Health Care Services

Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: PAD885

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED GRANT Public Disclosure Authorized

IN THE AMOUNT OF SDR 10.22 MILLION (US$15.79 MILLION EQUIVALENT)

AND

A PROPOSED GRANT IN THE AMOUNT OF US$5 MILLION FROM THE MULTI-DONOR TRUST FUND FOR HEALTH RESULTS INNOVATION

Public Disclosure Authorized TO THE REPUBLIC OF CHAD FOR A

MOTHER AND CHILD HEALTH SERVICES STRENGTHENING PROJECT

May 6, 2014

Health, Nutrition and Population (AFTHW) Country Department West Africa (AFCW3) Public Disclosure Authorized 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 March 31, 2014)

Currency Unit = Franc CFA (FCFA) XAF 475.38 = US$1 US$1.55 = SDR 1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AF Additional Financing AIDS Acquired Immuno-Deficiency Syndrome AFTEM Africa Region Financial Management Unit ANC Ante-Natal Care ARI Acute Respiratory Infection CAS Country Assistance Strategy CBO Community-based Organizations CFAF Central African Franc CHW Community Health Worker CPA Central Pharmaceutical Purchasing Agency CPA Complementary Package of Actions CPAR Country Procurement Assessment Report CPIA Country Policy and Institutional Assessment CPS Country Partnership Strategy CSO Civil Society Organization DALY Disability-Adjusted Life Year DHS Demographic and Health Survey DGRP General Directorate for Resources and Planning DOSS Directorate for Health Services Organization DPT Diphteria, pertussis (whooping cough), and tetanus vaccine DRF Division of Resources and Training (Ministry of Health) EA Environmental Assessment EEA External Evaluation Agency ECOSIT Enquête sur la consommation des ménages et le secteur informel au Tchad EA Environmental Assessment EU European Union FM Financial Management FMA Fiduciary Management Agency FMR Financial Management Report ii

GDP Gross Domestic Product HDI Human Development Index HIPC Highly Indebted Poor Country HIV Human Immunodeficiency Virus HMIS Health Management Information System HPI Human Poverty Index HRITF Health Results Innovation Trust Fund IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICT Information Communication Technologies IDA International Development Association IE Impact Evaluation IFAC International Federation of Accountants IFR Interim Financial Report IMF International Monetary Fund INSEED National Institute of Statistics, Economic and Demographic Studies IOI Intermediate Outcome Indicator ITN`` Insecticide Treated Net IPTM Intermittent Preventative Treatment of Malaria IPF Investment Project Financing ISN Interim Strategy Note IUD Intrauterine Device LLIN Long-Lasting Insecticide Treated Net MCH Maternal and Child Health MDG Millennium Development Goals M&E Monitoring and Evaluation MICS Multi-indicator cluster study (UNICEF) MoH Ministry of Public Health MoU Memorandum of Understanding MSP Ministry of Public Health MTR Mid-term Review MWMP Medical Waste Management Plan NCB National Competitive Bidding NDP National Development Plan NGO Non-Governmental Organization NPRS National Poverty Reduction Strategy NPV Net Present Value OI Outcome Indicator PACP Population and AIDS Control Project PAD Project Appraisal Document PBF Performance-based Financing PCT Project Coordination Team PDO Project Development Objective PETS Public Expenditure Tracking Survey PIM Project Implementation Manual PIU Project Implementation Unit PNDS National Heath Development Plan PPA Performance Purchasing Agency QEA Quality at Entry Assessment RBF Results-based Financing RZ Responsibility Zone iii

SDR Standard Drawing Rights SECPO Board Operations SOE Statement of Expenditure SP Sulfadoxine-pyrimethamine THE Total Health Expenditure TFR Total Fertility Rate TOMPRO Dedicated accounting system UN United Nations UNDP United Nations Development Program UNFPA United Nations Population Fund UNICEF United Nations Children's Fund USD/US$ US Dollar WHO World Health Organization

Regional Vice President: Makhtar Diop Country Director: Paul Noumba Um Acting Sector Director: Tawhid Nawaz Sector Manager: Trina S. Haque Task Team Leader: Aissatou Diack

REPUBLIC OF CHAD Mother and Child Health Services Strengthening Project (P148052)

TABLE OF CONTENTS Page

I. STRATEGIC CONTEXT ...... 1 A. Country Context ...... 1 B. Sectoral and Institutional Context ...... 1 C. Higher Level Objectives to which the Project Contributes ...... 5

II. PROJECT DEVELOPMENT OBJECTIVE ...... 6 A. PDO...... 6 B. Project Beneficiaries ...... 7 C. PDO Level Results Indicators ...... 7

III. PROJECT DESCRIPTION ...... 7 A. Project Components ...... 7 B. Project Financing ...... 11 C. Project Cost and Financing ...... 12 D. Lessons Learned and Reflected in the Project Design ...... 12

IV. IMPLEMENTATION ...... 13 A. Institutional and Implementation Arrangements ...... 13 B. Results Monitoring and Evaluation ...... 15 C. Sustainability...... 15

V. KEY RISKS AND MITIGATION MEASURES ...... 17 A. Risk Ratings Summary Table ...... 17 B. Overall Risk Rating Explanation ...... 17

VI. APPRAISAL SUMMARY ...... 18 A. Economic and Financial Analysis ...... 18 B. Technical ...... 19 C. Financial Management ...... 20 D. Procurement ...... 22

