LANGUAGE ENGLISH ORIGINAL : FRENCH DISTRIBUTION : LIMITED

PROJECT: Health Development Programme Support Project (Health –II) COUNTRY: Guinea Bissau

HEALTH II RESTRUCTURING REPORT AND

SUPPLEMENTARY GRANT APPRAISAL Dated: [22/09/2008 (this report has been prepared following a mission to Guinea Bissau from 02 to 11 July 2008)

Memorandum to THE Board of Directors Dated: [30/09/2008 (This report has been prepared following a mission to Guinea Bissau from 02 to 11 July 2008)

HUMAN DEVELOPMENT DEPARTMENT (OSHD) October 2008

Appraisal Team

Team Leader : Mr. M. COULIBALY, Health Expert, OSHD3 Ext. 3238 Team Members: Mr. O. MALAN, Country Economist, ORWB, Ext. 2774 Mr. X. BOULENGER, COP/SNFO, Ext. 3207 Mrs. R. TRAORE, Socio-economist SNFO, Ext. 2632

Sector Department : Mr. T. HURLEY, Director OSHD Ext. 2046 Regional Department : Mr. I. KOUSSOUBE, Acting Director. ORWB Ext. 2158 Sector Division : Mr. T. B. ILUNGA, Manager, OSHD. 3 Ext. 2117

AFRICAN DEVELOPMENT FUND

TABLE OF CONTENTS Page

EQUIVALENTS AND ABBREVIATIONS, LIST OF ANNEXES, (i-iv)

REVISED PROJECT MATRIX, EXECUTIVE SUMMARY

1. INTRODUCTION 1

2. PROJECT 1

2.1 Project Objective and Description of Components 1 2.2. Project Cost and Financing Arrangements 3 2.3. Loan Conditions 3 2.4. Project Implementation Status 3

3. PROJECT RESTRUCTURING AND SUPPLEMENTARY GRANT APPRAISAL 4

3.1. Rationale 4 3.2. Objectives and Description 5 3.3. Updated Project Costs 7 3.4. Sources of Finance 7 3.5. Project Implementation Schedule 8 3.6. Project Sustainability and Risks 9 3.7. Environmental and Social Impacts 10 3.8. Project Executing Agency 10 3.9. Procurement of Works, Goods and Services 10 3.10. Disbursement Arrangements 12

4. JUSTIFICATION IN LIGHT OF SUPPLEMENTARY FINANCING POLICY 12

4.1. Justification in light of the General Conditions 12 4.2. Justification in light of the Specific Conditions 12

5. CONCLUSIONS AND RECOMMENDATIONS 12

5.1. Conclusions 12 5.2. Recommendations 13

The present report has been prepared following a mission to Guinea Bissau from 2 to 11 July 2008 by Messrs. Malan Olivier, Country Economist, Mission Leader (Ext. 3602); Moussa COULIBALY, Health Analyst, OSHD.3, (Ext. 3238), Xavier BOULENGER, CPO SNFO (Ext. 3207) and Mrs. Rokhaya TRAORE, Socioeconomist, SNFO (Ext. 2632). For further information, please contact the authors or Tshinko B. ILUNGA, Division Manager. OSHD.3 (Ext. 2117) and Tom HURLEY, Director OSHD (Ext. 2046).

EQUIVALENTS

Currency Equivalents

(October 2008)

UA 1 = CFAF 714.167

Fiscal Year

1 January – 31 December

ACRONYMS AND ABBREVIATIONS

ADB African Development Bank ADF African Development Fund CFAF African Financial Community Franc CS/B Type B Health Centre CS/C Type C Health Centre FSF Fragile States Facility MDG Millennium Development Goal MINSAP Ministry of Public Health NGO Non-Governmental Organization PDS Health Development Programme PIU PNDS Project Coordination Unit PNDS National Health Development Plan UA Unit of Account UNIPAC UNICEF Procurement and Assembly Centre UNOPS United Nations Office for Project Services

LIST OF ANNEXES

No. of Pages ANNEX 1 : Map of Project Area 1 ANNEX 2 : Project Activity Status by Component 1 ANNEX 3 : Detailed Costs of Supplementary Grant 1 ANNEX 4 : List of Goods and Services 1

iiGUINEA BISSAU: Project In Support of the National Health Development Programme (Health–II)

Reformulated and Result-Based Logical Framework

HIERARCHY OF OBJECTIVES EXPECTED RESULTS REACH

(Beneficiaries) PERFORMANCE INDICATORS

BASELINE SCENARIO SITUATION,

INDICATIVE TARGETS AND SCHEDULE ASSUMPTION/RISKS

PROJECT/PROGRAMME GOAL Improve the living conditions of the people.

LONG TERM RESULTS (Impact) By 2015 - Millennium Development Goals (MDGs) No. 4: reduce infant mortality: No. 5: improve maternal health; No. 6: control HIV/AIDS, malaria and other diseases.

Beneficiaries People of Guinea Bissau (1.64 million)

Impact Indicators - Infant and child mortality - Maternal mortality Sources: health statistics of the MPH and from Population and Health Surveys

Baseline scenario and expected long term progress By 2015 1) Reduction of under-5 year mortality by 25% (200 to 150 per thousand) 2) Reduction of maternal mortality by 25% (from 1100 to 825 per 100 000 live births;

- Peace and stability in the country - Institutional capacities enhanced; - Successful implementation of other health programmes

PROJECT OBJECTIVE Enhance the efficiency of the health system by improving health infrastructures and establishing management systems for health institutions and maintenance of equipment.

