lessons Learned : Lessons from implementation of the ongoing project will be applied during implementation of the AF. Key lessons include the need to: (i) strengthen management of the quality aspect of RBF by modifying the quality supervision checklists and providing TA to the Government to operationalize revised quality checklists; (ii) strengthen strategic use of RBF subsidies through targeted TA to health providers; (iii) strengthen district RBF committees with targeted TA from Cordaid and from the National RBF Steering Committee; (iv) constantly update utilization and cost projections as well as associated pricing aspects for indicators; (v) finance country-driven analytical work on cost-efficiency and RBF sustainability; (vi) modify the internal verification function to a risk-based sampling approach to enable quicker flow of RBF subsidies to health providers; and (vii) support strengthening of the HMIS system so that its reports can be used for decision making by Government and development partners.

Figure 1. Coverage of key MCH services in 18 project districts

Mar-12Ap

r-12May

-12Jun

-12Jul-12Au

g-12Sep

-12Oct-

12Nov-

12Dec-

12Jan

-13Feb

-13Mar-

130

25

50

75

100

Inst. DeliveriesANCPNCVaccination

Perc

ent

(%)

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Figure 2. Institutional normal deliveries per 10,000 population in 16 RBF and 163 matched non-RBF districts (HMIS data)

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

Nov-12

Jan-13

Mar-13

0

5

10

15

20

25

30

35

40

RBF Districts Non-RBF Districts

per 1

0,00

0 po

pula

tion

See Annex 3 for a summary of progress of key indicators.

Rationale for Bank Financing

23.In April 2013, the Bank’s Board endorsed a new Interim Strategy Note (ISN) for FY13-FY15. Given the uncertainties in the country context, the ISN lays out three scenarios for Bank Group engagement: ‘status quo’ (continue current levels of support for reform and recovery through policy dialogue, analytical work, and piloting activities in specific sectors); ‘enhanced re-engagement’ (work with partners in helping the government to develop a track record of implementation of social and economic reforms and start preparations for moving to arrears clearance and full re-engagement); and ‘deterioration’ (scale back work program to minimum analytical work and policy dialogue). Based on country developments the enhanced-reengagement scenario will involve (i) support for developing a track record of economic reforms; (ii) support for developing an Interim Poverty Reduction Strategy Paper (IPRSP); (iii) stepping up support through programmatic Multi Donor Trust Funds (MDTFs) in the areas of improving access to basic services and improved investment climate and governance; and (iv) preparing for Zimbabwe’s eventual re-engagement with international financial institutions. This AF is an important contribution to this overall effort and fits squarely with the priority of stepping up access to improved basic services.

24.The AF will ensure continued funding for the project while the Government works to increase its contribution to the project and consolidate work with development partners on RBF scale-up and sustainability.4 The AF will cover the broadened scope of services in 18 rural districts which, subject to the outcome of a technical analysis by the MOHCW, will possibly include screening

3 While the original project supports a total of 18 districts, 16 districts are subjected to an impact evaluation and 2 served as learning districts in the initial roll-out of the original project.

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Project Start

for cervical cancer and management of selected under five illnesses, amongst others, and support the scale-up to two urban health districts to pilot a voucher model which specifically addresses the MCH services need of the poor.

25. The project’s success so far has catalyzed Government and development partners to adopt the RBF approach for other sources of financing.5 The Health Transition Fund is using the lessons from the HSDS Project as the basis for possible replication of RBF principles in 45 rural districts. However, health sector financing challenges are immense and continued Bank support is critical to support the 3.5 million people covered by the original project and to develop an innovative model to target poor households in urban.

26. Local authorities from major urban areas confirmed that at least 30% of women who deliver in urban health facilities do not have access to ante-natal care services. Qualitative data from a rapid assessment undertaken by the World Bank in two urban municipalities in March and April 2013 confirmed the existence of user-fees as a major reason why women delayed in registering for ANC in low-income urban areas. Furthermore, Zimbabwe’s urban areas face growing socio-economic inequalities and stagnating MCH outcomes. There is an increasing realization that strengthening both demand- and supply-sides simultaneously is more likely to improve utilization of MCH care. Hence, the AF intends to give equal weight to both demand enhancement and service delivery system strengthening for MCH care under the proposed urban sub-component.

III.PROPOSED CHANGES

27. The PDO and PDO indicators : The PDO will be revised under the AF to read as follows: to increase coverage of key maternal and child health interventions in targeted rural and urban districts consistent with the Recipient’s ongoing health initiatives.6 The Results Framework (RF) was revised based on evidence from the MTR of the project, in line with performance and trends from the time the project became effective. The RF was also modified to be further aligned with the Bank’s core indicators for Health, Nutrition and Population projects. Based on recommendations from the MTR, quality of care indicators have been added to reflect the AF’s greater emphasis on quality of care. In addition, indicators specific to the new urban sub-component which will roll-out a demand side intervention targeting low-income households have been added (please refer to Annex 2). Table 2 below shows current and revised (proposed under AF) project indicators.

4 The National RBF Steering Committee established a Task Force comprised of officials from Ministries of Health and Child Welfare, Finance and Local Government working on financial, technical and institutional sustainability aspects of the RBF with the technical support of the Bank and Cordaid.5 The Government with the support of development partners is actively rolling out the RBF approach to 45 rural districts using the technical design and approach piloted by the Bank in 18 rural districts.6 The word “urban” was added to the PDO in line with the scale-up to urban health districts under the AF.

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Table 2: Revisions to the Results Framework

Revisions to the Results Framework Comments/Rationale for Change

PDOCurrent (PAD) ProposedTo increase coverage of key maternal and child health interventions in targeted rural districts consistent with the Recipient’s ongoing health initiatives

To increase coverage of key maternal and child health interventions in targeted rural and urban districts consistent with the Recipient’s ongoing health initiatives.

The Project activities under the additional financing will be expanded to include urban districts in addition to rural districts.

PDO indicatorsCurrent (PAD) Proposed change*PDI#1: Number of pregnant women receiving antenatal care during a visit to a health provider in participating rural districts

PDI#17: Number of pregnant women receiving antenatal care during a visit to a health provider in participating districts

This indicator has been revised from participating rural districts to participating districts since the additional financing will include urban districts.

PDI#2: Percentage of births attended by skilled health personnel8 in a health institution in participating rural districts

Continued

PDI#3: Number of pregnant women living with HIV who received antiretroviral to reduce the risk of MTCT

Continued

PDI#4: Percentage of women 15-49 years receiving during their first and repeat visits one of the modern family planning methods9 in participating rural districts

Continued

PDI#5: Number of children immunized10

Continued

PDI#6: Number of births attended by skilled health personnel in health institutions in participating urban districts

New indicator Addition of this indicator is to track the success of the project in urban districts.

7 PDI – PDO level indicator8 Skilled health worker defined as doctors, midwives and any ordinary nurse with basic orientation in midwifery in line with MOHCW position.9 Modern family planning methods defined as oral contraceptives, injectable, IUDs or implants.10 Number of children immunized under 12 months against DTP3 (Penta3)

9


PDI#7: Increase in average quality scores by health facilities in participating districts

PDI#7: Increase in average quality scores by health facilities in participating districts

This indicator has been revised from participating rural districts to participating districts since the additional financing will include urban districts.

PDI#8: Number of women who had their first ANC visit during the first 16 weeks of pregnancy in participating districts

New indicator Addition of this indicator is due to more emphasis of the project towards outcome.

Intermediate Results indicatorsCurrent (PAD) Proposed change*IRI#111: Health facilities constructed, renovated, and/or equipped

Continued

IRI#2: Health personnel receiving training

Continued

IRI#3: District Health Executives (DHEs) using quality tool for supervision of health facilities

Continued

IRI#4: Percentage of health facilities implementing Quality Improvement/Assurance model in the participating districts

New indicator Addition of this indicator is due to the enhanced focus of the project towards quality of care.

Percentage of health facilities in participating districts submitting reports on health outputs/services including RBF core services to DHE and PIE within stipulated times

Dropped Deletion of this indicator is due to more emphasis of the project towards outcome rather than process.

Number of facilities contracted under the RBF program

Dropped Deletion of this indicator is due to more project emphasis on outcome than process.

Number of health facilities using a business plan


District and National Steering Committees meeting as stipulated in the


11 IRI - Intermediate Results indicators10


Project Implementation ManualCounter verification undertaken in line with agreed Project Implementation Manual


Baseline and follow up surveys completed


A summary note on results of RBF project drafted and disseminated to relevant stakeholders


28. Project Closing Date: The closing date of the AF phase will be October 30, 2015 to allow time

for implementation of the activities including the innovative urban sub-component.

Proposed AF Activities29. The original project components are: (i) Results-based contracts with PHEs, DHEs, District

Hospitals (DHs), Rural Health Centers (RHCs)/HCCs for the delivery of a package of key maternal and child health services; (ii) Management and capacity building of relevant MOHCW, faith-based non-governmental and Local Government owned health structures in RBF; and (iii) Monitoring and documentation. The AF will continue to support the three original components plus a new sub-component targeting low-income urban households.

30. Specifically the AF will finance the following:

Component 1: Delivery of Packages of Key Maternal, Child and Other Related Health Services

(a): Supply-side RBF in 18 rural districts

31. This sub-component will support the delivery of: (i) packages of basic health services in the 18 targeted rural districts with a focus on MCH through the engagement of health service providers under results-based service delivery contracts; (ii) packages of services for the supervision of delivery of such health services through the engagement of health supervision providers under results-based service delivery contracts, including a supervision contract by a national level management team.

32. As under the ongoing project, the AF will continue to finance performance based payments to RHCs and DHs on a fee-for-service basis, which will take into account the quantity and quality of services as well as the degree of remoteness of the facility.

33. Based on lessons learned and findings of the MTR, in addition to broadening the original MCH services, the AF will finance a package of services which will possibly include: (a) Integrated Management of Neonatal and Childhood Illness (IMNCI); (b) cervical cancer screening; and (c)

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post-abortion care. The package of services supported by the AF will depend on the outcome of a review exercise led by the National RBF Steering Committee.

34. To accelerate improvements in quality of care, the AF will strengthen the link between performance incentives and clinical quality of care through the use of a revamped quality tool/checklist to form the basis for pay-for-quality at RHC and hospital levels. Such a tool will include: (i) maternal death audits, (ii) routine clinical audits, and (iii) assessment of each facility’s progress on its implementation of a nationally defined quality improvement model.

(b) Demand- and supply-side RBF for low-income urban families (new sub-component)

35. This new sub-component in targeted low-income urban districts aims to: (i) protect the urban poor from financial catastrophe due to maternal/neonatal emergencies; (ii) improve quality of services in urban public facilities through incentivizing quality care; and (iii) improve health behaviors of the urban poor.

36. This sub-component will support the delivery of: (i) Vouchers for access to a package of basic MCH services in targeted urban districts targeted at the poor with a focus on MCH through the engagement of health service providers under results-based service delivery contracts; (ii) packages of basic health services in the targeted urban districts with a focus on MCH through the engagement of Health Service Providers through results-based service delivery contracts; (iii) packages of services for the supervision of the delivery of such health services through the engagement of Health Supervision Providers in accordance with eligibility criteria set forth or referred to in the Project Implementation Manual; and (iv) Performance-based grants to CBOs under a performance-based grant, for the delivery of community-based monitoring and verification of services by the CBOs. The MOLSS will enter into a performance-based contract with the PIE co-signed by the MOF. Based on the performance contract, the MOLSS will receive performance based quarterly supervision and management payments based on its delivery of predefined services towards implementation of the demand-side aspects of the AF.