E. Social (including Safeguards) ...... 23 F. Environment (including Safeguards) ...... 23

Annex 1: Results Framework and Monitoring...... 25

Annex 2: Detailed Project Description ...... 30

Annex 3: Implementation Arrangements ...... 44

Annex 4: Operational Risk Assessment Framework (ORAF) ...... 60

Annex 5: Implementation Support Plan ...... 64

Annex 6: Key Theories and Design Elements of Performance-based Financing ...... 68

Annex 7: 2011-2013 Chad Performance-based Financing Pilot Indicator List ...... 71

Annex 8: Economic and financial analysis ...... 74

Annex 9: Country Map ...... 81

LIST OF DIAGRAMS Diagram 1: Funds flow diagram for IDA Grant ...... 50

LIST OF FIGURES Figure 1: Chadian women are exposed to the highest maternal mortality risk ...... 2 Figure 2: Child mortality, Chad vs. sub-Saharan Africa ...... 2 Figure 3: Coverage for assisted deliveries through PBF, October 2011 – March 2014 ...... 30 Figure 4: Chadian women are exposed to the highest maternal mortality risk amongst central African countries ...... 31 Figure 5: Coverage for assisted deliveries through PBF, October 2011-March 2013 ...... 32 Figure 6: Family planning coverage (modern methods) through PBF – Oct. 2011-March 2013 ..32 Figure 7: Institutional arrangements for PBF in Chad ...... 38 Figure 8: Anticipated steps intended to guide the project implementation ...... 40

LIST OF TABLES Table 1: Project Components ...... 12 Table 2: Risk Rating Summary ...... 17 Table 3: Financial Management Action Plan...... 22 Table 4: Targeted Areas ...... 34 Table 5: Illustrative list of cost-effective community-based interventions ...... 40 Table 6: Implementation Responsibilities ...... 45 Table 7: Financial Management Action Plan...... 47 Table 8: Implementation support plan ...... 51 Table 9: Schedule of procurement actions ...... 54 Table 10: Timeline of main focus of support to implementation ...... 66 Table 11: Skills Mix Required ...... 67 Table 12 List of partners ...... 67 Table 13: PBF design and implementation characteristics linked to improved results ...... 69 Table 14: Basic Package of Primary Care Level Services ...... 71 Table 15: Complementary package of services ...... 72 Table 16: Cost-effective interventions for mother and child health ...... 77 Table 17: CBA parameters ...... 78 Table 18: CBA Table of costs, benefits and balances ...... 79

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. PAD DATA SHEET Chad Mother and Child Health Services Strengthening Project (P148052) PROJECT APPRAISAL DOCUMENT

. AFRICA AFTHW

Report No.: PAD885

. Basic Information Project ID EA Category Team Leader P148052 B - Partial Assessment Aissatou Diack Lending Instrument Fragile and/or Capacity Constraints [ ] Investment Project Financing Financial Intermediaries [ ] Series of Projects [ ] Project Implementation Start Date Project Implementation End Date 29-May-2014 30-Sep-2018 Expected Effectiveness Date Expected Closing Date 01-Oct-2014 30-Sep-2018 Joint IFC No Regional Vice Sector Manager Sector Director Country Director President Trina S. Haque Tawhid Nawaz Paul Noumba Um Makhtar Diop

. Borrower: Republic of Chad Responsible Agency: Ministry of Health Contact: MoH Title: Coordinator Telephone No.: 002352518174 Email: [email protected]

. Project Financing Data(in USD Million) [ ] Loan [ X ] Grant [ ] Guarantee [ ] Credit [X ] IDA Grant [ ] Other Total Project Cost: 20.79 Total Bank Financing: 15.79 Financing Gap: 0.00

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Financing Source Amount BORROWER/RECIPIENT 0.00 International Development Association (IDA) 15.79 Health Results-based Financing 5.00 Total 20.79

. Expected Disbursements (in USD Million) Fiscal 2015 2016 2017 2018 2019 0000 0000 0000 0000 Year Annual 0.80 3.00 7.00 7.00 2.99 0.00 0.00 0.00 0.00 Cumulati 0.80 3.80 10.80 17.80 20.79 0.00 0.00 0.00 0.00 ve

. Proposed Development Objective(s) The objective of the Project is to increase the utilization and improve the quality of maternal and child health services in targeted areas.

. Components Component Name Cost (USD Millions) Component 1: Improving accessibility and quality of Maternal 12.80 and Child Health Services through Performance Based Financing and Community Health Component 2: Strengthening the institutional capacity to 2.20 implement and sustain Performance-based Financing and Community-Level Health Care Services

. Institutional Data Sector Board Health, Nutrition and Population

. Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits % Co-benefits % Health and other social services Health 90 Health and other social services Other social services 10 Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project.

Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Human development Population and reproductive health 35 Human development Child health 30 Human development Health system performance 25 Human development Other communicable diseases 10 Total 100

. Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [X] respects?

. Does the project require any waivers of Bank policies? Yes [ ] No [X Have these been approved by Bank management? Yes [ ] No [X] Is approval for any policy waiver sought from the Board? Yes [ ] No [X ] Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ]

. Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X

. Legal Covenants Name Recurrent Due Date Frequency Interim unaudited financial reports X Quarterly Description of Covenant