MEDIUM TERM RESULTS By 2011 (Effects)

1. Reduction of morbidity and mortality caused by common diseases; Intermediate effects 2. National hospital used as a national referral structure; 3. Type B health centres are used by the public for primary health care;

4. Life span of equipment extended through the preventive maintenance;

Beneficiaries People of Guinea-Bissau (1.64 million) People of Guinea-Bissau (1.64 million) Ministry of Public Health

Effects Indicators 1. Rate of reduction of lethality of risky pregnancies;

2.1 Bed occupancy rates and average length of stay; 3. Rate of CS/B attendance;

4.Rate of increase in life span of specialized equipment and furniture following introduction of preventive maintenance;

Sources : PHS and CAP surveys with users and the Population

Baseline scenario and expected medium term progress By 2011 1. Reduction of the lethality of risky pregnancies by 80% as from 2012;

2 Reduction by over half of consultations for primary and secondary cases by 2015 3. CS/B annual attendance rate increases by over 25 % starting from 2012 4. Life span of equipment and furniture increases by 70% as from 2014 ;

- Effectiveness of economic reforms

INPUTS / ACTIVITIES WORKS - Construct and rehabilitate the Simao Mendès National Hospital GOODS - Procure equipment and furniture for the national hospital SERVICES - Recruit a firm for the implementation of the biomedical maintenance policy and health sector infrastructure; - Recruit a firm for the collection of basic information; FINANCIAL RESOURCES ADF Loan : UA 10 million ADF Grant : UA 6 million Government : 0.005 (UA 50,000) Beneficiaries : N/A TOTAL : UA 16 million

PRODUCTS/OUTPUTS By 2011 (end of [project) - All the hospital buildings are constructed and/or renovated; - All the national hospitals are equipped and are operational; - Contractualized maintenance and implementation of the preventive maintenance;

- Public health data updated and available;

Beneficiaries People of Guinea-Bissau (1.64 million) Ministry of Public Health * Ministry of Public Health

Product indicators - Provisional works acceptance report; - Equipment/ furniture installation acceptance; - Report of the training provided by the training institutes;

- Life span of equipment and furniture

- Number of staff trained in various areas assigned to the establishments of the Project; - Health data /available updated statistics;

Expected short term progress: By 2011 (end of project) - Good condition of buildings due to preventive maintenance of infrastructure

All equipment procured by the project is operational

- Institutional capacities of the Ministry of Public Health strengthened; Involvement of Mayors and municipal councils in the sensitization of the public .

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EXECUTIVE SUMMARY 1. The National Health Development Programme Support Project (Health-II) was approved by the Bank on 19 November 1997 and became effective on 22 August 2001. It consists of four components: (i) Strengthening of primary health care; (ii) Strengthening of the secondary and tertiary referral system; (iii) Management and maintenance capacity building; and (iv) Support for the National Health Development Programme (PNDS) Coordination Unit. The project, which has implemented since then, has yielded the following outputs, in particular: construction and equipping in 4 regions of 12 Type B health centres (CS/B) together with equipped boreholes, 24 furnished houses, 1 regional health directorate and procurement of logistical means for the mobile teams and evacuations. It also rehabilitated 9 buildings of the Simao Mendès National Hospital. (HNSM). The following activities are still to be carried out: (i) rehabilitation/extension and equipping of the HNSM; (ii) establishment of a bio-medical and infrastructure maintenance system, as well as an administrative and financial management system in the said hospital. Implementation of these activities has been compromised by the following major constraints: (i) lack of resources due to the depreciation of the UA in relation to the CFA F; and (ii) difficulties, for the Borrower, in mobilizing counterpart funds. 2. Completion of works and equipment of the hospital, the establishment of an administrative and financial management system, as well as a maintenance system remain top priorities of the country. The balance of the loan cannot cover the relevant costs. Thus a lack of resources has hampered achievement of the objectives. The Government needs additional resources to undertake the uncompleted activities, thereby enabling the project to fully achieve its objectives, notably that of providing the country with an operational national referral hospital. On the other hand, if the hospital is not completed and equipped, the effectiveness of the primary health care system will be adversely affected as a result of lack of support and supervision at the secondary and tertiary levels. 3. The total cost of the project, exclusive of tax, is UA 11.11 million financed by the ADF (UA 10 million), and the Government (UA 1.11 million). The rate of disbursement of the ADF loan is 60.15%. The cost of the remaining activities is estimated at UA 10.05 million. In view of the balance of the loan in the amount of UA 4.05 million, there is a financing gap of UA 6 million for which the Government is requesting supplementary ADF financing. The Bank and the Government have agreed on the need to complete the remaining activities of the project in order to guarantee sustainability of the outputs of the project. To that end, the project has been restructured by modifying the initial financing plan to enable the ADF to finance all the remaining project activities in accordance with the Bank’s policy expenditures eligible for Bank financing. In addition, the Government of Guinea Bissau has requested a supplementary grant to facilitate completion of the ongoing activities of Health Project II and achieve the expected results. 4. The remaining activities will implemented with diligence since the works contracts have already been signed and the amendments to the complementary works of the initial contracts approved by the ADF. Goods will be procured by direct negotiations with the United Nations Procurement Agencies (UNOPS). The strengthening of the Ministry of Public Health (MINSAP) for the project management will be entrusted to the United Nations Office for Project Services (UNOPS) to be designated by mutual agreement as the Executing Agency. Consultancy services for setting up the administrative and financial management of the hospital and Health Centres will be procured on the basis of shortlists. Consultancy services based on shortlists will also be procured for auditing the project accounts, conducting studies for basic information, cost recovery system, and contractualization of the maintenance and management of the HNSM.