37. The AF will support the design and implementation of a pilot performance-based urban sub-component. This urban sub-component of RBF introduces three new interventions in two low-income urban health districts—one from each of the two largest cities in Zimbabwe (Harare and Bulawayo). Public health providers will be contracted for a defined set of quality indicators and rewarded for both achievement of those quality indicators and for quality improvement efforts. The DHEs will be contracted to supervise contracted health providers. City health services departments will be contracted to supervise DHEs and the voucher component. Private health providers, in particular for-profit providers, may be invited to participate in the project later on. The Government together with the PIE and the World Bank will develop a framework and roll-out plan for private health providers to participate in the project.

38. The voucher will entitle mothers and neonates to access subsidized care from designated health facilities. All municipal facilities in the selected districts and referral facilities in the two cities will participate in the voucher scheme. The Project Implementation Manual will reflect the mechanism used for private health facility engagement and participation in the AF when this option is open. This aspect of the project requires inter-sectoral coordination between the MOLSS, the MOHCW and Local Government to meet MDGs 1c, 4 and 5.

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39. Beneficiary households (targeting the bottom 20% income quintile) and women will be identified through a census survey carried out by the National Statistical Agency with the support of the MOLSS. The approach to map the 20% income quintile households will be adopted from the methods currently used by the Zimbabwe Statistics Agency and MOLSS for the Harmonized Cash Transfer Program.

40. The costing of the voucher and pricing of quality-based performance incentives for urban health providers will be informed by: (a) user-fees charged for maternal, new-born, transportation and referral services, (b) household out-of-pocket expenditures, and (c) public health priorities. A detailed presentation of voucher sub-component activities is outlined in Annex 4.

41. Given that the voucher component in the urban area is new to the country and the project, Component 1 will be implemented on a pilot basis and accompanied by careful monitoring, documentation and process evaluation.

Component 2: Management and Capacity Building in Results-Based Financing

42. This component will support interventions to strengthen the capacity of health service providers and health supervision providers to provide and oversee health services, through the provision of: (i) basic medical equipment and other related goods, and (ii) training and technical assistance to improve capacity to manage results-based financing by the MOHCW, the MOF and the MOLSS, quality of data, financing, management, monitoring, reporting and evaluation and financial management of health services, including of the services provided under Component 1.

43. As under the original project, this component will support ongoing management and capacity building for HCCs, RHCs, DHEs, PHEs, DHs, and District Steering Committees for effective implementation of RBF. Component 2 will support and strengthen: (i) governance and strategic RBF management capacity for District Steering Committees; (ii) improvements of the Health Management Information System (HMIS); (iii) institutionalization of RBF and health financing; (iv) training for DHEs and PHEs on the use of the quality supervision tool and innovative ways to improve the verification and supervision process; and (v) mentoring and peer learning among RBF stakeholders to learn from implementation.

44. In response to the MTR findings, Component 2 will support skills transfer at the national level from Cordaid to a core team of technical and financial management staff seconded from the MOF and the MOHCW to enable greater involvement of the Government in day-to-day management of the RBF mechanism. The AF will prioritize transfer of skills in fund-holding, purchasing of RBF services, management of performance-based financing programs, costing, verification of RBF services and governance of RBF programs.

45. The AF will prioritize financing and technical support to MOHCW for: (a) health financing; (b) development and implementation of a quality improvement framework, quality of care checklists that emphasize clinical care, monitoring of quality improvement processes and incentivizing quality improvements by health providers; and (c) strengthening technical capacity in MOHCW to use DHIS2 Health Information System at national, provincial and district levels in close collaboration with development partners.

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46. In order to ensure sustainability of the RBF approach, this component will support efforts to develop national level training and technical management capacity in RBF. The support will be carefully rolled-out to select local Zimbabwean institutions in consultation with the Bank and the MOHCW. The AF will also support select staff from the MOHCW, MOLSS and MOF to participate in relevant regional and international trainings based on a training plan endorsed by the MOHCW and approved by the Bank under the procurement plan. The AF will prioritize use of competitively selected local consultants or twining arrangements between international and local consultants.

47. Cordaid will provide technical support in close collaboration with a team of Government fiduciary and technical staff designated as focal points for this project. The component will directly finance capacity building in management of the voucher mechanism for the District Social Welfare Officers from the MOLSS for the two selected urban districts. The AF will promote cost effective and innovative skills transfer and capacity building interventions such as: (i) peer-to-peer mentorship on key aspects such as use of the integrated supervision quality checklist; and (ii) cross district and provincial learning exposure assignments for staff from the relevant Government departments and from the two municipalities. Each year, financial resources will be set aside for technical assistance to the MOHCW, the MOLSS and municipalities in priority areas linked to performance-based financing such as: (i) analysis of equity effects of RBF interventions; (ii) quality of care strategy development and operationalization; (iii) health financing strategy development and implementation; (iv) HMIS improvements; and (v) planning for sustainability. Possible opportunities for co-financing by Cordaid will be identified and agreed to by the MOHCW and the Bank to support capacity building of policy makers, operational staff and senior managers in the public sector, think-tanks and academia to ensure sustainability of the RBF approach.

Component 3: Project Monitoring and Evaluation

48. Broadly, this component will support supervision, monitoring, documentation, reporting, evaluation and external verification of the Project.

49. The AF will strengthen key data management deficiencies observed at the MTR within MOHCW and Cordaid. These include modifications to the database to include component quality indicators, improvement in data analysis and quality control by and within both Cordaid and key Government departments. The AF will further strengthen the MOHCW DHE teams’ capacity for use of operational data to improve performance at facility and district levels. Quarterly performance reviews at the district levels including both health facility managers and a representative of the community and members of the DHE will be further scaled-up under the AF to strengthen learning across health facilities and to use qualitative and quantitative data on RBF and non-RBF indicators to assess performance and inform management decisions.

50. The AF will finance development of mechanisms for MOHCW in rural districts and City Health Services Departments to monitor the project’s effect on equity. The PME (which will be executed by the Bank with PHE support) and day-to-day monitoring by DHEs and Cordaid will introduce mechanisms—such as an asset index in the patient exit surveys—to capture and assess the socio-economic status of patients.

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51. The AF will support implementation of PME to strengthen learning from demand- and supply-side RBF interventions by the Government, Cordaid, health facility managers and the Bank. This learning will strengthen capacity to scale-up interventions to more rural and urban districts. The PME will feed into the Impact Evaluation for which the Government and the Bank has already defined policy questions and a technical design. The urban sub-component will be subjected to a rigorous evaluation and a cost effectiveness analysis to enable the Government, the Bank, municipalities and development partners to learn its effectiveness and potential for scale-up.

52. The Recipient, through the MOF and the MOHCW under the leadership of the Accountant General’s Office and the MOHCW Permanent Secretary or designee respectively, shall carry out annual reviews, the first such review to be carried out within twelve months of the Effective Date of this Agreement, of the implementation and management of the Project by the PIE. The annual review will be carried out in accordance with terms of reference, satisfactory to the World Bank, prepared by the MOF and MOHCW in consultation with the PIE. The annual review, in addition to technical and implementation progress of the Project, will include an assessment by the MOF and MOHCW of the PIE’s technical, management and fiduciary performance.

53. Table 3 below reflects the allocation of resources across different components and sub-components of the AF while Table 4 reflects revised project outcome indicators.

Table 3: Revised Project Costs by Disbursement Category (in US$ millions)

Category

Original Grant

Amount of the Original Grant

Allocated (expressed in

USD)

Category

Additional Grant

Amount of the Additional Grant

Allocated(expressed in

USD)

Percentage of Expenditures to

be Financed(inclusive of

Taxes)

(1) Payments under Results-based Contracts under Part A of the Project

7,101,497 (1) Payments under Results-based Contracts under Part A(I) of the Project

13,000,000 100% of amounts paid by the Project Implementing Entity

(2) Payments under Results-based Contracts, Vouchers, and Operating Costs under Part A(II) of the Project

2,000,000 100% of amounts paid by the Project Implementing Entity

(2) Goods, services, Training and Workshops, and Operating Costs under Parts

7,898,503 (3) Goods, services, Training and Workshops, and Operating Costs under Parts

4,000,000 100%

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B and C of the Project

B and C of the Project

(4) Monitoring, Documentation, and Verification of Results under Performance-based Contracts under Part C of the Project

1,000,000 100%

TOTAL AMOUNT

15,000,000 20,000,000

54. Withdrawals of proceeds of the Additional Grant up to an aggregate amount not to exceed US $3,000,000 equivalent may be made for payments eligible under this Agreement, made prior to the date of this Agreement but on or after August 1, 2012.

Table 4: Revised Project Outcome Indicators

Indicator Original target Changes with AF Revised targetPregnant women receiving antenatal care during a visit to a health provider in participating rural districts

108,000 93,000 201,000

Percentage of births attended by skilled health personnel12 in a health institution in participating rural districts

62% 1% 63%

Pregnant women living with HIV who received antiretroviral therapy to reduce the risk of MTCT13

11,000 -1200 9,800

Percentage of women 15-49 years receiving during their first and repeat visits one of the modern family planning methods14 in

60% 1% 61%

12 Skilled health worker defined as doctors, midwives and any ordinary nurse with basic orientation in midwifery in line with MOHCW position.13 The target for this indicator has been adjusted based on the recent data from the Ministry of Health and Child Welfare.

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Indicator Original target Changes with AF Revised targetparticipating rural districtsChildren immunized15 90,500 33,500 124,000Number of births attended by skilled health personnel in health institutions in participating urban districts

New indicator New indicator 8,500

Increase in average quality scores by health facilities in participating districts16

10% 5% 5%

Number of women who had their first ANC visit during the first 16 weeks of pregnancy

New indicator New indicator 19,200

Verification of Results

55. The AF will continue to support built-in mechanisms to verify results reported by providers. The main modification to the verification arrangements will be the verification of voucher beneficiaries by an independent organization. Given the high cost of counter verification and that findings in the preceding rounds were not timely enough to guide the decision, other modifications to the existing arrangements include: (i) improving procurement methods to shorten processing time, (ii) focusing on the most recent past in the next round, and (iii) reducing the sample size from 6% to 4% of facilities. Verification of results will be conducted as outlined in Table 5 below.

Table 5: Verification and Counter Verification of Results

Verification Counter verificationData Verification: The PIE checks the quantity of services by looking at the facility registers (a sample of facilities undergoes quantity verification every month).

Audits: An independent organization performs financial and quality audits at operational level by random spot checks (a sample of facilities is audited externally). Under the urban sub-component, the independent organization will undertake community-based audits of recipients of the vouchers.

Quality Verification: MOHCW represented by DHE and PHE checks the professional (medical) quality and the PIE verifies by performing random spot checks (100% of facilities undergo

Community Verification: CBOs are contracted by the PIE to check the authenticity of the patients reported by providers and to evaluate patient

14 Modern family planning methods defined as oral contraceptives, injectable, IUDs or implants.15 Number of children immunized under 12 months against DTP3 (Penta3)16 The target for this indicator has been adjusted based on the recent data from the Ministry of Health and Child Welfare.

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quality verification every quarter). satisfaction (a sample of patients are traced and administered a patient satisfaction survey).

Other Key Aspects of the AF

Government Co-financing56. Under the AF, the MOF will contribute US$1 million for the first year of the project as

counterpart funding. In subsequent years, the MOF will contribute at least US$1 million annually. However, the annual funding will possibly be increased based on fiscal performance against the national budget. The funds will primarily finance outputs in health facilities contracted in participating districts. The team seconded by the Government to work closely with Cordaid will play a key role in managing health facility payments.