The Recipient shall prepare and furnish to the Association not later than forty-five (45) days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Association. Name Recurrent Due Date Frequency Financial statements audited X Yearly Description of Covenant The Recipient shall have its Financial Statements audited in accordance with the provisions of Section 4.09 (b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than [six months] after the end of such period. Name Recurrent Due Date Frequency Recruitment of external auditor 30-Mar-2015 Description of Covenant The Recipient shall recruit not later than six (6) months after the Effective Date, the external auditor referred to in Section 4.09 (b) of the General Conditions in accordance with Section III of Schedule 2 of this Agreement and pursuant to terms of reference satisfactory to the Association.. Name Recurrent Due Date Frequency Accounting software purchase, 28-Nov-2014 installation and maintenance Description of Covenant The Recipient shall, not later than two (2) months after the Effective Date, acquire, install and thereafter maintain an accounting software acceptable to the Association, for the Project. Name Recurrent Due Date Frequency Recruitment of a Project Coordinator, 30-Dec-2014 PBF Expert, Financial Mgt & Proc. Spec M/E

Description of Covenant The recipient has recruited a Project Coordinator /PBF expert, a Financial Management Specialist, a Procurement Specialist and Monitoring and Evaluation Specialist Name Recurrent Due Date Frequency Recruitment of an Internal Auditor 30-Sep-2014 Description of Covenant The recipient has recruited an internal Auditor.

. Conditions Source Of Fund Name Type IDA Execution and of delivery of the Financing Effectiveness agreement

Description of Condition The Financing Agreement has been executed and delivered and all conditions precedent to its effectiveness have been fulfilled. Source Of Fund Name Type IDA Adoption of the Project Implementation Manual Effectiveness Description of Condition The Recipient has adopted the Project Implementation Manual in accordance with Section B.1 of Schedule 2 to this Agreement. Source Of Fund Name Type Execution and delivery of the co-financing Effectiveness agreement Description of Condition The Co-financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it (other than the effectiveness of this Agreement) have been fulfilled. Team Composition Bank Staff Name Title Specialization Unit Daniele A-G. P. Jaekel Operations Analyst Operations Analyst AFTHW Wolfgang M. T. Chadab Senior Finance Officer Senior Finance Officer CTRLA Nicole Hamon Language Program Language Program AFTHW Assistant Assistant Aissatou Chipkaou Operations Analyst Operations Analyst AFTHW Hadia Nazem Samaha Senior Operations Senior Operations AFTHW Officer Officer Sybille Crystal Senior Operations Senior Operations AFTHW Officer Officer Ningayo Charles Donang Senior Procurement Senior Procurement AFTPW Specialist Specialist Berthe Tayelim Program Assistant Program Assistant AFMTD Aissatou Diack Senior Health Specialist Team Lead AFTHW Maya Abi Karam Senior Counsel Senior Counsel LEGAM Lombe Kasonde Operations Analyst Operations Analyst HDNHE Paul Jacob Robyn E T Consultant Health Specialist AFTHW Melissa C. Landesz Operations Officer Operations Officer AFTSG Celestin Adjalou Sr Financial Sr Financial AFTMW Niamien Management Specialist Management Specialist Helene Barroy Economist Economist HDNHE

xii

Non Bank Staff Name Title Office Phone City Peter Bachrach Consultant

. Project locations: Batha, Guera, Logone Oriental, Mandoul, Tandjile

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I. STRATEGIC CONTEXT

A. Country Context

1. Despite a significant increase in Gross Domestic Product (GDP) per capita since 2003, Chad remains one of the poorest countries in the world. Since becoming an oil-producing nation in 2003, Chad’s GDP per capita has tripled, from US$220 to US$674 (World Bank, 2010). However, political instability, particularly from the social and political unrest over the period 2006-09, has affected the economic growth and development of the country. Economic gains have not been accompanied by a substantial drop in poverty: while the poverty levels in N’Djamena have declined from 21 percent (2003) to 11 percent (2013), more than half of the rural population remains poor (52.5 percent) and poverty has declined by only six percent over the last ten years.

2. In 2011, the Human Development Index (HDI) ranked Chad at 183 out of 187 countries (UNDP 2011): (i) 53.2 percent of the population lived on less than US$1.25 per day; (ii) life expectancy was 50 years; and (iii) access to education was limited with 34 percent of children aged 6-11 not attending school. Health indicators were especially weak: communicable, maternal, neonatal and nutritional diseases represented 74 percent of causes of deaths, with 20 percent of child death due to malaria and 33 percent due to malnutrition (WHO 2011).

3. Population is increasing at 3.5 percent per year, which would double the estimated current population of 12.5 million by 2035. Further, given the country’s young age structure, high fertility rates (total fertility rate estimated at 6.9 children per woman in 2010), and low levels of contraceptive use, this growth is expected to continue (Guengant 2011). High fertility rates, close birth spacing, and teen-age pregnancies are major contributors to maternal and child morbidity, mortality, and malnutrition; and rapid population growth impedes poverty reduction.

4. Gender inequalities are pervasive in Chad. Chad has been ranked 97th out of 102 countries on the UN Gender Inequality Index, showing that Chad has one of the highest levels of gender inequality in the world (UNDP, 2011). The adolescent fertility rate is quite high with eight percent of Chadian women having a child before age 15, and early childbearing is pervasive (47 percent of women between 18-24 years old had a child before 18), affecting not only young women and their children’s health and nutrition, but also their long-term education and employment prospects (Guengant 2011). Early childbearing (20 to 24 years old) tends to be more frequent among the poor. Improving access to family planning would empower women and potentially improve their economic status.

B. Sectoral and Institutional Context

5. Maternal and child mortality remain significant problems in Chad. Chad is unlikely to achieve either the targets set forth in its “National Road Map for Accelerating the Reduction of Maternal and Child Mortality (2009-2015)” or the Millennium Development Goals (MDG).