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5. In light of the foregoing, it is recommended that the Board of Directors should approve the restructuring of the Health Project II and award a grant not exceeding UA 6 million from the resources of the Fragile States Facility (FSF) to the Republic of Guinea Bissau subject to fulfilment of the conditions defined in the protocol agreement.

1. INTRODUCTION 1.1 The population of Guinea Bissau of about 1.64 million is mostly rural and consists of about twenty ethnic groups. Poverty prevalence is estimated at over 70%. About 80% of the rural population are poor. About 30% of the population live in urban areas. Over 50% of the urban population are poor. Poverty is also reflected in other social indicators. The per capita Income, estimated at less than USD 500, is one of the lowest in the world. Infant and child mortality (223 per 1000) and maternal mortality (1100 per 100 000) are among the highest in sub-Saharan Africa. 1.2 Since the end of the crisis, the situation of the Republic of Guinea Bissau has remained fragile, and is marked by weak institutional capacities, insufficient internal resources, contraction of economic activity, decline in human development indices, etc. The design of the Health Development Programme Support Project (Health II) under review did not take into account the current conditions of the country. Consequently, its implementation has been beset by many constraints that constitute a threat to its viability. The present proposal aims to restructure the project and provide it with supplementary resources to ensure its completion. 1.3 Indeed, Health II received ADF financing approved on 19 November 1997. The loan agreement on the said financing was signed on 11 February 1998 and became effective on 22 August 2001. The first disbursement was made on 15 August 2003. The project encountered diverse problems that hampered its implementation, particularly delays on the Simao Mendès (HNSM) National Hospital work site. The physical implementation rate is estimated at 65% for a disbursement rate of 60.15%. The depreciation of the UA to the CFAF, as well as the escalation of energy costs impacted negatively on the availability of resources. The current balance of the loan of UA 4.05 million cannot cover the cost of the remaining activities estimated at UA 10.05 million. It is against this backdrop that the Government requested a supplementary grant of UA 6 million to finance the remaining activities. 2. HEALTH PROJECT II 2.1 Project Objectives and Description of Components 2.1.1. The sector goal as formulated at appraisal is to contribute to improving the health status of the people of Guinea Bissau, particularly mothers and children. The specific objectives of the project are: (i) strengthening of primary health care; (ii) strengthening of the secondary and tertiary referral system; (iii) enhancement of the efficiency of management staff; and (iv) establishment of an infrastructure and equipment maintenance system. The project components are briefly described below. Component 1 : Strengthening of primary health care: This covers four (4) regions,

namely:

- The autonomous sector of Bissau : 4 new Type B health centres (CS/B) ; 1 new regional depot for essential medicines to be built and equipped ; 5 motorcycles to be procured;

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- The Biombo region : 1 Type C health centre (CS/C) to be upgraded into Type B and equipped; enclosure of the regional directorate to be constructed, 6 new residence to be built and furnished; 4 boreholes fitted with pumps and a reservoir and 1 motorcycle to be procured;

- The health regions of Bolama and Bijagos : 1 regional directorate and 1 regional medicine depot to be rehabilitated and equipped, 1 residence and 2 health post to be rehabilitated and equipped; I health post and 6 houses to be constructed and furnished, 4 boreholes to be drilled and fitted with a reservoir ; 2 four-wheel drive ambulances, 2 dugouts with outboard motors and 1 motorboat to be procured;

- The Quinara region : the CS/B of Buba to be constructed and equipped; 1 CS/B, 2 health posts and 3 houses to be rehabilitated and equipped; 1 CS/B and 12 houses to be constructed and equipped; 4 boreholes fitted with a pump and a reservoir; 1 four-wheel drive ambulance and 2 motorcycles for the health centres.

Component 2 : Strengthening of the secondary and tertiary referral system: This

component concerns the extension and rehabilitation of the Simao Mendes National Hospital. It will involve the following:

- rehabilitation and equipping of 15 buildings (emergencies and out-patients

department, a central pharmacy, laboratory, endoscopy, cardiology and pneumology, reception and statistics, management, radiology and ultra sound scan, a blood bank, a school, a tropical medicine centre, a library, a maternity ward, a refectory, a water tower, laundry, an operating block, a paediatrics ward and an intensive care unit;

- construction and equipping of 9 new buildings, namely medicine, surgery, mortuary and anatomy-pathology laboratory, sterilization, kitchen, central store, maintenance workshop, their linkages (gallery, ramp) with existing buildings; 1 new traffic at two levels;

- execution of external works: 1 new fence, existing installations and roadways and various networks to be rehabilitated;

- procurement of 2 ambulances, 1 four-wheel drive vehicle for the hospital, 2 four-wheel drive vehicles for international experts; and

- Establishment of : a human resource management system; a health care quality control system; a health information system; an infrastructure and equipment maintenance system; an efficient accounting system and the training of hospital managers to monitor the said systems.

Component 3 : Building management and maintenance capacities: concerns training

activities in the areas of management and maintenance, and a retraining scheme in various aspects of day-to-day hospital management.