57. Government co-financing will flow from Treasury to the MOHCW where it will then be disbursed to health facilities based on results verification reports, invoices and payments data provided by Cordaid. Once payments to facilities are completed, Cordaid will present a summary report to the MOHCW and the Bank with a copy to the MOF on facility payments reflecting Government and Bank contributions for periods when co-financing is utilized.

Evidence for Management and Policy Decision Making58. Evaluation activities agreed to by the Government and the Bank will be rolled out to answer

policy-relevant questions and strengthen evidence-based RBF learning by policy makers and development partners. The evaluation for the original project follows a quasi-experimental design that purposively selects pairs of districts stratified by province. These districts were pre-matched by ministry officials on the basis of assessed health systems capacity and levels of priority maternal and child health outcomes. Each provincial health authority supplied two sets of matched districts, one pair at low (below median) levels of capacity and one pair at higher (above median) capacity. One district in each pair was then randomly assigned to the RBF program and the other to the comparison group, which will serve as the counter-factual for evaluative purposes. Comprehensive baseline data collected before the onset of the program includes administrative and HMIS data, population based surveys (the 2011 Zimbabwe DHS), and a dedicated facility and health worker survey covering 309 facilities in the 32 study districts. The urban component will include evaluation to capture lessons learned, effect on utilization of priority health services and possible opportunities for scale-up.

Implementation Arrangements

59. Governance and implementation arrangements and stakeholders for the original project will continue to support RBF activities in 18 rural districts and some will be expanded to the urban sub-component. The existing National Steering Committee (NSC) will be expanded to include representation from the two cities and from the Urban Councils Association of Zimbabwe. As is the case with the original project, Cordaid will serve as the Project Implementing Entity (PIE).

60. The MOF and MOHCW Policy, Planning and Monitoring and Evaluation Directorate, Finance and Administration Directorate and the Preventive Services Directorate will second a team of up to five staff (including financial specialists and technical health staff) who will work closely with Cordaid on purchasing and fund-holding aspects of the RBF mechanism with a view to

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promoting ownership and skills transfer to the Government. TORs for the seconded team and how they will support specific RBF functions will be developed by MOF and MOHCW and adopted by the NSC. The seconded team will continue to work from the MOF and MOHCW and will be the key facilitators for knowledge transfer between Cordaid and the Government.

61. Cordaid will develop a roadmap for capacity building and gradual transferring of responsibilities to the Government and submit to the Bank and Government for approval by July 31, 2013. The basis of this roadmap is common agreement between all actors involved on the institutional set up of the RBF system in the long term. Checks and balances and clear division of roles and responsibilities are the bases of the RBF system to function well. The capacity building plan will be reviewed and adjusted during annual project reviews. The NSC will evaluate the arrangement each year under the leadership of the MOHCW Permanent Secretary. Annual work programs for the following year will be submitted for Bank approval by November 1, and regular project reports that document progress made in the last six months will also be submitted within one month of the end of the period that is being covered by the report. In addition, during annual reviews of the project, assessments will be undertaken on roles and responsibilities to identify opportunities to further improve ownership and management of specific RBF functions by relevant Government stakeholders. The PIE continues to engage various health-related service providers under performance-based service delivery contracts stipulating the services they will deliver and the level of payments for each service provided.

62. DHEs and PHEs in the rural districts will continue to play a similar role to that of the original project, with intensification of efforts by Cordaid to transfer skills on purchasing of services and quality supervision of services with in-depth focus on clinical care as per the MTR recommendations. The capacity building of City Health Services Departments for Harare and Bulawayo as well as of the MOLSS to manage the voucher program will be undertaken within the proposed AF implementation timeframe. The role of the District Steering Committee remains the same. The AF will strengthen the District Steering Committees’ capacity to effectively play a governance and oversight role for the RBF.

63. Cordaid will engage local or regional staff with technical skills planned within the AF budget (health economics, quality of care and health systems strengthening) recommended at the MTR to support both the rural and urban components. Cordaid will serve as the fund-holder and purchaser for the urban health services and will contract: (i) the City Health Services Department for their supervision of services, with DHEs under their jurisdiction; (ii) DHEs in urban areas for supervisory services of private and public facilities enrolled in the supply-side AF; (iii) public and screened private providers for achievement of quality standards based on an integrated supervision checklist; (iv) MOLSS for enrollment of households, monitoring of the demand-side component and households to ensure they receive benefits under the voucher scheme, and for consolidated reports on uptake of vouchers; (v) CBOs for community-based client tracing and spot checks concerning quality of services received.

64. All municipal facilities in the selected districts and referral facilities in the two cities and a few private facilities17 will provide services under the project through the AF. A voucher for referral

17 A selection criterion will be developed before to screen private providers within the selected urban health districts. Private providers will offer a pre-defined package of services as stipulated in their performance-based contracts with the PIE.

19

will be provided to patients by participating facilities to enable them to use ambulance services to the next level of care. The public or private transportation provider will receive payment from the PIE upon presentation of a voucher stamped by the receiving referral facility with identification details for the patient on it for counter verification. Penalties discouraging cheating or abuse of the transportation and referral service will be reflected in the Project Implementation Manual.

65. The project brings in collaboration among three Ministries and two municipalities. The MOLSS will coordinate client engagement, community monitoring and report to the PIE and MOF on voucher utilization by targeted households. The MOHCW will have a regulatory role in setting the standards of service provision, overall supervision and supervising the PIE. The counter-verification agency, already contracted to support the current RBF program, will expand its scope of services to include an urban counter verification component.

66. This is an operation with an overall moderate risk rating. Risks, which relate largely to country context, have been identified and appropriate mitigation measures including working closely with the Country Management Unit are planned to address these risks. These are outlined in the Operational Risk Assessment Framework in Annex 2. The parent operation is a well-performing project in which identified risks have been mitigated appropriately to date.

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Figure 3. Institutional arrangements - Urban Component

External verification arrangements Internal verification arrangements Contracting arrangements Payment

Financial Management Arrangements21

67. In March 2013, the Bank conducted a full financial management assessment (FMA)18 of the capacity of the fiduciary arrangements put in place by Cordaid for the original project. Under the original project, key financial management functions were handled in The Hague (Cordaid Head Quarters).

68. Key financial management processes previously handled in The Hague (including preparation of Interim Financial Reports, annual financial statements, budget and timing, financial performance evaluation, withdrawal applications, procurement, quality and control) will be shifted to Cordaid’s Harare office. The Hague office will shift to a quality assurance, supervisory and monitoring role to ensure high quality reports and enforcement of provisions of the Financial Management and Procurement Manuals. There will be closer collaboration between Cordaid, the MOF and the MOHCW Finance Directorate to further strengthen financial management practices and systems for the project. This change will also facilitate project implementation support and oversight from the Bank fiduciary team.

69. A follow up financial management assessment will be undertaken once the proposed financial management arrangements have been completed by Cordaid. The objective of the financial management assessment will be to determine whether the Harare office has the staff complement and capacity to manage the project’s finances and that the financial management arrangements in place meet the World Bank’s minimum requirements under OP/BP10.00. Mitigation measures will be agreed upon during the assessment and an updated financial management action plan put in place for the implementation of the mitigation measures.

Fund Flow and Disbursement arrangements

70. Next steps include discontinuing the Designated Account in The Hague to allow for World Bank disbursements to flow directly into the designated account in Harare. All eligible expenditures of the project shall be paid out of the designated account. For the co-financing from the Government of Zimbabwe, funds will flow directly from the Treasury to the MOHCW, which will then be used to pay facilities for service provision based on Cordaid’s results verification reports and payment claims from health facilities.

18 See the FMA report in annex 5 of this document.

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71. The fund flow will be as follows:

Figure 4. Funds Flow World Bank and Government Financing

72. Cordaid will be responsible for the day-to-day management of the Designated Account and for fund holding aspects of the RBF. The MOF will be copied when Cordaid submits disbursement projections and requests and Interim Financial Reports on expenditure progress to the Bank. The Bank will copy the MOF when approving disbursement projections. A select team of staff in MOF will have access to the Bank disbursement system to monitor disbursement progress of the project.

Reporting and External Audit

73. Cordaid will increase within the limits of the budget the staff responsible for financial management in Harare to strengthen capacity to manage the urban sub-component and skills transfer to the Government. The PIE will build capacity in government for critical functions including project budget preparation and implementation, accounting and reporting and internal financial controls during the AF. The current internal auditing arrangements—whereby auditors are contracted to provide a number of days of auditing services to the project in each calendar quarter—will continue. Possible use of MOF staff for internal audit purposes will be explored. The PIE will share the internal audit report with the World Bank for project management and technical support purposes. Unaudited Interim Financial reports will be prepared on a quarterly basis by the team responsible for the project’s financial management and submitted to the World Bank within 45 days of the end of each quarter. At the end of each financial year, the annual accounts or the annual financial statements of the project will be prepared and submitted to external auditors for auditing. An independent external auditor will be engaged to audit the financial statements and the accounts of the PIE using international auditing standards and terms of reference agreed upon with the Bank. Copies of the audited financial statements, together with

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World Bank

Designated Account Harare

Operating expenses Payment to Beneficiaries (Health

Facilities, District Health Executive etc.)

Republic of Zimbabwe Treasury

RBF Account MOHCW

the management letter, shall be forwarded to the Bank by the PIE no later than six months after the end of the financial year.

Procurement

74. Procurement of goods and non-consulting services under this Grant will be carried out in accordance with Guidelines: Procurement under IBRD Loans and IDA Credits, January 2011. Selection of consultants will be carried out in accordance with Guidelines: Selection and Employment of Consultants by World Bank Borrowers, January 2011. The Bank’s Anti-corruption Guidelines will apply.

75. The PIE has been responsible for procurement of goods and services for the original project and implementation progress on procurement packages is mixed. Whereas the project has experienced successful procurement of low value items using relatively simple methods, procurements using more competitive methods like International Competitive Bidding needs improvement. The PIE faced challenges when: (i) preparing bidding documents/Requests for Proposals; (ii) undertaking evaluation of Bids/Proposals; (iii) preparing Evaluation Reports in accordance with the World Bank procurement guidelines; and (iv) timely delivery of goods or services from suppliers.

76. A procurement risk assessment of the PIE was conducted in May 2013 using the Bank’s Procurement Risk Assessment Management System (P-RAMS) and the risk has been found to be Substantial. Mitigation measures have been identified and when implemented, will reduce the overall risk to Moderate.

77. Major risks identified as substantial include: (i) lack of accountability for procurement decisions; (ii) staff with limited experience to carry out procurements under World Bank procedures using competitive methods and undertake capacity building of other implementing entities; and (iii) inadequate contract management arrangements.

78. Project implementation under the AF will require the PIE to hire an experienced Procurement Specialist, at a minimum, on a retainer basis if employment of a full time staff is not justified by activities. This recruitment should be subject to Bank prior review process. The experienced procurement staff will be expected to provide oversight and capacity building activities to other Participating institutions and ensure that activities are implemented as planned.

79. Based on the Procurement Risk Assessment, the main risks and risk mitigation measures are provided in the table below:

Table 6: Summary Assessment of Capacity, risk and Mitigation – Action Plan for PIE

Issues Risks Mitigation Measures

By When

Accountability for procurement Decisions

Procurement staff not accountable for procurement decisions in the Implementing

More procurement responsibilities should be handled by the procurement and logistics staff

Within three months of Grant Effectiveness

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Issues Risks Mitigation Measures

By When

Agency. and less by the Finance and Administration Manager, currently, handling the procurement roles.

Staffing i) Key procurement staff do not have adequate experience in handling open competitive bidding processes under Bank procurement procedures.ii) Inexperienced staff to undertake procurement capacity building of beneficiary institutions.