6. Chad’s maternal mortality ratio, estimated at 1,100 per 100,000 live births in 2010, is the highest among Central African countries (Fig. 1) and is currently four times higher than the MDG 5 target. Prenatal care rates increased from 42 percent in 2004 to 53 percent between 2004 and 2010, but these results are very low compared to West African countries where over 80 percent receive prenatal care. Recent data show that between 2004 and 2010: (i) deliveries

1 assisted by skilled providers only increased from 20 percent to 22 percent; and (ii) deliveries taking place in health facilities only increased from 13 percent to 15 percent.

Figure 1: Chadian women are exposed to the highest maternal mortality risk amongst central African countries

800 + 19% 700 1990 2000 2010 +0% 600

500 +8%

400 +33% ‐43% 300 ‐60% 200 ‐13% ‐79% 100 ‐54%

0 Chad Central Cameroon Republic Angola Gabon Equatorial Sao Tome African of the Democratic Guinea et Principe Republic Congo Republic of the Congo

Source: WHO (2013)

7. Chad’s infant mortality rate was estimated at 98 per 1,000 live births in 2010; and child mortality rates are among the highest in the world and decreasing more slowly than in other Sub- Saharan African countries (Fig. 2). From 1990 to 2010, child mortality has declined from 210 to 170 per 1,000 live births, but will not attain the MDG 4 (Reduce Child Mortality) target. Children under five years old die primarily from malaria (20 percent), acute respiratory infections (ARI) (19 percent) and diarrhea-related diseases (14 percent). Nutritional status among children has not improved since 1997, and malnutrition accounts for more than one third of child mortality in the country. Immunization coverage of children under 12 months old is extremely low and has even decreased since 2001 (WHO 2012).

Figure 2: Child mortality, Chad vs. sub-Saharan Africa

CHAD 189 180 171 Sub‐Saharan Africa (average) 105 101 98 176 161 148 104 95 89

2000 2005 2010 2000 2005 2010 Infant Mortality Under 5 Mortality (per 1000 live births) (per 1000 live births)

Source: INSEED (2001, and 2010) and FNUAP (2005, 2010)

2 8. Barriers to health services are significant and coverage is low. Geographical access to health care services is limited: 30 percent of households require more than a two hour walk to access a health facility, and only 10 percent of poor people live within a 15 minute walk of a health facility (ECOSIT 2013). Financial access is limited, due to the reliance on out of pocket expenditures as the main source of health financing: 58 percent of people state that cost is the main reason not to go to a health center (ECOSIT 2013). Between the poorest and wealthiest quintiles, access to care differs significantly: 59.5 percent of the poorest women did not have at least one ante natal care (ANC) visit compared with 20 percent among the wealthiest); and only five percent of the poorest women delivered at the health center compared with 45.8 percent of women from the wealthiest quintile.

9. At the national level, high impact health interventions have not succeeded in reaching the targeted populations. Immunization coverage in Chad is alarming: only three percent of children 12-23 months old are entirely immunized (MICS 2010), and immunization coverage has declined since 2001. Vaccination rates for DTP and poliomyelitis have declined from 20 percent to 15 percent and from 42 percent to 25 percent respectively. Malaria prevention measures are inadequate: only 10 percent of children and 10 percent of pregnant women sleep under an insecticide-treated net (ITN) and only 22 percent of pregnant women received the two recommended doses of sulfadoxine-pyrimethamine (SP) for the Intermittent Preventive Treatment of Malaria (IPTM) (MICS 2010). The current attitudes toward and the use of modern contraceptive methods remain a challenge for the country: in 2010, only two percent of women were using a modern contraceptive method and the unmet needs are estimated to be 28.3 percent (MICS 2010).

10. Finally, lack of education for women and girls (only 22.4 percent of women between 15- 24 years old are literate) and socio-cultural barriers to health information constrain women’s demand for and use of sexual and reproductive health services (including modern contraceptives) and increase the likelihood of early marriage and consequent pregnancy.

11. To date, the health system’s response to poor health service delivery has been inadequate. The health sector is organized hierarchically with: (i) administrative units at central (Ministry of Health), regional (Regional Health Delegations), and peripheral (Health Districts) levels; and (ii) health care services at primary (health centers), secondary (district hospitals) and tertiary (regional hospitals) levels. Health districts are divided into responsibility zones (RZ), covered by a health center and run by one nurse or midwife. As of 2013, 1037 of 1290 (80 percent) responsibility zones were functional; and only 64 of 98 (65 percent) of districts had a functional district hospital.

12. The health system’s ability to respond to the needs of the population has been constrained by inadequate performance of its essential functions: (i) health sector financing lacks adequate data and tools for developing a health financing strategy; (ii) human resources and drugs are not sufficiently regulated leading to poor distribution, inefficient use, and inevitable leakages; and (iii) health management information does not provide an evidentiary basis for decision-making.

13. In 2011, Government financing constituted about 12 percent to total health spending while household spending accounted for 71 percent of overall expenditures. External aid decreased as a share of total health expenditure (THE) over the last decade (from 36 percent in 2004 to 13 percent in 2013). Despite a noticeable increase in 2013 (to 9.8 percent), over the

3 period 2008-2012 the health budget’s average share of the total budget was 5.4 percent (or approximately US$35-40 per capita). In addition to low health spending, the effectiveness and efficiency of government health spending have been significantly affected by: (i) skewed budget allocations; (ii) an exclusive focus on inputs (both by the Government and its development partners); and (iii) significant leakages in the use of budget resources.1

14. The combination of poor service accessibility, affordability, and quality has resulted in a very low use of existing health care services, especially at primary level and among women and children (0.18 contacts per year and per child).