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Component 4 : Support for the coordination unit of the National Health Development Plan (PNDS): concerns strengthening of the PNDS management unit with technical assistance staff and resources for operation.

2.2 Project Cost and Financing Arrangements The total cost of the project, exclusive of tax, was estimated at the initial appraisal at UA 11.11 million, equivalent to CFAF 9 162.34 million (Sept-1997 exchange rate: UA 1 = CFAF 824.693) including provision for physical contingencies and price escalation. Tables 2.1 and 2.2 below provide a summary of the project cost and the financing plan:

Table 2.1 Summary of Project Cost Estimates by Expenditure Category

(UA Million) (UA million)

EXPENDITURE CATEGORY FE L.C Total % Total.

A. SERVICES 2.26 0.50 2.76 25.09 B. WORKS 5.24 1.07 6.31 56.80 C. GOODS 1.18 0.03 1.21 10.89 D. OPERATIING COSTS 0 0.83 0.83 7.47 TOTAL PROJECT COST 8.68 2.43 11.11 100

Table 2.2:

Sources of Finance (UA Million)

(in UA million) SOURCE F.C L.C Total

% of cost

AD F 8.68 1.32 10.00 90.00 Government - 1.11 1.11 10.00

TOTAL 8.68 2.43 11.11 100.00 Percentage 78.13% 21.87% 100.00%

2.3 Loan Conditions The loan became effective on 22 August 2001 following fulfilment by the borrower of the effectiveness conditions. The other conditions, six in number, were also fulfilled. 2.4 Project Implementation Status 2.4.1 The project started with the first disbursement in August 2003. Since then, the total physical implementation has reached 65%. Details of the execution of activities are indicated in Annex II and summarized by component below:

• Component 1 – Strengthening of primary health care: all the health posts and

health centres, with the exception of the Buba health centre, have been constructed, equipped and opened for use. This is also the case with pharmaceutical depots and the residences of the core staff;

• Component 2 – Strengthening of the secondary and tertiary referral system: the physical implementation rate is estimated at 25% and corresponds to: 12

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buildings of the Simao Mendès National Hospital completely rehabilitated, and 9 new buildings completed;

• Component 3 – Building of management and maintenance capacities: the computer equipment has already been procured;

• Component 4 – Support for the PNDS coordination unit: The technical assistance required for the management of the project has already been recruited. It receives adequate local staff support. Goods required for the operation of the team have already been procured.

2.4.2 Despite the achievements, the project has not been completed as a result of challenges confronting it, notably:

(i) Socio-political disturbances that occurred in the country from June 1998 to

March 1999, leading to a period of instability that extended to end 2001 ;

(ii) The weak institutional capacity of the Ministry of Public Health and the lack of qualified personnel both at the central and peripheral levels;

(iii) Difficulties in the mobilization of counterpart funds by the Borrower. The government was able to disburse only UA 0.050 million out of a total expected contribution of UA 1.11 million. Thus, for the various contracts, the government was not in a position to honour its commitments and, currently, there is a pending amount of about CFAF 300 million;

(iv) The numerous and protracted periods of suspension due to non-payment of arrears and the use of ADF resources for non-eligible expenditures. These periods total over 18 months since effectiveness of the loan agreement, seven years ago. The respective suspensions have seriously affected the implementation of the project, particularly the HNSM components;

(v) Depreciation of the UA in relation to the CFAF has impacted negatively on the available resources of the project. Indeed, the UA which was worth XOF 824.693 in September 1997, date of the project appraisal, is currently worth only XOF 714.167. The loan which was worth XOF 8, 246.93 million in September 1997, is currently worth only XOF 7 141.67 million, representing a shortfall of XOF 1105.26 million (UA 1.55 million). These various constraints contributed to the project cost overruns.

2.4.3. While some of these constraints essentially stem from the fragile state of Guinea Bissau, others are beyond the control of the government. 3. RESTRUCTURING OF PROJECT AND APPRAISAL OF SUPPLEMENTARY

GRANT 3.1 Rationale 3.1.1. The needs to be satisfied by the Health Project II notably with regard to the referral hospital remain valid and are always a priority for the Government. When the project is completed as initially planned, it will enable the country to provide the public with an