Engagement of an experienced Procurement Specialist for the duration of the competitive bidding process and to undertake procurement capacity building of participating entities.

Within 30 days of AF effectiveness

Contract Management

Inadequate contract management arrangements resulting in delays in delivery of goods and services

Appointment of an internal staff to manage the contract until the contract is completed; further, the Agency need to enforce the contractual terms in the event of delays in delivery of products

Within 6 months of Grant Effectiveness

Results Based Contracts

80. With the addition of the urban sub-component, the mission concluded that specific results based contracts be drafted on similar lines as those existing between the National Purchasing Agency (NPA) and the various service providers including those for supervision and counter verification. The draft contracts, including respective specific terms of reference for the providers and supervisors, should be submitted to the Bank for prior review and clearance.

Safeguards

81. No new safeguards policies are triggered under the proposed AF and thus the environmental category of the AF will remain as B, which requires a partial assessment. As was the case with the original project, the AF triggers the Environmental Assessment (OP/BP 4.01) safeguards

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policy mainly because health centers targeted under this operation generate health care waste containing hazardous and infectious material. The operational framework for the AF will continue to include mechanisms to actively monitor health care waste practices by health providers. Supervision checklists used for the project have clearly defined performance criteria against which health providers’ compliance with the Health Care Waste Management (HCWM) Plan of 201119 is assessed. Health providers that do not comply with HCWM guidelines stipulated by the HCWM Plan are penalized under the performance-based contract and receive reduced performance-based grants. The PIE will continue to work closely with the Environmental Health Unit in the MOHCW to ensure that supervision of HCWM practices is undertaken comprehensively. These activities will be carried out in accordance with national and local laws and procedures.

82. As with the original grant, the AF will continue to finance or contribute to the upgrading (e.g. painting, electrical work) of existing health facilities.

IV.APPRAISAL SUMMARY (ECONOMIC ANALYSIS AND IMPLEMENTATION ARRANGEMENTS, AND TECHNICAL APPRAISAL)

Economic and Financial Analysis

83. Additional funding will be used to scale-up project activities in both rural (through mainly supply-side financing) and urban areas (through demand-side financing and quality-based RBF). In both components, the benefit package remains more or less the same for rural districts and contains high impact services such as: high-risk perinatal referrals; institutional deliveries including management of complications; postnatal care; and vaccination. For urban areas, the package of services supported by the voucher will be high-impact interventions that will be reviewed every six months for continued relevance and appropriateness of the prices. The economic justification for investing in MCH services included in the original project appraisal remains relevant.

84. The section below focuses on: (i) performance-to-date of the rural sub-component against cost and effects assumptions in the appraisal phase of the original project; (ii) equity and efficiency considerations for the new urban sub-component focusing exclusively on the poor; and (iii) the economic case for the urban sub-component, which combines demand-side financing with improvement in quality of care.

85. Regarding the on-going rural sub-component, the original assumption about annualized per capita cost of the project is US$3—very close to the actual spending to date (US$1.5 for service delivery, or 47% of the total spending projected until July 2013). On the effects side, performance of many key indicators compares positively with estimates in the initial appraisal (see table below). Thus the actual cost-benefit ratio is likely to be higher than originally estimated.

19 The Bank supported MOHCW to develop the HCWM Plan in 2011 and continues to provide support to ensure its implementation at health facility level.

26

Table 7: Estimated and Actual Performance of Select Interventions at Clinic and District

Selected indicators (coverage) Baseline(Health Sector

Investment Case 2010)

Project Investment(Estimated at original appraisal)

Project performance(latest month of complete data - Nov

2012)(1) (2) (3) (4)

Women of reproductive age currently using any family planning method (modern)

58% 64% 78%1

Pregnant women receiving 3 ANC visits including urine test

36% 40% n/a

Mothers with birth in the last 12 months protected against tetanus

Tetanus coverage among pregnant women5

55% 61% 61%2

HIV positive pregnant women receiving a complete course of ARV prophylaxis to reduce MTCT

27% 30% 51%3

Children aged 6-36 months who received at least one dose vitamin A supplement within the last 6 months

52% 58% 61%4

Children under 5 receiving vitamin A supplement5

Access by women with complicated pregnancy to treatment at district hospitals offering quality BEmONC or CEmONC

14% 16% n/a

Note: assumptions for calculating denominators of coverage indicators: 1 women of reproductive age=22% of population;2 expected pregnancies=4% of population; 3 HIV positive among pregnant women=17%; 4 target population = 50% children under 1+100% children aged 1-5=12.8% of population; Parameters are provided by Cordaid. 5 Note that indicators supported by the project are not exactly the same as ones in the original economic analysis.Figures in columns (2) and (3) were estimated at national level, figures in column (4) are from project performance data for 18 rural districts.

86. The urban sub-component’s MNCH services voucher provision to the poorest 20% of population can be justified on the grounds of both equity and efficiency. It is the case in Zimbabwe as well as many other countries that the poor have the widest disconnect between health needs and access. Providing subsidized access to essential health services to the poor not only improves service utilization but also prevents them from falling deeper into poverty due to the financial burden of health care. On the cost efficiency side, an oft-cited estimate states that “perfectly targeted” poverty alleviation programs—benefitting all the poor and only the poor—could eliminate poverty at less than 10% the cost of programs that do not discriminate between the poor and the rich.

87. To date, there has been no comparative study on the cost-effectiveness of vouchers versus supply-side financing or other forms of demand-side financing (such as cash transfers).

27

However, there is robust20 evidence that vouchers for maternal health can encourage skilled birth attendance, among other outcomes, and tend to disproportionately benefit disadvantaged households. Furthermore, the best results are often achieved when vouchers are implemented in concurrence with supply-side incentives and interventions such as training of health workers and improving quality of care, which are the intended activities of the project.

Technical Analysis

88. The underlying technical appraisal of the original project remains valid. The proposed design for the AF is firmly anchored in lessons learned and evidence from implementing the RBF mechanism in 18 rural districts. The Bank and the Government have built on robust evidence gathered from a Technical Review undertaken after the first nine months of piloting the RBF in two districts of Zimbabwe and the MTR undertaken after close to 20 months of RBF implementation. The overall technical design of the project is aligned with the country’s health sector priorities as defined in the National Health Strategy 2009-2015. Building on evidence from the original project, the AF will pilot an innovative model in urban health districts for addressing some of the critical supply-side and demand-side constraints to health service delivery using RBF. Successful implementation of the AF will require mitigation of risks associated with: delayed flow of funds from the fund-holder to purchasers; abuse of the referral vouchers by providers in urban districts; and non-uptake of the voucher by poor households. A well-structured engagement with beneficiaries through CBOs and health extension workers will ensure awareness of the project and mobilize them to utilize the vouchers. In addition, an independent verification agency (IVA)—reporting to a neutral actor such as the MOF—will be contracted to verify self-reported results and data by different actors involved in the AF 21. The IVA’s findings will be shared simultaneously with the World Bank, MOHCW, MOLSS and MOF with a copy to the PIE. The MOF will convene a meeting to discuss the results and agree on an action plan.

89. The technical objective of the project addresses the most immediate need to restore service delivery to the population, particularly for MCH services. The service package is designed to contribute to reducing under-five and maternal mortality. Results of operational data analysis of the original project reveal major improvements in the coverage of key maternal and child health indicators (See Figures 1 and 2). The comparison of the 16 RBF districts and 16 matched non-RBF districts using HMIS data provides strong evidence supporting the value of holding providers accountable for results (See Annex 1). It also suggests that the performance improvement in the incentivized services did not come at the expense of non-incentivized services.

20 Bellows et al. Systematic Review: the use of vouchers for reproductive health services in developing countries: systematic review. Trop Med Int Health. 2011 Jan;16 (1):84-96.21 The external verification agency, currently the University of Zimbabwe will play an expanded role to fulfill Independent Verification Agency roles for the voucher component.

28

V. ANNEXES

ANNEX 1 - REVISED PROJECT RESULTS FRAMEWORK22

Project Development Objective (PDO):

To increase coverage of key maternal and child health interventions in targeted rural and urban districts consistent with the Recipient’s ongoing health initiatives.

PDO Level Results IndicatorsC

ore UOM23

BaselineOriginal ProjectStart(2012)

Progress To Date(2013)24

Cumulative Target Values25

Frequency Data Source/Methodology

Responsibility for Data

CollectionComments2013 2014 2015

1. Number of pregnant women receiving antenatal care during a visit to a health provider in participating districts

Number

95,889 168,264

182,000 190,000 201,000

6-monthly Project reports

Project Implementing Entity,MOHCW

Disaggregated by district and rural/ urban

2. Percentage of births attended by skilled health personnel26 in a health institution in participating rural districts

Percentage

58 58 61 62 63 Baseline and end of project

DHS

Impact Evaluation survey

MOHCWProject Implementing EntityWorld Bank

Disaggregated by district and by level of facility at which delivery takes place.

3. Number of pregnant women living with HIV who received antiretroviral to reduce the risk of MTCT Number

8179 9,324 9,500 9,700 9,800 6 monthly Project Database

MOHCWProject Implementing Entity,


22 The baseline data are largely from the DHS. It is envisaged that follow up DHS data will be available at the end of the project. If not, the Bank funded follow up impact evaluation data will be used to assess the progress of various indicators.23 UOM = Unit of Measurement.24 For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value.25 Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the “Comments” column.26 Skilled health worker defined as doctors, midwives and any ordinary nurse with basic orientation in midwifery in line with MOHCW position.

29

PDO Level Results Indicators

Cor

e UOM27


Progress To Date(2013)28

Cumulative Target Values29 Frequency Data Source/Methodology


CollectionComments

4. Percentage of women 15-49 years receiving during their first and repeat visits one of the modern family planning methods30 in participating rural districts

Percentage

56 56 59 60 61

Baseline and end of project

DHS

Impact Evaluation survey

MOHCWProject Implementing Entity

Disaggregated by (a) first time visits, and (b) repeat visits. Disaggregated by district.

5. Number of children immunized31

Number

77,195 107,333

108,000 111,000 124,000

6 monthly Project reports


Disaggregated by district

6. Number of births attended by skilled health personnel in health institutions in participating urban districts32 Number

0 8,200 8,400 8,500 6-monthly Project reports

Project Implementing Entity,MOHCW


7. Increase in average quality scores by health facilities in participating districts

Percentage

0

70% 73% 74% 75%6 monthly Project

ReportsMOHCWProject Implementing Entity

Experiences so far have shown the score to increase rapidly initially followed by stagnation.

8. Number of women who had their first ANC visit during the first 16 weeks of pregnancy in participating districts

Number 0

0 17,800 18,600 19,200 6 monthly Project Reports



Beneficiaries

Project beneficiaries,

Number

3,462,354

3,891,000 3,930,000 3,969,000

Annually

Project reports, Special surveys

Project Implementing Entity,MOHCW, MOLSS


Of which female (beneficiaries) Number 1,603,002 1,753,000 1,770,000 1,787,000 Annually Project Project Disaggregated by

27 UOM = Unit of Measurement.30 Modern family planning methods defined as oral contraceptives, injectable, IUDs or implants.28 For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value.29 Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the “Comments” column.31 Number of children immunized under 12 months against DTP3 (Penta3)32 Number of birth in urban areas being monitored separate from deliveries in rural districts to assess the effect of the combined demand and supply side RBF interventions.