15. Recent experiences in health service delivery have demonstrated the potential for increasing access to health care. A combination of community-level services (through mobile outreach from health facilities and recruitment of community health workers) and facility-level services using Performance-based Financing have demonstrated the potential for significantly improving coverage and accessibility to health services.

16. Community-based service delivery. Community-based approaches have recently been initiated by non-profit organizations with the support of external donors. Community midwives and community health workers have been trained and deployed in several regions (Kanem, Mandoule, Guera) to increase the awareness of the populations, deliver an integrated package of preventive and curative services at village or household level, and organize emergency transport. Community-based approaches, including family planning and nutrition, have proven effective in similar settings in reaching the poor and rural populations and accelerating progress towards MDG 4 and 5 (Reduce Child Mortality, and Improve Maternal Health, respectively).

17. Thus far, community-based service delivery has been limited and unevenly developed, thereby preventing vulnerable segments of the population (especially mothers and children) from accessing basic health services. Chad is currently preparing a national policy for community health which will reorient the existing approach for community participation and establish a more systematic community-centered approach for health service delivery as an affordable alternative for allocating health resources in Chad.

18. Mobile health teams. Mobile health teams (or équipes mobiles) were introduced in 2007 with support from the Second Population and AIDS Project (PACP2), and have proven to be another successful strategy for increasing access to basic health services outreach. Initially limited to a few districts in pilot regions, the intervention has been expanded and is being financed by the Global Fund. Vehicles with trained health workers (the mobile health teams) have visited isolated villages on a monthly basis to provide essential services. The results of the mobile teams have been positive in increasing the utilization of health services (particularly in comparison with the results of the fixed health facilities) and highly appreciated by the populations in these remote areas.

19. Performance-based Financing. Between October 2011 and March 2013, the Government with support from PACP2 introduced a Performance-based Financing (PBF) scheme in eight health districts across four regions (Batha, Guera, Mandoul, and Tandjile) covering a total

1 The 2004 Public Expenditure Tracking Survey (PETS) estimated leakage at 80% of expenditures and that less than 1 percent of their official non-wage budgetary expenditures from the MoH was received by health centers. A PETS is being planned for 2014.

4 population of 1.45 million people (102 health centers and nine hospitals). The pilot included the financing of two packages of services: (i) a basic package of health services comprising 12 key health services, principally targeting pregnant women and children under five, to be delivered at the health centers in targeted areas; and (ii) a complementary package of 12 key health services to be delivered at district hospitals in targeted areas. In addition to these health service packages, a quality checklist was also introduced to improve quality of health services provided.

20. Based on operational data and an independent evaluation conducted after project closing, utilization of health services in PBF targeted areas and facilities increased substantially, as did the quality of these services. From October 2011 to March 2013: (i) the proportion of women of reproductive age accepting modern contraceptive methods increased from 1.2 percent to 6.9 percent; (ii) the proportion of children immunized with Pentavalent 3 rose from 50 percent to 95 percent; and (iii) the proportion of women who gave birth in a health facility (caesarean sections included) increased from 17 percent to 40 percent. Quality of care has also improved (with improved availability of drugs, equipment, and motivation of health workers). An increased autonomy of health facilities to use additional resources to better meet the priorities of their area was also observed.

21. The PBF approach has demonstrated its cost-effectiveness in increasing the use of services, doubling assisted delivery and immunization rates in targeted districts with less than US$1.55 spent per inhabitant. In addition, the PBF approach has addressed health system bottlenecks in Chad by: (i) decentralizing health financing to front-line providers, thereby closing the gap between financial resources and effective service delivery; and (ii) encouraging health personnel to adopt an entrepreneurial approach aimed at increasing the use and quality of services provided.

22. Before project closing in June 2013, the Government of Chad introduced a budget line for continuing PBF operations; an account was opened and funds deposited, but the funds have not yet been disbursed and PBF activities slowed considerably but did not stop. The National PBF Steering Committee and the National PBF Technical Unit remain functional and are fully engaged in the policy dialogue related to PBF and health care financing in general.

23. Analysis of the three delivery approaches has shown their complementarity and predicted that outreach and family-community care in combination at 90 percent coverage could result in an 18–37 percent reduction in neonatal mortality, even with no change in facility-based care services (Darmstadt et al, 2005). Further, the re-integration of the various community-based programs implemented in the context of Chad (community workers for HIV/AIDS, malaria, nutrition, etc.) towards a single, comprehensive approach integrating basic packages of health care services would also represent significant gains in resources, notably from external aid.

C. Higher Level Objectives to which the Project Contributes

24. The proposed project will contribute to the achievement of MDGs 4 and 5 by supporting proven interventions to increase the accessibility of vulnerable populations to quality health services and to decrease the high rates of maternal and child mortality.

25. The proposed project is consistent with Chad’s National Development Plan (NDP) (or third PRSP) for the period 2013-15, which was approved in May 2013. With respect to health,

5 the NDP seeks to ensure universal access to quality basic services and focuses on: (i) improving the efficiency of the health system; (ii) improving access to services and quality of health care delivery; (iii) reducing mortality and morbidity related to priority health problems of the overall population and especially those of mothers and children; and, (iv) strengthening interventions against major diseases.

26. Among its specific recommendations, the Joint IDA-IMF Staff Advisory Note urged the government to: (i) increase health spending over the medium-term; (ii) improve the availability of drugs; (iii) strengthen human resources; and (iv) encourage citizen participation in the delivery of health services. In 2013, the HIPC completion review process was re-launched in coordination with the IMF. Key triggers of this process are from the health sector, including indicators of reproductive health, service delivery and HIV/AIDS, among others.