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equipped and operational referral hospital that will provide quality care within the context of deconcentration of primary activities in the health centres constructed by the project. This structure would reduce the mortality rates due to risky pregnancies and frequent surgical interventions that have a high mortality rate as a result of the lack of an appropriate technical support centre and effective management. 3.1.2. Completion of the Simao Mendes National Hospital (HNSM) and its equipping, as well as the establishment of an efficient financial and administrative management system and a related maintenance system will enable Guinea Bissau to have a referral centre to support primary level health facilities in order to combat disease and mortality. Thus, the country could have an operational health system that would effectively contribute to the achievement of the Millennium Development Goals. It is for this reason that the Health project II remains a national priority. 3.1.3 However, the current balance of the loan amounting to UA 4.05 million can only finance the remaining works. It cannot cover the cost of all the other activities estimated at UA 10.05 million. Without equipment or staff trained to use it, the HNMS could not play its role. Thus achieving the project objectives would be compromised. Furthermore, the non-completion of the project could undermine the credibility of the Bank in the sector where there are no other major partners. 3.1.4. In light of the foregoing, the Guinea Bissau portfolio review team of July 2008 agreed with the Government to restructure the project and provide additional resources for its timely completion. Specifically, the restructuring exercise will use the additional resources of the present proposal to cover costs that initially supposed to be financed from the counterpart funds to the tune of CFAF 300 million as an emergency measure indispensable for the restructuring of the project. Thus, this measure will help to close the pending operations in accordance with commitments made in the previous phase. 3.2 Objectives and Description 3.2.1 The objectives of the project remain unchanged, though they have been re-formulated below to follow the results-based approach (cf. Matrix). Thus the goal of the project is to contribute to achieving the Millennium Development Goals (MDG) namely: Goal No. 4; reduce infant mortality; Goal No. 5: improve maternal health; and Goal No. 6: Combat HIV/AIDS, malaria and other diseases. 3.2.2. The aim of the project is to enhance the effectiveness of the health system through improved health infrastructure and implementation of the management systems of health establishments as well as the maintenance of equipment. This objective has been compromised by the non-completion of the project. 3.2.3. The main expected outcome of the project is the reduction of general morbidity and mortality among the population. The intermediate outcomes are: (i) improved access to quality health services; (ii) building the capacities of the central and peripheral levels of the health pyramid; and (iii) strengthening of the maintenance of equipment and fixed assets of the health sector to ensure the sustainability of the investments. 3.2.4. The project components remain the same. The remaining activities under each component are as follows:

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- Component I: Strengthening of primary health care: Establish preventive

maintenance and administrative and financial management in the Health Centres and health posts of the project with support measures such as the training of users and construction of the Buba CS/B.

- Component II : Strengthening of the secondary and tertiary referral system : Procure equipment and furniture for the national hospital and complete the hospital works, put in place preventive maintenance and administrative and financial management (cf. Component III) and support measures;

- Component III : Building management and maintenance capacities: (i) put in place a preventive maintenance system for the infrastructure and equipment, specialized and non-medical furniture; (ii) put in place a computerized administrative and financial management system; (iii) organize the contracting of maintenance and management of the HNSM and the CS/Bs ; (iv) undertake monitoring studies for the basic indicators and the implementation of a cost recovery system; and (v) provide training in various areas of maintenance and management;

- Component IV: Support for the PNDS Coordination Unit: strengthening of the PNDS Unit and the Ministry of Public Health through technical assistance for the management of the project and conducting of audits.

3.2.5. Component 3 was strengthened through contracting of the management and maintenance of the HNSM and the health centres. The management of these health facilities will be transferred to a specialized firm for a period of about two years following their completion and pending the takeover by the national counterparts trained for the purpose. This measure aims to improve the sustainability of the project outp0uts. 3.2.6. The implementation of the remaining project will involve the following expenditure categories:

- Works: The completion works of the Simao Mendes National Hospital and the construction of the CS/B of Buba;

- Services: UNOPS will provide the required technical assistance to the PNDS Coordination Unit as the executing agency. UNOPS will recruit other service providers for the following tasks: (i) establishment of a biomedical and infrastructural maintenance system; (ii) putting in place of an effective administrative and financial management; (iii) studies for the monitoring of basic indicators and implementation of the cost recovery system; (iv) the study on the contracting of the management and maintenance of the national hospital and CS/Bs; and (v) contracting of the management and maintenance of the HNSM and CS/Bs. The terms of reference of the contracting mission and the various studies will be prepared by UNOPS and submitted to the Government for review and comments prior to forwarding it to the Bank for no-objection by the ADF. Two audit missions for the accounts and financial statements are also planned.

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- Goods: Medical equipment and furniture, generators, maintenance tools and accessories as well as sundry items.

3.3 Updated Project Costs 3.3.1 The updated project costs were based on the exchange rate of the UA for October 2008 (UA 1= XOF 714.167). They indicate an overall overrun of UA 6 million, equivalent to XOF 4 285.00 million (cf. Table 3.1.) compared to the initial appraisal.

Table 3.1

Project Cost at Appraisal and Following Restructuring (UA Million)

At Appraisal At Restructuring*

Cost Overrun EXPENDITURE CATEGORY

F.C. L.C Total %Ttl F.C. L.C Total %Ttl Devise.

L.C. Total

A. SERVICES 2.26 0.50 2.76 25.09% 3.70 0.82 4.52 26.42% 1.44 0.32 1.76

B. WORKS 5.24 1.07 6.31 56.80% 6.10 1.25 7.35 42.96% 0.86 0.18 1.04

C. GOODS 1.18 0.03 1.21 10.89% 4.30 0.11 4.41 25.77% 3.12 0.08 3.20

D. OPERATING COST 0 0.83 0.83 7.47% 0 0.83 0.83 4.85% 0 0 0

TOTAL 8.68 2.43 11.11 100 14.10 3.01 17.11 100 5.42 0.58 6.00

% tage 78.13 21.87 100 82.41% 17.59% 100% 90.33 9.67 100.0

3.3.2. As explained above, the cost overrun of UA 6 million resulted from: the depreciation of the UA to the CFAF, the escalation of energy cost and the contracting of HNSM maintenance and management for 2 years, which was added to Component III to improve sustainability of the project. 3.4 Sources of Finance 3.4.1. In accordance with the policy on expenditures eligible for Bank Group financing and pursuant to the operational guidelines for Fragile States Facility (FSF), it is proposed that the project be restructured by modifying the initial financing plan and granting a supplementary grant to Guinea Bissau as indicated in Table 3.2 below. The high proportion of the ADF financing takes into consideration efforts made by the country to finance the health sector and the country’s debt burden.