30

reports, Special surveys

Implementing Entity,MOHCW, MOLSS

district

Intermediate Results and Indicators

Intermediate Results Indicators

Cor

e

Unit of Measure

ment


Progress To Date

(2013)

Target Values

Frequency Data Source/Methodology


Collection Comments2013 2014 2015

1. Health facilities constructed, renovated, and/or equipped33

Number

0

170 264 334 400 6 monthly Project Reports


This indicator relates to upfront investments in medical equipment

2. Health personnel receiving training

Number

0

1489 1900 2100 2200 6 monthly Project Report Project Implementing Entity

Health workers who participate in RBF training and associated training linked to core services of the project. Numbers disaggregated by category of health workers (a) doctors, (b) nurses (c) management (d) support staff

3. District Health Executives (DHEs) using quality tool for supervision of health facilities

Number

0

18 18 18 18 6 monthly MOHCW Reports,Project Reports


Indicators include use of the quality tool to supervise health facility performance

4. Percentage of health facilities implementing Quality Improvement/Assurance model in the participating districts

Percentage 0

0 30% 50% 80% 6 monthly Project Reports



33 Total eligible health facilities in the project area are 400

31

ANNEX 2 - OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)

1. Project Stakeholder RisksStakeholder RiskRisk Description:

Rating Low

Due to unfamiliarity with the RBF approach in urban areas, municipalities, heads of private health facilities and other City Health Services Department staff will confuse the project with input based financing thereby affecting early stages of implementation.

Risk Management:The Bank and PIE will work closely with the Government and MOHCW to ensure that the RBF approach is explained clearly to key stakeholders from municipalities and heads of private facilities. Key representatives of municipalities will serve on District Steering Committees and this will strengthen understanding and ownership of the project.

Resp: Bank

Status: Not yet due

Stage:Both

Recurrent: Due Date:

Frequency:

District Health Executives, heads of health facilities do not fully appreciate the implementation of the voucher sub-component in low income urban areas. This leads to delays in verification of outputs reported by health facilities by DHE/PHE and adjustments made to final payments based on quality of services by health facility heads and health center committees.

Risk Management:Technical support from the PIE to ensure practical application of RBF mechanism by heads of health facilities and members of the Health Center Committees including use of business planning processes that are evidence-based to minimize subjectivity in the event targets are not met.Resp: PIE

Status: In progress

Stage:Both


Frequency:

The voucher program will be misunderstood by the community thereby leading to resistance to its implementation.

Risk Management:The PIE in collaboration with the MOHCW established technical teams at national and provincial levels to strengthen capacity of DHE and PHE to execute their mandated RBF roles to enable payments to take place in a timely manner. Capacity building interventions were rolled out to strengthen understanding of RBF programs.

Resp: MOHCW and PIE

Status: In Progress

Stage: Both Recurrent: Due Date:

Frequency:

2. Implementing Agency (IA) Risks (including Fiduciary Risks)CapacityRisk Description:

Rating Moderate

32

RBF needs significant know-how to make it work. In addition, for RBF to work, timely execution of key functions including financial reporting and procurement is important. The necessary capacity might not be available the decentralized level of the program.

The PIE may not have adequate technical knowledge to lead and manage the clinical quality of care aspects in the revised RBF checklists

Risk Management:

1. Close hands-on technical assistance (TA) by the Bank will continue to be provided by the Bank team. The Bank's Procurement and Financial Management Specialists based in Harare and Lusaka as well as a seasoned staff will provide ongoing support to ensure the project team develops sufficient capacity to run the project in the Zimbabwean context.

Resp: Bank

Status: Both

Stage: Both Recurrent: Due Date:

Frequency:

GovernanceRisk Description:

Rating Moderate

The legacy of decline in key governance aspects as reflected by international rating agencies will pose risks for accountability for resources

Risk Management:1. The Bank contracted an international NGO to manage flow of funds and build capacity of the Finance

Directorate in the MOHCW to monitor funds and strengthen accountability within Government.

2. A high level National Steering Committee was established to oversee governance of the project and it has the mandate to take corrective action where accountability issues are noted.

Resp: PIE

Status: In progress

Stage: Recurrent: Due Date:

Frequency:

2. Implementing Agency (IA) Risks (including Fiduciary Risks)DesignRisk Description:

Rating Low

Some of the risks associated with PBF include: (i) gaming the system by inflating service delivery records; (ii) favoring service delivery to easier to reach population; and (iii) health providers only focusing on targeted services to the detriment of other interventions.

Risk Management:

1. The RBF National Steering Committee will play a key role in debating and endorsing proposed changes to the package of services or to major design modifications. The Project Implementation Manual provides flexibility to modifications based on evidence of changes to the context and priorities.

2. The design of the original project was undertaken through a participatory process over a 14 months period. The design reflects priorities as reflected by the National Health Sector Investment Case 2010-2012 and the National Health Strategy 2009-2013. Implementation approaches were developed with guidance from MOHCW and expert input of the PIE

33

The rapidly changing context in the health sector in Zimbabwe might lead to a shift in priorities and warrant modifications of the package of RBF indicators. Changes might be as a result of more knowledge being developed on the RBF approach by key stakeholders in Zimbabwe.

External factors in the health sector beyond RBF might constrain the functioning of the program. These constraints include challenges in the supply chain of key drugs and services. The current push system for drugs might present challenges linked to stock-outs.

3. Modifications to the package and pricing of RBF services will be done every six months by Cordaid and will be reviewed and cleared by the Bank. As proven in other contexts, RBF does not work in isolation from other interventions in the health sector. In Zimbabwe, RBF will work closely with other health system strengthening interventions such as the Health Transition Fund. Close collaboration with other donors and international NGOs supporting MOHCW is ongoing.

Resp: Bank

Status:In progress

Stage:Both


Frequency:

Social and EnvironmentalRisk Description:

Rating Moderate

Disposal of bio-hazardous waste constitutes a serious environmental and social issue in Zimbabwe. The Public Health Act and the Environmental Management Act set strict penalties for unregulated disposal of medical and hazardous waste. The project has potential to increase medical waste from health facilities.

Risk Management:

1. The MOHCW and PIE will work closely to monitor implementation of the Medical Waste Plan by health facilities during project implementation. The Medical Waste Plan addresses a number of challenges linked to management of medical waste and sets easily actionable guidelines for health facilities to follow.

2. The PIE will closely monitor medical waste management practices together with the DHE. Scores for quality will be linked to medical waste practices in addition to other core clinical aspects. The PHE will closely monitor how district hospitals handle medical waste issues since they are the ones that produce high volume of waste disposal.

Resp: Bank

Status: In Progress

Stage:Both


Frequency:

Program and DonorRisk Description:

Rating Moderate

Aid fragmentation and sometimes differences in approach to financing the recovery of the health sector in

Risk Management:1. Dialogue with donors to date has enabled sharing of strategic information on how to better strengthen

collaboration and synergies between different programs in support of MOHCW's implementation of the

34

Zimbabwe would affect coordination needed to achieve goals of the project.

Development partners with limited experience in RBF might resist the approach and roll-out interventions that under-mine or duplicate the program’s efforts

There are several donors in Zimbabwe contributing to the recovery of the health sector. The project is not going to replace any ongoing interventions, it is meant to strengthen achievement of health outcomes together with other donor and MOHCW financed interventions.

national strategy. Some donors have tentatively expressed interest to collaborate or finance similar projects in due course.

2. Dialogue with key donors has been scaled-up. There is growing appreciation of the RBF approach by donors and other players in Zimbabwe. This has seen a decline in resistance to the project.

Resp: Bank

Status: In progress

Stage:Both


Frequency:

Delivery Monitoring and SustainabilityRisk Description:

Rating Low

Though support from Ministry of Finance and Senior Management in the Ministry of Health has been impressive so far, lack of follow up by the MoF on the issue of increasing co-financing could jeopardize continued sustainability of the program.

Risk Management:The per capita cost of RBF subsidies will be kept at a reasonable level to enable Government financing to cover a portion of it and to follow up.Resp: Bank and MOF

Status:In progress

Stage:Implementation


Frequency:

3. Overall RiskImplementation Risk Rating: ModerateRisk Description: Project preparation is being undertaken with the support of a strong technical team which has enabled the Government and the PIE to initiate steps towards revising quality supervision checklists to include clinical care indicators. However, actual implementation of clinical care guidelines is complex and requires strong technical skills in PIE and MOHCW to monitor and enforce. The Bank team will work closely with other development partners with significant experience in Zimbabwe on quality of care issues and the Bank will provide ongoing technical support to DHEs, PHEs and the national level MOHCW to strengthen implementation of the clinical guidelines.

The voucher component requires significant start-up technical and management input by the municipalities and the Government. The Bank and the PIE are providing technical support through technical working meetings and on-the-job support to enable rapid completion of key start up activities.

35

ANNEX 3. PROGRESS TO DATE OF THE ORIGINAL PROJECT

1. Progress to date was assessed using the HSDS Project’s operational data and data from the HMIS obtained from the MOHCW in February 2012. Given that these are routine administrative data rather than data from rigorous impact evaluation, the patterns depicted are more suggestive than conclusive on the true impact of the project. Analysis of the results reveals a noticeable increase in the coverage of key indicators as supported by the project in the short-term. Furthermore, they demonstrate that the project has inserted positive effects on a number of health system aspects, including efficiency, equity, and quality of care. The comparison of the 16 RBF districts (all but two front runners) and 16 matched non-RBF districts using HMIS data provides evidence indicating the value of holding providers accountable for results. It also suggests that the performance improvement in the incentivized services did not come at the expense of non-incentivized services.

Progress of High-impact Indicators

2. Operational data from the beginning of the project to November 2012, the latest month for which verified data are available, show major increases in the coverage of key MCH indicators (institutional deliveries, pregnant women having completed at least 4 ANC visits, PNC, vaccination, current users of modern family planning methods, and HIV positive pregnant women receiving ARV prophylaxis (PMTCT)) (Table A1). The quantity of services supported by the project increased by more than two times for ANC4 and three times for PNC. This trend, if sustained, will contribute to reducing maternal and child deaths in the country.

Table 6 A1. Quantity of key MCH services supported by the project, March – November 2012

Month

Inst. Deliveries

ANC4 PNC Vaccination

Modern FP

PMTCT

Mar 3,605 3,121 1,239 2,244 26,768 774Apr 3,888 3,650 1,382 2,127 31,015 636May 3,786 4,090 1,773 2,278 32,103 597Jun 5,376 5,266 2,575 2,686 38,490 708Jul 5,119 5,977 3,260 2,426 37,294 773Aug 5,457 6,289 2,968 3,158 33,446 767Sep 6,190 6,798 3,490 2,984 40,899 888Oct 5,917 6,930 3,662 3,209 40,083 916Nov 5,725 7,044 3,755 3,026 39,650 825

Enhancing Efficiency Through Strategic Purchasing

3. RBF can improve efficiency and allocation of resources in the health system. For example, by setting the incentives high for services to be delivered at health centers, RBF attracts funding to primary care level, thus contributing to improved quality of care and service provision capability at the primary health care level. This in turn attracts patients to primary care, where services cost less, and saves hospital resources for more complicated cases. In addition, it also

36

does not reimburse for normal deliveries in the secondary hospitals unless they are deemed to be difficult cases and were referred from the lower level. Data from two front runner districts clearly showed an increase in number of deliveries handled by the health centers over time against a sharp decrease in the hospital deliveries reimbursed by the program (Figure A2). Throughout the duration of the project, price has been adjusted to assure RBF funding directs toward prioritized primary care level. For example, at the recommendation of the Technical Review in June 2011, incentive levels were revised for several indicators, resulting in an increase in the share of RHCs in total output spending from 50% to 70%.