27. The World Bank reengaged in Chad in 2009 following a disruption after the 2008 internal conflict. The scope of the program suffered from a long stall in the process to attain debt relief under the HIPC Completion Point (CP) since 2001, low CPIA rating, and the legacy of the difficult dialogue with the Bank over management of oil revenues. An Interim Strategy Note (ISN) approved for 2010-2012 proposed new directions for Bank engagement in Chad, with focus on knowledge and analytical activities.

28. Within the health sector, the National Health Plan (2013-15) comprises seven priority areas for action: (i) service delivery, where the plan emphasizes strengthening the quality and the overall performance of clinic services, the coordination of care across the different levels, and accelerating immunization coverage to catch up with regional standards; (ii) governance, including community mobilization as a key enabling factor for accelerating progress; (iii) information systems; (iv) human resources for health (including consideration of Performance- based Financing); (v) health financing, including a request that at least 13 percent of the government budget be allocated to the health sector; (vi) drugs; and (vii) infrastructure. The specific interventions are planned to be developed for the most disadvantaged, including nomadic people.

29. The project is consistent with other existing national health sector strategies, including: (i) the strategy to accelerate the reduction of maternal and neo-natal mortality (2008-15); (ii) the human resources development strategy (2011-20); (iii) the country’s strategy to fight HIV/AIDS (2012-15); and (iv) the National Community Health Policy (now being prepared). The proposed project complements interventions being implemented by other development partners, who meet regularly with the Ministry of Health and the Presidency to ensure coordination in the health sector. Finally, the project is consistent with the World Bank Group Twin Goals of reducing extreme poverty and improving shared prosperity by targeting the poorest rural dwellers with high impact maternal and child health interventions.

II. PROJECT DEVELOPMENT OBJECTIVE

A. PDO

30. The objective of the project is to increase the utilization and improve the quality of maternal and child health services in targeted areas.

6 B. Project Beneficiaries

31. The project will target a total of twelve health districts in five regions: Batha, Guera, Logone Oriental, Mandoul and Tandjile. The five regions were selected on the basis of: (i) the high poverty rate; (ii) the status of health indicators, such as immunization, assisted delivery, and antenatal visits; (iii) the presence of other development partners; and (iv) the logistical and technical capacity to implement PBF. All four regions included in the PBF pilot from the previous operation (Batha, Guera, Mandoul and Tandjile) were retained and Logone Oriental was included based on the above-mentioned criteria.

32. The beneficiary population includes approximately 2.17 million inhabitants (2014) in the five regions. The project would especially target women of reproductive age (including young women, pregnant women and mothers) and children. Given that women of reproductive age, pregnant women and infants 0-11 months comprise respectively 22.80 percent, 4.23 percent, and 3.60 percent of the total population, the project would impact 410,400 women of reproductive age overall, and 76,140 pregnant women and 64,800 infants annually.

C. PDO Level Results Indicators

33. The proposed set of PDO indicators will focus on increasing the quantity and quality of reproductive, maternal and child health services in targeted areas, and capacity building of health sector management. Additional intermediate level indicators for progress monitoring and results reporting are described in Annex 1. The proposed PDO key results indicators are as follows:

i. Pregnant women receiving antenatal care during a visit to a health provider (number) (IDA Core Indicator); ii. Births (deliveries) attended by skilled health personnel (number); iii. Children fully immunized (number) (IDA Core Indicator); and iv. Average score of quality checklist (percent)2.

III. PROJECT DESCRIPTION

A. Project Components

34. The proposed project will include service delivery and capacity-building components, based on the need to: (i) support proven high-impact activities to improve maternal and child health in the short-term; and (ii) strengthen specific technical and managerial areas in the medium-term to ensure the future sustainability of these health services. Together, the components offer a means for simultaneously supporting the Government’s health development strategy and expanding promising initiatives to address the country’s serious administrative and technical problems in delivering health services.

Component 1: Improving accessibility and quality of Maternal and Child Health Services through Performance-based Financing and Community Health (US$17.8 million, of which US$13.3 million IDA, US$4.5 million HRITF)

2 A quality checklist is a comprehensive assessment of the quality of care provided by a health facility. It includes 100+ indicators covering: hygiene, equipment availability, clinical care and laboratory services, drug availability and management, and financial management. The checklist may be found at www://nphcda.thenewtechs.com.

7 35. The component will improve the delivery of health services, particularly in remote areas through a combination of facility-based, outreach, and community-based services. Facility-based services will expand on the PBF approach piloted by PACP 2. Facility-based services: (i) comprise the packages of essential and complementary health activities adopted by the Government; and (ii) will include interventions to improve the quality and availability of preventive health services at health centers and district hospitals, availability of drugs, and the capacity and motivation of human resources.

Sub-component 1.1: Expansion of Performance-based Financing for health facilities

36. Building on the pilot experiences, the project will strengthen the PBF approaches in five regions: Batha, Guera, Mandoul, Tandjile, and Logone Oriental. The project will finance grants to health facilities based on: (i) the quantity of maternal and child health (MCH) services delivered to the targeted population; (ii) the quality of those services; and (iii) geographical disparities to strengthen the supply of health services in remote areas.

37. The PBF grants will be used to: (i) improve the work environment of the health facility (minor repairs in the facility, procurement of additional small equipment, drugs, etc.); and (ii) finance performance-based bonuses to the health personnel. For health facilities that are located in highly remote and poor areas (where it is more difficult to achieve results), additional “equity bonus” adjustments will be made to allow for increased output financing to the worst off zones.