Table 3.2 Sources of Finance

XOF (million) UA (millions) % du SOURCE

F.C L.C Total F.C L.C Total Total

ADF Loan 6198.97 942.70 7141.67 8.68 1.32 10.00 99.50%

Government 0.00 35.67 35.67 0.00 0.050 0.050 0.50%

Total 10 426.84 999.83 11 462.34 8.68 1.82 10.05 100%

FSF Grant 4 227.87 57.13 4 285.00 5.92 0.08 6.00 100.00

Government 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total 4 227.87 57.13 4 285.00 5.92 0.08 6.00

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Table 3.3

Expenditure Category of the Project by Source of Finance (UA Million)

ADF Loan FSF Grant

Total CATEGORY OF EXPENDITURE

F.C L.C Total GoGB F.C L.C Total GoGB Total F.C %F.C A. SERVICES 2.04 0.45 2.49 0 2.22 0.08 2.30 4.79 4.26 28.42% B. WORKS 4.74 0.97 5.71 0 0 0 0 0 5.71 4.74 31.62% C. GOODS 1.08 0.03 1.11 0 3.15 0 3.15 0 4.26 4.23 28.22% D. OPERATING COSTS 0 0.235 0.23 0.050 0 0 0 0 0.28 0.00 0.00

Base Cost 7.86 1.68 9.54 5.37 0.08 5.45 14.99 13.23 Physical Contingencies 0.25 0.06 0.31 0.27 0 0.27 0.58 0.52 Price escalation 0.09 0.06 0.15 0.28 0 0.28 0.43 0.37

TOTAL 8.20 1.80 10.00 5.92 0.08 6.00 16.00 14.12 88.25%

3.4.2 The ADF loan will finance all the activities already undertaken and/or initiated, including the arrears of the Government contribution on the said activities. It will also finance works not yet undertaken as well as the operating costs and a portion of services. 3.4.3. The FSF grant will finance the procurement of HNSM equipment, as well as expenses pertaining to the services of the executing agency, the firm responsible for the management of health facilities, establishment of the maintenance and administrative and financial systems, and the consultancy services deemed necessary. 3.4.4. The Government’s contribution is limited to operating costs in local currency already incurred equivalent to UA 0.050 million. No other contribution will be required from Government until completion of the project. 3.5 Project Implementation Schedule The physical implementation of the remaining activities will spread over a 2-year period. During that period, it would be necessary to add two years during which the management of the hospital and the health centres will be entrusted to an entity with the requisite experience in the area. To avoid delays in project implementation, it is proposed that the management of the project activities be entrusted to UNOPS. This specialized agency has experience in managing projects in a fragile environment similar to that of Guinea Bissau. The expenditure schedule of the remaining expenses (loan balance and supplementary grant) and the summary of the implementation schedule are given in the table below:

Table 3.4: Schedule of Expenditure by Component

(UA Million)

COMPONENT 2009 2010 2011 2012 TOTAL

1. Strengthening of Primary Health Care 0.17 0.02 0.18 0.02 0.31 2. Strengthening of the Referral System 0.33 0.50 1.98 0.50 3.31 3. Capacity Building 1.73 2.41 1.38 0.23 5.74 4. Strengthening of PIU 0.09 0.21 0.16 0.14 0.54

TOTAL 2.32 3.14 3.70 0.89 10.05

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Table 3.5:

Summary of Implementation Schedule 2009-2012 Activity Date Responsible Party Presentation Board of Directors 18 December 2008 ADF. Signing of Grant Agreement 30 December 2008 ADF/Gov Recruitment if UNOPS as Executing Agency January -March 2009 Gov/ADF Continuation of Works, Provisional Acceptance Jan.-Sept-2009 Contractors/Gov UNOPS mobilization and services April 2009- Dec. -2012 UNOPS/Gov Recruitment of consultants June—déc.-2009 UNOPS/Gov/FAD Conducting of Studies (03) and approval of reports Jan.-Jun 2010 Consult/FAD/Gov. Quotation of equipment & hospital furniture UNIPAC/UNOPS May- June 2009 UNOPS/Gov Equipment delivery and installation January 2010 UNOPS/Gov. Services for establishment of maintenance/management July – Sept 2009 Consultant/Gov Signing of contract for management maintenance contractualization services Dec.-2009 – Dec.-2012 Consultant/Gov Staff training Sept 2009 to July 2011 UNOPS/Gov Supervision by Bank Every six months ADF/UNOPS/Gov Mid-term review November 2010 ADF/Gov/UNOPS Government completion report March 2013 Gov GB Bank completion report Sept-2013 ADF

3.6. Project Sustainability and Risks 3.6.1 The potential risks were identified on the basis of lessons learnt from the implementation of the project since its commencement. These include the following:

- Weak institutional capacities: The project provides for the reinforcement of the Ministry of Health/PIU by providing high level technical assistance through the recruitment of UNOPS which will supply the experts required. National counterparts will be selected and trained to replace the technical assistants. The project will also train the staff needed in priority areas such as maintenance, administrative and financial management;

- Suspension of disbursements following the numerous sanctions for defaulting on payment arrears and failure to mobilize counterpart funds: Since the loan arrears have been cleared and the remaining project activities will be fully covered with ADF resources in accordance with the policy on expenses eligible for funding by the Bank Group, this risk will be mitigated;

- Pay particular attention to the completion, strengthening and monitoring of ongoing operations: Supervision of the project will improve with the involvement of the Bank Field Office in Senegal and the country representative of the Bank in Bissau. The annual rate of supervision will be at least two missions.