Figure 6 A2. Trends in normal deliveries in RHCs and hospitals in 2 front-runner districtsJu

l

Aug

Sept Oct

Nov

Dec

Jan

Feb

Mar

Apr

May Jun Jul

Aug

2011 2012

0

50

100

150

200

250

Deliveries in RHC Linear (Deliveries in RHC)Deliveries in Hospitals Linear (Deliveries in Hospitals)

Num

ber o

f Del

iver

s

Conscious Efforts to Improve Equity

4. It is expected that marginal return to RBF investment will be higher in resource-poor areas which did not have much to spend before the program. On the other hand, it is possible that less remote areas are in a better position to reap the benefits of RBF incentives: facilities could be better equipped and staffed to provide the services, and the distance from the end users to facilities could be shorter, making it easier to access services.

5. The project has made concerted efforts to improve equity in access to important MCH services. On the demand side, as the result of the program, user fees for incentivized MCH services in participating facilities were fully removed. On the supply side, the project provides extra bonus to remote facilities. As shown in figure 6 A3 below, the remoteness bonus is rather substantial in a number of districts.

37

Figure 6 A3. Remoteness bonus as percentage of RBF reimbursement, by district

Marondera

ChegutuGweru

Chikomba

Mazowe

Zvishava

ne

Mutoko

Centenary

Mangwe

Mwenezi

Gokwe

Gwanda

Mutare

Chipinge

Chiredzi

NkayiBinga

Kariba

0

5

10

15

20

25

% s

pent

on

rem

oten

ess

bonu

s

Improving Technical Quality of Care and Client Perception

6. It is important to stress that RBF is not only about volume of services; contracting facilities were generally found to be more responsive to client demand, while at the same time making progress in improving clinical care standards.

Figure 6 A4. Technical quality of care (assessed by DHEs/PHEs) and client perception (assessed by CBOs)

_x0002_T1 _x0002_T2 _x0002_T3 _x0002_T40

20

40

60

80

100

DHE/PHE Score

CBOs ScorePerc

ent

38

Improving Management Autonomy and Assuring Accountability for Results

7. A fundamental difference between output-based financing (RBF) and input-based financing is RBF’s ability to generate management autonomy, which helps ensure accountability for results. In the project area, participating facilities gain flexibility in using incentive payment to improve service delivery and quality of care so that they can attract more patients. These results were shown in figure 6 A5 below, which compares 16 RBF districts (all but the two front runners) with 16 matched non-RBF districts on number of pregnant women having completed 4 ANC visits. Note that the data are from HMIS, and therefore they go back to one year before the project started. They also represent more than just participating facilities in the RBF districts, although a large share of services provided in these districts were handled by the participating facilities. As shown, the trends were rather similar between the two groups up until the start of the project (March 2012), and departed immediately after that. The comparisons for many other key services show similar patterns.

Figure 6 A5. Number of pregnant women having completed 4 ANC visits per 10,000 population in 16 RBF and 16 matched non-RBF districts (HMIS data)

Mar-11

May-11

Jul-11

Sep-11

Nov-11

Jan-12

Mar-12

May-12

Jul-12

Sep-12

Nov-12

Jan-13

Mar-13

0

5

10

15

20

25

30

35

40

45

RBF Districts Non RBF Districts

per 1

0,00

0 po

pula

tion

Effects on Non-Incentivized Services

8. A common concern for all RBF programs is that participating facilities will focus on delivering incentivized services and neglect the services that are not paid for by the programs. This issue is explored in Zimbabwe with HMIS data for a number of non-incentivized indicators, which belong to the most frequent conditions for outpatient contacts (diarrhea, malaria, and acute respiratory infection, or acute respiratory infection (ARI), both among children and adults). Figure 6 A6 presents the ARI rate (per 10,000 population) in RBF and matched non-RBF districts. As shown, the trends are identical not only in the period before the project started, but also for the whole 9 months into the project. This is a clear contrast to

39

Project Start

the picture depicted in Figure 6 A5, which shows an appreciable difference between RBF and non-RBF districts in the period after the program started. The patterns are similar for other indicators. Thus it is reasonable to conclude that to date there is no evidence suggesting the improvement in RBF performance was achieved at the expense of the non-incentivized services. Under the AF, the MOHCW with the support of Cordaid will routinely monitor RBF funded and non-RBF funded services within the same facilities to monitor whether health providers are in any way biased toward RBF funded services.

Figure 6 A6. Facility based ARI cases per 10,000 Population in 16 RBF and 16 matched non-RBF districts (HMIS data)

Mar-11

Apr-11

May-11

Jun-11Jul-1

1

Aug-11Sep

-11Oct-

11

Nov-11Dec-

11Jan

-12Feb

-12

Mar-12

Apr-12

May-12

Jun-12Jul-1

2

Aug-12Sep

-12Oct-

12

Nov-12Dec-

12Jan

-13Feb

-13

Mar-13

0

20

40

60

80

100

120

140

160

180

RBF Non-RBF

per 1

0,00

0 po

pula

tion

40

Project Start

ANNEX 4: URBAN SUB-COMPONENT

Overview

1. The urban sub-component focuses on both demand (household) and supply-side (health facility) financing through incentives to accelerate utilization of quality maternal and neonatal healthcare (MNCH) services of the urban poor. This initiative arises from the backdrop of worsening maternal and child health (MCH) status in Zimbabwe, compared to other sub-Saharan African countries. Further, the urban areas in the country have growing inequalities and stagnating maternal and child health outcomes. There is an increasing realization that it is critical to strengthen both demand and supply-sides simultaneously to improve utilization of MCH care in Zimbabwe and to achieve MDGs 4 and 5. Hence, this project intends to give equal weight to both demand generation and system strengthening for MCH care. Currently, a World Bank supported initiative under the RBF program operates in 18 districts of Zimbabwe focused on supply-side strengthening to boost rural MCH care. This proposed additional sub-component will expand the RBF intervention to include low-income urban health districts from the two largest cities (Harare and Bulawayo) to increase utilization through an equal focus on reducing demand-side barriers while improving the availability of quality MCH care.

Purpose

2. The supply side financing of the new urban sub-component, with a focus on improving quality at primary care clinics and poly-clinics will benefit both the poor and non-poor patients, help limit bypassing of primary care level and save central hospital resources for complicated cases. Having a program to support poor mothers to obtain MCH services near their home can reverse the influx of urban poor patients traveling long hours to access free services in the rural, currently RBF funded facilities. Combining supply and targeted demand side financing in the pilot will provide valuable learning experience in terms of identifying and recruiting beneficiaries, defining benefits packages, and managing providers. All these experiences will be useful in the event a decision to move towards social health insurance is made. The demand side initiative offers a well-targeted model, which will demonstrate the effect of removing user-fees on lowest income households’ access and utilization of maternal and new-born services. By focusing subsidies on the poorest households, it will also help policy makers address sustainability concerns in the future.

Specific Objectives of Urban Sub-component1. To strengthen the supply and quality of MNCH services in selected urban districts 2. To increase utilization of MNCH services among the urban poor3. To reduce out-of-pocket and catastrophic expenditure on MNCH services among the

urban poor.

Demand-side intervention – targeting and vouchers

3. The project will primarily enable mothers to access free maternal and neonatal healthcare services. Tentatively, the services vouchers will be redeemed for four ante natal (ANC) visits, delivery and related complications (including c-section), two post-natal (PNC) visits and family planning services during the post-partum period. Certain essential services of the

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neonates will also be provided freely. The final list of specific maternal and neonatal services will be finalized through a consultative process led by a Technical Working Group of the National Steering Committee. In addition, free ambulance services will be provided to mothers and neonates to reach out to the designated hospitals for referral services due to pregnancy risks or complications.

4. The targeting and identification of beneficiary households will be overseen primarily by MOLSS officers along with Health Extension Workers (HEWs) from City Health Services Departments on Bulawayo and Harare. Beneficiary households (targeting the bottom 20% income quintile) and women will be identified through a census survey carried out by the National Statistical Agency (ZimStat) with the support of the MOLSS. The criteria to identify potential beneficiaries’ households will be taken or slightly adapted from methods used by the MOLSS and ZimStat in the current poverty census. This helps ensuring the replicability of the design in the future. The census results will be made available for the MOLSS for their use in other social support programs as well.

5. From the list of poor households identified from the poverty census, local community based organizations (CBOs) will select households having any woman of reproductive age (15-49) to target. At the designated households, CBO staff will talk about voucher benefits and distribute a Certificate of Entitlement to each woman. The Certificate has a unique identification number (ID), the first part of which is household ID in the MoLSS poverty database and the second part of which is the woman’s national ID number. CBO staff do not earn commission on distributing the Certificates. However, CBOs are contracted by the PIE and their work is supervised by the PIE as well as the MOLSS staff at the local level (Social Welfare Officers).

6. Distributors will submit to the PIE the list of certificates they have distributed which have names of the recipients, their ID as well as household ID numbers. The Certificate is a leaflet which contains information on a package of free services, the health benefits of seeking proper MNCH care, and the list of participating facilities. Pregnant women in the eligible households will then bring the Certificate of Entitlement to participating facilities for their first ANC contact, during which they will receive a voucher booklet to be valid until their neonates turn six weeks. In this manner, beneficiaries are sensitized very early in their pregnancy (or even before they are pregnant), thus maximizing the chance of early booking. The self-identification addresses the fact that pregnant women typically do not disclose their pregnancy status in the first 3-4 months, hence it is very difficult for CBO staff to target them early with a voucher booklet.

7. The voucher booklet, given out at a fee of USD 1 by the health facility, consists of different colored leaves to denote different types of eligible services. For instance, a blue color leaf can indicate ANC care and a yellow color leaf can denote PNC etc. The leaf for each service is printed in triplicate, one copy to be kept by the woman, one collected and kept with the provider, and one collected and submitted by the provider for redemption. Each voucher booklet and leaf will have a unique serial number, the first part of which allows for identifying facilities which give out the specific vouchers. This will help controlling the quantity of vouchers given out and limiting fraud by facilities.

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8. Referral ambulance service will be contracted with private ambulance companies which are in operation in the two cities. The rapid assessments of the supply and demand sides in the urban area revealed that the cities have rather well functioning private ambulance system. The project will negotiate favorable price with such companies in return for large quantity.

9. The project will support the development, implementation and operationalization of a voucher beneficiary data repository as a critical tool to be included in the financing of the capacity building in management of the voucher mechanism for the District Social Welfare Officers from the MOLSS for the two selected urban districts. The beneficiary database should keep up to date the Certificate of Entitlement registry to assure transparency and to facilitate eligibility verification in issuing voucher booklets and validating follow up visits by the HEWs. The database should maintain household ID linked to the MoLSS poverty database and the woman’s national ID number linked to the National Civil Registry Agency (Ministry of Home Affairs). To maintain the integrity of the UID, periodic data verification and validation with the MoLSS poverty database and the Civil Registry database should be assured by the PIE in coordination with the MoHCW. Future online data exchange protocols and connectivity should be explored to maintain the real time benefits verification and ID validation and update.

Supply-side intervention – performance base incentive for quality of care

10. All municipal facilities in the selected districts and referral facilities in the two cities and a few private facilities will participate in the voucher scheme. Health facilities will be subjected to a pre-qualification assessment which will guarantee that staff has the required qualifications and training, and facilities operate in line with Government standards. A number of for-profit and not-for-profit private facilities have been consulted on their willingness to participate, their pricing of services and their required start-up funds. The pre-qualification assessment of private providers will be linked to the guidelines of the Health Professional Authority (HPA).