38. A quantified quality checklist will be designed for each level of the service package and will provide the foundation for measuring results (with increased weights given to process measures). The quality checklist will introduce measures related to rational prescribing of generic drugs, essential drug management and availability tracer drugs. Facility payments will be made quarterly: (i) on the basis of a set of incentivized indicators (defined by the Ministry of Health) emphasizing reproductive, maternal and child health (see Annex 2 for complete list of targeted services); and (ii) after quantity and quality of services have been declared and verified (ex-ante and ex post).

39. This subcomponent will finance grants based on health service packages delivered by health facilities.

Subcomponent 1.2: Governance, purchasing, coaching and strengthening the health system through Performance-based Financing

40. To support PBF implementation and supervision (capacity building, verification and counter verification, IT system, etc.), the project will finance purchasing arrangements covering batches of 1,000,000 persons (2-3 regions per contractual arrangement). Given the technical challenges of PBF implementation and the previous positive experience with external technical assistance for PBF piloting, the project proposes to identify international non-governmental organizations (NGOs) with demonstrated experience with PBF to act as purchasing and verification agencies. The contract management and verification for PBF implementation is estimated to be at maximum 30 percent of the total PBF budget, which is in-line with international experience.

41. The public entities that will be involved in the operation, such as the PBF Technical Unit and regional and district health administrative units will enter into performance frameworks to be

8 accountable for services and activities agreed upon action plans. These performance framework contracts will clearly outline the expected performance of these entities vis-à-vis their roles in the health system and lead to successfully scaled up PBF approaches. The performance frameworks will also be assessed quarterly using a combination of internal and external verifications before payment is made (ex-ante), and are randomly counter-verified after payment (ex-post) using a third party agent to ensure reliability of the performance assessments. A system of tested penalties will be instituted to discourage gaming.

42. Verification and counter-verification of the health facilities PBF Technical Unit, regional and district units. The purchasing agent will assess the performance of the various entities being contracted to provide a set of services. Activities to be carried out include:

(a) Verification of the performance of the HMIS and drug regulatory authority/MoH;

(b) Counter-verification of the quantity and quality of services provided by health facilities through verification, including a community verification client satisfaction survey component;

(d) Counter-verification of a random sample of health center quality checklists.

43. In the case of discrepancies surpassing pre-determined percentage points in any of the verified samples (whether quantity, quality or performance frameworks for the district), penalties will be introduced through reductions in future payments through PBF grants. The penalties for fraud will be clearly outlined in the various contracts and procedures and will be detailed in the PBF manual.

44. This subcomponent will finance studies, surveys, consultant services and training

Sub-component 1.3: Development of community-based approaches for MCH services

45. To stimulate demand for the increased availability of improved health services resulting from the expansion of PBF, the project will provide support for the development and implementation of community-based approaches proposed by the Ministry and its development partners.

46. To date, a draft National Community Health Policy has been formulated by the Ministry in close collaboration with other concerned partners (UNICEF, UNFPA, EU, WHO, etc.); the policy will be followed by the preparation of a budgeted medium-term strategic plan based on the three priorities of the Policy: (i) development of an appropriate package of preventive health services; (ii) training of community health workers; and (iii) support for facility-level health management committees. The formulation of the policy is at its final stages and the related operational plan will be adopted while the project is being rolled out. Key activities have already been pre-identified and the government is requesting support from each health sector partner.

47. Specifically, the project will finance a mix of national and project specific components. Nationally, the project will: (i) support a systematic review of successful community strategies

9 used in the region to accelerate progress in MCH and a costing of the plan; and (ii) contribute to workshops for the ongoing discussion of the problems and possible solutions for community- based health services development.

48. In the project areas, the focus will be on developing the complementarity of community- based health services and facility-based PBF. To this end, the project is expected to finance: (i) adaptation and harmonization of the existing training curriculum for community health workers; (ii) training of 500 community health workers (relais communautaire) to deliver the defined package of community health services; and (iii) training for the health management committees.

49. This subcomponent will finance studies, surveys, consultant services and training.

Component 2: Strengthening the institutional capacity to implement and sustain Performance-based Financing and community-level health care services (US$2.99 million, of which US$2.49 million IDA, US$0.5 million HRITF) 50. This component will: (i) strengthen institutional capacities for improved program and health sector management; and (ii) strengthen capacity for better M&E, supervision and project implementation.

Sub-component 2.1: Strengthening institutional capacities for improved program and health sector management

51. Within the overall framework of the expansion of PBF, project recognizes the importance of health system strengthening. Capacity-building efforts will focus on enhancing strategies for adequately financing the sector, deploying and motivating human resources, and strengthening supply chain management. The project will support the Government’s efforts to implement PBF through consultations, workshops and training aimed at promoting reforms that will lead to better health delivery and promote scaling up of PBF in Chad. Activities will contribute to: (i) improve the availability of quality essential medicines at all levels of the health system, (ii) ensure better allocation of human resources for health by providing managerial autonomy for contracting health personnel; and (iii) continuously review and assess the institutions regulating and implementing PBF.

52. This subcomponent will finance workshops, study tours, training consultant services and media communication.

Sub-component 2.2: Strengthening capacities for better M&E and supervision, and Project Implementation

53. This sub-component supports project management and supervision as well as monitoring and evaluation of the PBF.

54. Project management and supervision. A PBF Steering Committee and a PBF Technical Unit have existed since 2010 and 2012 respectively. Their mandates have been renewed and updated on April 2014. Given the experience of these structures and the expanded tasks required for the PBF approach, MoH has proposed revisions to the existing organizational texts to establish arrangements for project management and supervision.