- Address persistent problems of weak capacities (human and financial resources) in operational coordination and aid absorption, through contribution to the formulation and implementation of the public administration reform. Under the ADF XI, the Bank will contribute, through a new operation to the establishment of a National School of Administration, the building of the capacities of the financial administration aimed at optimizing the mobilization

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of resources and the strengthening of the operationalization of the implementation of priority sectoral action plans and the monitoring-evaluation framework;

3.6.2. Within the current context, the Bank, through strengthening some ongoing operations as well as new operations (national and regional), will support Guinea Bissau in coordination and/or joint financing with other partners. 3.7 Environmental and Social Impacts/Gender 3.7.1 The project is classified in environmental category II. Its impact on the environment is a constant concern: the design aims to enhance the benefits and limit the disadvantages for the environment. Through the precautions taken, the treatment of waste generated by the project activities will be controlled and the risk of pollution will be limited. The technical arrangements will concern external developments compatible with health and safety standards and adapted to the characteristics of the project sites. The rainwater drainage systems (runoffs and roofing) and treatment of waste water and black water to limit the effects of erosion at the base of buildings and protect the underground water form part of the works to be executed. This will be extended to the conservation of existing vegetation on the total land area of the project, creation of green open spaces on the sites and the maintenance of project installations. Other measures relate to the procurement of containers and incinerators for the on-site elimination of solid wastes produced on the project sites, thereby isolating them from the inadequate management of urban wastes. 3.7.2. Regarding the social impact, over 60% of consultations concern women over half of which involve antenatal consultations. The improvement of environment of health establishments will contribute to reducing waiting time and improving the quality of care delivery. The overhaul of the referral system and commissioning of the renovated and equipped hospital will be beneficial to the female population. Today, the hospital manages over 7500 normal deliveries annually, which is an overload. The facility could be devoted to the management of risky pregnancies thereby contributing to reducing maternal mortality. The training courses to be financed from the grant will benefit women who constitute over 60% of the health workforce. It is expected that at least 50% of the trainees will be women. 3.8 Project Executing Agency The Ministry of Public Health has the overall responsibility for the project. It is supervised by the General Secretariat of the Ministry of Public Health. The PNDS Coordination Unit is responsible for the effective implementation of the various activities on the ground. The staff of the current PIU will be limited to the PNDS Coordinator and the support staff (2 secretaries, 2 drivers and a maintenance staff) when the day-to-day management is entrusted to UNOPS for the 2-year period of physical implementation of the project. 3.9 Procurement of Works, Goods and Services 3.9.1. The procurement of goods, works and services are summarized in Table 3.7 below. The procurement of goods, services and works using ADF resources will be in accordance with the ADF rules of procedure of goods and works or, where necessary, for the use of consultants. Standard bidding documents of the Bank will be used for the purpose.

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Table 3.6

Procurement of Works, Goods and Services (UA Million)

CATEGORY NCB Short List Other* N.B.F. TOTAL

A Works 0.00 0.00

Buba Health Centre 0.35** 0.35

B. Goods

Equipment and Furniture 0.0 3.47* 0.00 3.47

C. Services

Studies and Firms 2.13 0.00 0.00 2.13

UNOPS- Executing Agency 0.40 0.40

TOTAL 2.13 4.22 0.00 6.35 * Other: Procurement of equipment and medical furniture for the hospital will be by direct negotiations with UNIPAC and UNOPS. ** Award of works contract to the two best bidding contractors whose services are deemed to be satisfactory and financed from the balance of the ADF loan

3.9.2. Procurement of goods and will be based on the following arrangements:

(i) Works: Procurement of construction/rehabilitation works of the Buba health centre (UA 0.35 million) financed from the ADF loan balance will be by shopping and the contracts awarded to contractors whose services are deemed to be satisfactory;

(ii) Goods : Equipment and furniture for the national hospital, including those for maintenance and computer equipment for management and logistics (UA 3.47 million), will be procured from the United Nations System Procurement Centre (UNOPS) ;

(iii) Services: Procurement for studies, contracting including auditing (UA 2.13 million) will be based on shortlists. The method of comparability of technical proposals and the least bid price will be used for the recruitment of the consultancy firm and the firm of auditors. Regarding the building of the capacities of the Ministry of Public Health for project management, UNOPS will be recruited following direct negotiations (UA 0.40 million).

3.9.3 General Procurement Notice: The text of the general procurement notice will be discussed and adopted with the Government of Guinea Bissau at the negotiations and published in the United Nations “Development Business” following approval by the ADF Board of Directors of the supplementary grant proposal. 3.9.4 Review Process: The following documents will be submitted to the Bank for prior review and approval: (i) Specific Procurement Notice; (ii) prequalification documents, bidding documents and letters of invitation to consultants; (iii) evaluation reports of contractors and suppliers bids or of consultants’ proposals containing recommendations for contract award; (iv) draft contracts where the latter have been modified in relation to the draft contract in the bidding documents.