11. The project will provide start-up support to all participating facilities to bring them up to the adequate level for providing designated services. This will ensure facilities have minimum equipment at their level as specified by the MOHCW guidelines. Afterwards, health facilities will be incentivized upon achieving certain pre-fixed quality indicators. The urban pilot may consider applying the quality assessment model currently being used in the 18 RBF rural districts, which combines clinical quality score with patient satisfaction.

12. While vouchers will only benefit women from the poor households, quality of care improvement will benefit all patients seeking care in the participating facilities. To ensure that investment will in fact benefit poor women, the project will make, “number of poor women with vouchers served,” one of the important indicators in the quality checklist.

Institutional arrangements

13. The urban component (which has a combination of both demand-and supply-side interventions) will retain the above mentioned institutional and implementation arrangement. Cordaid will be the PIE and will work jointly with relevant Government departments and representatives of City Health Services Departments. MOF will be the grant recipient from the World Bank.

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14. The project brings in collaboration among three Ministries and two municipalities. The MoLSS will coordinate the identification of the poorest households, targeting and enrollment, and verifying that enrolled women and child are receiving the service package—in addition to providing support supervision to CBOs. The Ministry of Local Government, Rural and Urban Development (MOLGRUD) will provide oversight to ensure that the governance and accountability systems for the program are functioning, and will play a key role in the project steering committee on urban health service delivery and accountability.

15. City Health Services Departments will manage the providers of health services, undertake supervision of health services delivered in the selected urban health districts (through City Health Mangers), perform quarterly quality check, and ensure that financing provided by the program goes towards improvement of quality of services by enrolled facilities. The Ministry of Health and Child Welfare (MOHCW) will have a regulatory role in meeting the standards of service provision, overall supervision and supervising the voucher agency.

16. The counter-verification will be done by an independent agency. Possible options to consider include University of Zimbabwe Department of Community Medicine, which is already contracted to perform counter verification in the rural component, or Deloitte, which is providing verification service to MOLSS.

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ANNEX 5 – FIDUCIARY ASPECTS

1.0 Procurement

1.1 A procurement capacity assessment was undertaken in accordance with the World Bank’s Procurement Risk Management System to assess overall project risk and identify mitigation actions. Measures required to procurement risks will be summarized in the Procurement Risk Assessment and Management System.

2.0 Procurement Post Reviews and Independent Post Reviews

2.1 In addition to providing ongoing implementation support, the World Bank will carry out review missions at least twice per year. This will include a review of procurement activities to ensure that procurement plans are regularly monitored and updated and published on the World Bank’s external website as required by the disclosure policy.

2.2 Based on the assessed agency procurement implementation, the World Bank will carry out Procurement Post Reviews (PPRs) or Independent Procurement Reviews (IPRs) on a sample of contracts not subject to prior review. As risk mitigation measures are successfully implemented, the sample size will be reduced proportionally: High Risk (H) entails a sample size of 20 percent, Substantial (S) Risk a sample size of 15 percent, Moderate (M) risk 10 percent and Low (L) risk 5 percent. Changes in risk will be communicated to the PIE/MOHSW as outcomes of the procurement post reviews which also result in the revisions of the prior review and National Competitive Bidding thresholds.

3.0 Prior Review Thresholds

3.1 The prior review thresholds are summarized in table 1 below.

Table 1: Prior review and procurement method thresholds

1. Expenditure Category Procurement Method

Contract Value Threshold For use of Method (US$)

Contracts Subject to Prior Review (US$)

1. Works ICB(Works/Supply & Installation)

≥ 5,000,000 All contracts

NCB ≥ 200,000 - <5,000,000 As in procurement planShopping <200,000 NoneDirect Contracting All values All contractsCommunity Participation Procedures

All values As in Procurement Plan

2. Goods ICB ≥ 500,000 All contractsNCB ≥ 200,000 <500,000 As in procurement planShopping <200,000 (motor vehicles

only)None

Shopping <100,000 000 (rest not motor vehicles)

None

Direct Contracting All values All contractsProcurement from UN Agencies

All values None

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Community Participation Procedures

All values As in Procurement Plan

3. Consulting FirmsQCBS, QBS

≥ 200,000≥ 300,000 (Engineering & Contract Management only) All contracts

CQS, LCS, QBS, FBS <200,000 As in procurement planSSS All values All Contracts

4. Individual Consultants (IC)

Competitive selection

IC Single Source Selection

≥ 100,000

<100,000

All values

All contracts

None

All contracts

NOTE: Contracts selected on basis of CQS should not exceed US$200,000 equivalent.

4.0 Procurement plan

4.1 With Bank support, the PIE developed a procurement plan for at least 18 months of implementation; the plan was discussed with the Bank team at appraisal. The procurement plan was discussed further and agreed upon during negotiations. The procurement plan will be updated annually.

4.2 Procurement at lower levels (if any) will be included in procurement plans appropriate to those levels, and will on account of relatively small value generally not be subject of prior review by the World Bank. Instead the World Bank team will review the procedures at these levels and ensure that they are satisfactory and generally in alignment with World Bank policy. To ensure adequate oversight, the PIE will be required to carry out technical and procurement audits based on Terms of Reference acceptable to the World Bank for a representative sample of these procurements. 5.0 Procurement Manual

5.1 With the introduction of the urban sub-component, and the increased role of Ministries of Finance and Health and Social Welfare in the activities of the Project, the Procurement Manual will need to be updated. The Manual is expected to spell out the role and responsibilities of the institutions involved in procurement, internal and external

6.0 Procurement arrangements for Goods, Non-Consulting Services and Works

6.1 In response to a request by the MOF, procurement for health facilities and for other goods under the urban component will be undertaken by the two cities with the PIE largely providing technical support to ensure the procurements meet World Bank rules and requirements. Cordaid will continue to procure goods and services in line with its overall PIE role.

In addition to International Competitive Bidding (ICB), the project is expected to use:

a. National Competitive Biddingb. Shoppingc. Direct Contracting d. Procurement under UN Agencies

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e. Community Participation Procedures (for Community Driven Development, or CDD).

The Procurement Plan specifies the instances under which such methods may be used.

6.2 Schedule for Goods, Non-consulting Services and Works

6.2.1 Procurement of goods and non-consulting services: Goods to be procured under the project are likely to include: vehicles information technology equipment (e.g. computers, servers and printers), office equipment and furniture, and medical equipment and supplies. Procurement of operational costs such as: (a) vehicle operation and maintenance; (b) office administration costs; (c) communications charges, insurance costs and banking, utility and rental charges; (d) travel and per diem for PIE staff for travel linked to the implementation of the Project will be procured in accordance with the PIE Guidelines, the rates of which will be set by the PIE and reviewed by the Bank within the first quarter of achieving effectiveness of the grant. 6.2.2 Procurement will be carried out using the World Bank’s Standard Bidding Documents for all International Competitive Bidding (ICB) contracts. The PIE will consolidate similar goods required by all contracted health institutions and procure them centrally using International Competitive Bidding (ICB); or alternatively, such appropriate methods as: (a) National Competitive Bidding (NCB) (subject to the following additional provisions: (i) the Recipient (including its State Procurement Board) shall not be involved in the procurement process, which shall be conducted entirely by the Project Implementing Entity; (ii) foreign firms shall not be precluded from bidding; (iii) bidders shall not be required to register with any professional organization or association as a condition of bidding; and (iv) bracketing or the rejection of bids based on deviation from cost estimate shall not be allowed); (b) Shopping; (c) Direct Contracting; and (d) Procurement under UN Agencies (e) Community Participation Procedures (for Community Driven Development, CDD)

6.2.3 Procurement of works: No works contracts are anticipated; in the event that there are, these will be limited to small value works estimated to cost less than US$200,000 per contract, these could be procured under the Shopping procedures based on comparing price quotations obtained from at least three qualified and eligible contractors. The invitations will include bills of quantities and a statement requiring minimum qualifications, evaluation and award procedures. Contracts will be on a lump-sum, fixed price basis.

6.3 Consulting services

Particular methods of procurement for consulting services will include, in addition to Quality and Cost-Based Selection (QCBS)

a. Quality-based selection (QBS)b. Fixed-budget selection (FBS)c. Least-cost selection (LCS)d. Selection based on the consultant’s qualifications (CQS)e. Single-source selection for firms (SSS)f. Individual Consultants (IC)

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g. Single-source selection for IC (SSS)

6.4 Schedule for consulting services

Selection of consultants for monitoring and evaluation, external verification of results, financial audits, NGO/CBO services; database support, development of the Quality of Care Tool, and other consultants will be carried out in accordance with the Bank Consultant Guidelines using methods indicated in 6.3. Prior review will be required for all competitive firm selection above US$200,000 and all single source selections. Any selection which may by exception be subject to prior review by the Bank will be identified in the procurement plan. For individual consultants, the prior review limit will be for contracts estimated at US$100,000 and above (for competitive selection) and for all sole source selection.

Financial Management

The objective of the financial management (FM) assessment was determine whether the financial management system put in place by the PIE is capable of supporting the implementation of the AF. In particular, the assessment determined whether the RBF project has adequate FM arrangements to: (a) ensure that project funds will be used for intended purposes only in an economical and efficient way; (b) whether the financial reports of the AF will be prepared in an accurate, timely and reliable manner; (c) whether the project’s assets will be safeguarded. The FM assessment was carried in accordance with the Financial Management Manual issued by Operations Policy and Country Services (OPCFM) on March 1, 2010. This assessment has concluded that the original project has adequate FM arrangements to satisfy the Bank’s minimum requirements under OP/BP 10.02 as shown below. The results of the review are documented below.

1. Risk Assessment and Mitigation

FM risk was assessed to ensure that appropriate risk mitigating measures are incorporated into design of the operation, to enable the Bank to make decisions with regard to the appropriate level of assessment and supervision intensity, and to enable FM resources to be allocated in a manner consistent with assessed risks. The following is the detailed risk assessment:

2. Financial Management Risk Assessment

Risk Risk Rating

Risk Mitigation measures incorporated into Grant design

Risk after Mitigation

Inherent RiskCountry LevelZimbabwe is recovering from a serious financial crisis that had paralyzed the economy. The withdrawal of donors among others led to low productivity and hyper-inflation which culminated in the adoption of a multi-currency economy led by the US Dollar. In the

High The Bank together with other Development Partners are working with the Government to improve the PFM environment through ROSC and CIFA among other initiatives.

The HSDS Project does not

Low

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process, the country’s Public Financial Management (PFM) system nearly collapsed. The PFM has been revived but very little donor funding is currently moved through the PFM system.

use the PFM system in Zimbabwe.

Entity LevelThe PIE is a Dutch non-governmental organization with experience and expertise in emergency aid and structural poverty eradication in countries in Africa, Asia and Latin America. The PIE has a local office in Zimbabwe responsible for the project implementation (including FM) with support from The Hague.

Moderate PIE will implement the Financial Management Action Plan (FMAP) to address the recruitment of the remaining staff.

Low

Project LevelUnder the Project, the PIE will contract a large number of government and mission or private health facilities in different parts of Zimbabwe. This makes it a complex project.

Moderate The HSDS has a Field Manual and Guidelines that guide the selection and supervision of the health facilities. The Finance Manual guides the Financial Management of the Project. Moreover, the Bank’s Procurement Guidelines are followed in contracting these facilities. Adherence to the manual and guidelines, regular supervision and monitoring has substantially mitigated this risk.

Low

Overall Inherent Risk Moderate LowControl RiskBudgeting:The Budget preparation, implementation and reporting may not be followed

Moderate On a quarterly basis and an annual basis internal audit report and the external audit report respectively will check for compliance.

Low

AccountingThe financial accounting and reporting may not be done accurately and in accordance with international standards.