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3.10 Disbursement Arrangements Disbursement methods to be used for the supplementary grant are as follows: (i) the direct payment method will be used for the payment of goods, works and services of consulting firms and individual consultants; (ii) the special account method will be used for operating expenses. The borrower will use the project special account to receive the grant resources. This account will receive an initial advance based on the projected expenditure schedule covering a period of 6 months of activities, prepared for the project and approved beforehand by the Bank. The special account will be replenished periodically upon presentation of a request based on the new 6-month expenditure programme activities and accompanied by supporting documents indicating the use of at least 50% of the last advance and all the previous advances. .

4. JUSTIFICATION IN LIGHT OF THE SUPPLEMENTARY FINANCING POLICY

4.1 Justification in light of the general conditions The supplementary financing proposed meets the general conditions set out in the Bank Group policies and procedures for the financing of supplementary loans and grants. Indeed: (i) the ongoing project cannot achieve the objectives without the completion of National Hospital and the adoption of support measures and, consequently, without the supplementary financing; (ii) the cost overruns were due to extreme conditions beyond the control of the borrower ; (iii) 60.15% of the ADF loan was disbursed, indicating that the project is at an advanced stage of implementation; and (iv) the proposed supplementary grant will be financed from ADF-XI allocation (Fragile States Facility resources) for the country and the proposed activities are in accordance with the orientations of CSP 2005-2009. 4.2 Justification in light of the specific conditions The supplementary financing envisaged for the project also meets specific conditions outlined in the Bank Group policies and procedures for the financing of supplementary loans/grants as indicated below: (i) the country has been making determined efforts in national development; (ii) the Borrower cannot cover the additional costs needed to execute the remaining activities; (iii) it has not been possible to cut the cost of the project to cover the said remaining activities; (iv) the project is technically feasible and economically beneficial in view of its positive impact on the health of the population and hence on productivity ; (v) there is no other exogenous financial, technical or administrative constraint to impede the completion of the project; and (vii) the implementation of the remaining activities will help to secure the investment, which is vital for the country especially in the absence of a national health referral structure worthy of the name. V. CONCLUSIONS AND RECOMMENDATIONS 5.1 Conclusions The supplementary grant is mainly justified by the need to sustain the investments already made in the Health Project II with the support of the ADF for the benefit of the estimated population of 1.64 million. Failure to complete the works and equip the hospital will hamper the achievement of the expected results of the project.

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5.2 Recommendations It is recommended that an ADF grant not exceeding UA 6 million be awarded to the Republic of Guinea Bissau to contribute to the financing of the project as described in the present report, subject to fulfilment of the following conditions:

A. Conditions precedent to effectiveness Effectiveness of the protocol agreement shall be subject to its signature.

B. Conditions precedent to the first disbursement: In addition to effectiveness of the protocol agreement, the disbursement of the grant resources shall be subject to fulfilment by the Donee, to the full satisfaction of the Bank and the ADF, of the following condition:

Provide evidence of the signing of a protocol agreement between the Donee and UNOPS on the technical assistance required for the implementation of the Project, the terms of which shall have been deemed acceptable by the Bank and the ADF

C. Other conditions : The Donee shall:

a) Submit to the ADF for approval, within a period of six (6) months from the date of signing of the protocol agreement, a detailed training programme indicating the names, qualifications and/or experience of various categories of staff trainees, as well as the estimated costs per trainee and specialization.

b) Provide evidence, not later than 30 June 2010, of adoption of texts relating to the autonomy of management of the Siamo Mendes National Hospital, and delegation of the management of the health centres to an entity with relevant experience;

c) Provide evidence of the inclusion of the operating costs of the Siamo Mendes National Hospital in the budget for the 2010 fiscal year;

d) Provide evidence, not later than 31 December 2010, of the availability of

the staff needed for the operation of the project health facilities, in accordance with PNDS standards.

ANNEX 1 REPUBLIC OF GUINEA BISSAU

SUPPLEMENTARY GRANT FOR HEALTH II PROJECT Project Map

This map has been prepared by the African Development Bank Group for the convenience of the readers of the report to which it is attached. The denominations used and the boundaries shown on this map do not imply on the part of the Group and its affiliates, any judgment on the legal status of any territory or any endorsement or acceptance of such boundaries.

ANNEX 2 PROJECT ACTIVITY STATUS BY COMPONENT

ANNEX III

Detailed Costs of Supplementary Grant

ANNEX 4 REPUBLIC OF GUINEA-BISSAU

LIST OF GOODS AND SERVICES

Cat. Component Unit Quant.

Unit Cost (UA)

Total (Incl. Cont.) ('000

UA)

Sub-Total (UA ‘000)

I. Strengthening Primary Level Care

B. Standard maintenance kit for health centre Unit 7 18 848 145.461

B. Management computer equipment Unit 7 2347 18.109

II. Strengthening Secondary and Tertiary Referral System

B. Hospital equipment / furniture Fixed sum 1 3000000 3 307.50 3 471.07

III. Capacity building

C. Consulting firm responsible for the management of the project and training Fixed sum/year 398048 438.848

Consulting firm responsible for collation of basic information - 6 months Fixed sum 1 125000 137.813

C. Maintenance training abroad Pers./months 10 9400 103.635

C. Managerial training abroad Pers./months 20 9400 207.270

C Cost recovery studies Fixed sum 1 192071 211.759

C. Study + Contractualization of Hospital maintenance and management Fixed sum/3 years 1 1187621 1 309.35 2528.93

IV. PIU Strengthening

C. Auditing Unit 2 50000 120.254

Total 6 000.00 6 000.00