Moderate Audit reports confirm that the accounting system in place is working well. Accounting staff have been trained in the Bank’s FM and Disbursement policies

Low

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and guidelines.The Finance Manual provides guidance and it is being followed by Cordaid.

Internal ControlsCordaid is responsible for both procurement and payments. There is insufficient segregation of duties.

Moderate Staff strength and capacity should be enhanced for sufficient segregation of duties.

Low

Internal AuditThere is no Internal Audit Unit or staff in the local office hence violations of internal controls may go un-noticed. The internal audit unit in the Netherlands does not cover HSDS sufficiently.

Moderate A local accounting firm is providing internal audit services and the report is shared with the bank.

Low

Financial ReportingThere is risk of inaccurate in the event of failure to apply appropriate financial reporting standards.

Moderate External audit confirms the compliance with international financial reporting standards

Low

Funds FlowDelays in flow of funds to health facilities after they have submitted their claims.

Moderate The validation process should be reviewed to include post payment reviews, sampling, risk based approach and other innovative methods to reduce delays.

Low

External AuditFailure to detect errors and misstatements in the financial statement due to low audit standards.

Moderate The external auditors recruitment complies with Bank policies

Low

Overall Control Risk Moderate LowOverall Project Risk Rating Moderate Low

3. Strength

The PIE has several years of experience in RBF projects in several countries in the world including Africa. It has a Country Director, and Finance and Administration Manager and other accounting staff in the Zimbabwe office with experience in managing RBF projects and knowledgeable of World Bank procedures. The PIE will implement a Financial Management Action Plan (FMAP) set out below, which will improve FM systems and internal controls.

4. Weaknesses

Whereas the financial management arrangements in place are reasonably adequate, they are concentrated in The Hague. The Harare Office is inadequately staffed hence most of the financial management is done from The Hague office. There is need to cut down on overhead costs by transferring functions to the Harare office where international PIE staff can work closely with

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qualified local staff on financial management aspects of the project. The RBF project has shown success in implementation and plans are far advance for the next phase, it is therefore of utmost importance to reexamine the financial institutional arrangements in place for the smooth implementation of the project. . The AF will prioritize financial capacity building of the Zimbabwe PIE office team and Government structures.

FM Action Plan

As a result of the foregoing risks and weaknesses, an action plan has been developed, with actions to be taken as indicated in the table below.

Action Indicative Date By whom

The PIE to provide World Bank information as required for project purposes including internal and external audit reports.

At Negotiation for additional financing

PIE/Bank

Increase capacity of the Zimbabwe PIE office to undertake financial management of the Project and also build capacity in the Government

Within three months after effectiveness of additional funding

PIE

Use International Financial Reporting Standards in the preparation and presentation of Financial Statements

Ongoing PIE

Engage local firm conducting internal auditor as per TOR agreed with the Bank

Ongoing PIE

A status report showing compliance with all recommendations of internal and external audit reports

Before effectiveness PIE

External Auditors conducting audit using IAS and TOR agreed with the Bank

Ongoing PIE

1. Accounting and Financial Reporting

The PIE uses SAGE Pastel Evolution as their platform for financial management and reporting. The software allows for proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories and sources of funds. The financial management of the project in Harare is under the Finance and Administration Manager who reports to the Head of Mission. The other finance staff includes an Accountant and a Cashier. There are job descriptions for each of the jobs that clearly define duties, responsibilities, and lines of supervision and limits of authority. The financial management arrangement currently in place should be reviewed to ensure it is cost effective and that staff in Harare take responsibility for producing key reports (such as IFRs) for which the PIE’s head office provides quality assurance support.

2. Internal controls and Auditing

A review of the internal audit and external audit reports indicate that the internal controls are working with some limited lapses in compliance with internal control procedures. These lapses resulted in the

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loss of about $30,000 in Mutare office in 2012. The External Auditors in their Management Letter reported a few internal control weaknesses in the Harare office, which are being corrected. Under the AF the PIE will provide regular update on the status of implementation of the external and internal auditors’ recommendations and provide updates to the Bank and to the Government. The external audit of the RBF project for the financial year ended 31 December 2012 was ongoing at the time of this assessment.

3. Funds Flow and Disbursement Arrangements

The project uses SOE as basis for disbursement together with withdrawal applications. The proceeds of the Grant are channelled through a Designated Account in the Netherlands, and managed by the PIE. Then a component is transferred by the PIE to a Designated Account in Harare, Zimbabwe to finance Grant expenditures locally in accordance with the procedures and guidelines set forth in the Bank’s Disbursement Handbook. The Designated Accounts in Zimbabwe are reconciled on a monthly basis by the Accountant and the reconciliation statements are checked and approved by the Finance and Administration Manager and the Head of Mission of the PIE. The disbursements for the additional financing will be done by the World Bank directly into the designated accounts of the PIE in Harare.

4. External Auditing

The financial statements, the IFRs and the Accounts of the implementing entity shall be audited at the end of each financial year. The audit shall be done by independent auditors approved by the World Bank. The audit shall be done using international auditing standards and terms of reference agreed with the bank. Audit shall be completed and a copy the report together with management letter submitted to the Bank through the implementing agency within six months after the end of the financial year.

5. Conclusion

The accounting and financial reporting arrangements for the PIE are satisfactory based on the financial reporting, supervision missions, MTR, audited financial statements for 2011 and the Finance Manual that provides guidance for financial management of HSDS project. The FM arrangements in place for the HSDS Project meets the Bank’s minimum FM under OP/BP 10.02 in ensuring accountability and transparency in administering the funds available to the project. However, for the AF, the institutional arrangement currently in place has to be changed as explained above.

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ANNEX 6 : STATUS OF THE URBAN HEALTH SYSTEM IN ZIMBABWE

1. The section summarizes the status of urban health system in Zimbabwe with a focus on the two largest cities, i.e. Harare and Bulawayo.

Supply side

Health Facilities in Harare and Bulawayo City

2. The City of Harare is the largest city in Zimbabwe and has an estimated official population of 1,601,324. It has 12 Polyclinics (that provide maternity services including deliveries, provide primary curative services and have a family health clinic), 13 Satellite Clinics (provide the full range of primary health care except deliveries), six Primary Care Clinics (provide primary curative service without maternity and family health services), six Family Health Clinic (provide immunizations, growth monitoring, home visits and community health), four dental clinics housed in the polyclinics and two Infectious Diseases Hospitals. The City of Bulawayo in the south western region is the second largest city in the country with a population of 655,675. The health services runs 19 static health facilities, an infectious diseases hospital, and a clinic leased to a private operator. As there is no district nor provincial hospital, referrals are directed to the tertiary institution at Mpilo Central Hospital.

Administration Structure

3. The health services department, with its two branches: the Environmental Health and Personal Health, is led by a Director of Health Services who reports to the Town Clerk. There is also a director Administration who works hand in hand with the Director of Health Services. There are two Clinical Medical Officers, a Chief Nursing Officer and a Deputy Chief Nursing Officer, five sisters-in-charge and six community health sisters. Apart from these, there are Registered General Nurses, Primary Care Counselors, and Nurse Aides. Each clinic is served by a Senior Clerical Assistant who tallies all attendances and collects various user fees. Senior Clerical Assistants are supervised by the Senior Administrative Officer. Each clinic is supported by community health promoters who operate on a voluntary basis.

Staffing, Revenue and Medical Supplies

4. The health services department is facing a severe shortage of registered general nurses whose complement is 50% of the authorized establishment of 317. Staff and operational costs are heavily subsidized by Council. The clinics collect about 7.3% of their recurrent expenditure. There have been no capital projects undertaken in the past five years due to lack of affordable finance. Adult clients are charged $5 and children above 5 years $3, whereas the fees for maternity and under-five children have been waived. Laboratory tests attract a minimal fee if the test is available at the city Council’s laboratory, otherwise patients are referred to either the public or private laboratories. Clinics are recipients of the Primary Health Care package availed on a push system every three months. Patients have to bear the cost of medicines that are out of stock or are not included in this package as they purchase them from retail outlets in the city. The supply of medicines from NATPHARM is not consistent leading to stock outs.

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Demand Side

Health Seeking Behavior on maternal services

5. The removal of user fees in Bulawayo has seen an influx of women seeking maternal and neonatal health care services from health facilities. However, there are some pockets of religious groups who are accessing antenatal care services but preferring to have Traditional Birth Attendant (TBA) assisted deliveries. It emerged that the city health department has banned the services of TBAs. But, the interviewed TBAs stated that they always attended to emergency cases of the few women who were delivering at home due to ambulance delays. Fear of mandatory HIV testing during ANC was a deterrent for women to access maternal health services. Whilst removal of user fees incentivized maternal health care seeking, long waiting times were discouraging as some women claimed that they had to be in the queues for two days before being attended to.

Referral services and bypassing of the routine referral system

6. Women were reluctant to be referred because it meant an added cost for ambulance services and the requirement to buy some drugs and supplies. All women who had previous C-sections were referred to the next level of care and such women would bypass the referral system by going to religious leaders and traditional birth attendants who assured them that they could have normal deliveries. The tables below shows the out of pocket expenses related to maternal and neonatal health care in Nkulumane District in Bulawayo city and Harare City. The information from Nkulumane is self-reported by the beneficiaries who had availed care within the previous one year of the interview. The interviews were conducted during April 2013. The information for Harare City was provided by the City Health Council.

Table 9: Out of pocket expenses for MNCH care for Nkulumane District

Expenditure item Approximate amount paid

Antenatal care (bookings, consultations)Scan

$0.00$35.00 to $50.00

DeliveryAmbulance services from home to clinicBaby preparation (clothing, cotton wool, nappies, baby blankets, methylated spirit, vest, soap, food etc.)

$0.00$20.00$100.00- $150.00

Postnatal care $0.00Source: Demand Side Rapid Assessment, April 2013

Table 10: Out of pocket expenses for MNCH care for Harare CityServices City of

HarareGovernment Central Hospitals

Private Clinics/Hospitals

Antenatal care $25

Seen at local ClinicsDelivery $80 $400-$500C-Section Referred $450 $1050-$1400Postnatal care $0.00 Referred to local

clinics$20-$30

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Source: Harare City Council :April 2013

TEAM COMPOSITION

Bank Staff

Name Title Unit

Ronald Mutasa Task Team Leader AFTHE

Son Nam Nguyen Sr. Health Specialist ECSH1

Abdo S. Yazbeck Lead Economist, Health AFTHW

Ashis Kumar Das Impact Evaluation Specialist/E T Consultant

AFTHE

Bernadette Farai Sobuthana Ndlovu

Health Specialist/ E T Consultant AFTHE

Zoe Kolovou Lead Counsel LEGAM

Rama Lakshminarayanan Sr. Health Specialist AFTHE

Jed Friedman Sr. Economist DECPI

Daniel Yaw Domelevo Senior Financial Specialist AFTME

Farai Sekeramayi Noble Program Assistant AFMZW

Ha Thi Hong Nguyen Economist, Health HDNHE

Hocine Chalal Lead Environmental Specialist AFTN3

John Bosco Makumba Operations Officer AFTHE

Luis M. Schwarz Senior Finance Officer CTRLA

Patricio V. Marquez Human Development Sector Leader AFTHD

Wedex Ilunga Sr. Procurement Specialist AFTPE

Celine Gavach Sr. Operations Officer AFTDE

Yvette M. Atkins Sr. Program Assistant AFTHE

Chenjerai Sisimayi Health Specialist/Consultant AFTHE

Leah C. Jones Knowledge Management Consultant AFTHE

Saji Gopalan Health Economist/Consultant AFTHE

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COUNTRY MAP

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