10 55. The project will support operating costs for the PBF Steering Committee and the PBF Technical Unit for activities directly related to the project, including performance payments for the PBF Technical Unit.

56. Monitoring and evaluation of PBF. Given the fragmentation, unreliability, and inaccuracy of the existing routine reporting system for the health sector, challenges exist in using results from this system as the basis for measuring health facility performance. However, since PBF payments are to be made based on service volumes and quality, external reviewers will assess the declared results, ex post verification activities will be conducted by an independent third party and an external evaluation agency (EEA) will be contracted by the MoH to check the veracity of the information provided by health services.

57. For enhanced monitoring and evaluation, the project will use a web-application to manage both the public front-end and the back-end strategic purchasing. The backbone of the web-application for Chad currently exists, developed during the previous pilot (http://fbrtchad.org/). The project will work closely with the HMIS department to revamp the web-application. The Information and Communication Technologies (ICT) solution is part of the system of intense monitoring and evaluation for PBF results. Verified and purchased results including the results for the health administration will be visible on the public website whereas the raw data will be downloadable from the website.

58. The project will be regularly assessed so that lessons learned from the operation can be rigorously documented and disseminated to Chadian stakeholders and abroad. The project will also incorporate an experimental impact evaluation (IE) to generate evidence on the effectiveness and impact of PBF in combination with training and recruitment of community health workers. As target districts for the PBF intervention have already been identified, the experimental design will introduce the rollout of the community health worker scheme (which may include performance contract components) through randomized assignment at the health facility catchment area level. To measure the effect of PBF on health outcomes of interest, PBF districts will be matched with non-PBF districts through a quasi-experimental evaluation design. The details of the IE research questions and identification strategy will be developed during the early stages of project implementation.

59. This subcomponent will finance workshops, study tours, training consultant services and media communication.

B. Project Financing

60. The lending instrument will be an Investment Project Financing (IPF), financed under an IDA grant of US$15.79 million equivalent and an HRITF grant of US$5 million. Bank support is planned for four years (2014-2018).

11 C. Project Cost and Financing

Table 1: Project Components

HRITF IDA Project Components Financing Total Financing

1. Component 1: Improving accessibility and quality of 13.30 4.5 17.80 Maternal and Child Health Services through Performance- based Financing and Community Health 2. Component 2: Strengthening the institutional 2.49 0.5 2.99 capacity to implement and sustain Performance-based Financing and community-level health care services Total Financing Required 15.79 5.0 20.79

D. Lessons Learned and Reflected in the Project Design

61. Lessons learned from the implementation of previous projects in Chad (such as the PACP2) as well as more general PBF experiences outside and inside Chad have been taken into consideration in the design of this project.

62. Though Chad’s current policies and strategies correctly identify the issues of accessibility, quality, and utilization of health services, the sector’s responses to date have been inadequate and its results have been poor. The Government and its development partners (including the Bank through its previous interventions in Chad) have focused almost exclusively on supply side factors and inputs (building and equipping health facilities, training personnel, supplying drugs and other consumables, etc.). However, recent successful efforts in Chad to pilot demand side interventions and a results orientation have convinced the authorities to consider a comprehensive community-based health strategy which would combine outreach services and facility-based services. These considerations have been included in the most recent National Health Development Strategy and are currently being pursued in a coordinated manner by the Ministry of Health and its development partners.

63. A community-based health strategy must combine increased accessibility to services with improved facility level delivery of services. Though implemented in different districts, the pilot experiences for both community-based service delivery and facility-based Performance-based Financing have demonstrated the potential benefits of these individual initiatives. The proposed project would combine these complementary service delivery modalities in the same districts to: (i) enhance service accessibility (through community outreach) and affordability (by expanding free antenatal and family planning services and subsidizing emergency obstetrical care); and (ii) improve facility performance (by increasing the quantity and quality of outputs).

64. Performance-based Financing has been shown to be an appropriate strategy for increasing utilization and improving the quality of services in health facilities. Studies of PBF in Cambodia, Burundi, Haiti, and Afghanistan and a randomized controlled study in Rwanda have demonstrated PBF’s effectiveness in rapidly increasing the use of cost-effective health interventions. The Rwandan experience with PBF has shown promising results in terms of

12 increasing the proportion of staff in public sector facilities, increasing financing to the district level, and improving the coverage of key maternal and child health services. Burundi has implemented a PBF program, similar to the one planned in Chad, and shown that facilities are more likely to have the full complement of skilled staff and increases in important health services such as skilled birth attendance and contraceptive prevalence.

65. PBF has improved the alignment between resources and health service delivery priorities by purchasing priority service indicators at higher rates. By shifting financial resources from a focus on inputs to a focus on outputs and the purchase of health services conditional on the quantity and quality of the services delivered, service utilization has increased. In a country like Chad, which has historically financed inputs, the PBF experience has both enhanced the functioning of the public health system and provided incentives for health facility managers and health workers to expand the coverage and improve the quality of essential public health interventions. Support for the autonomy of health facilities and for health worker bonuses linked to facility performance seem to be changing the culture of service delivery.

66. Besides providing an obvious performance-based motivation for health workers, PBF has a number of other advantages: (i) it gives a clear signal to health workers regarding the priorities of the government and ensures that facilities maintain a focus on preventive and pro-poor interventions; (ii) it ensures that projects focus on producing tangible results and on strengthening M&E systems; and (iii) it decentralizes decision making to managers who are much closer to the community.

67. Experience has also shown that PBF can contribute to improved governance through: (i) increased transparency linked with better verification and oversight of health facility performance and the publication of results on a public website; (ii) better participation by communities in assessing facility performance; and (iii) more involvement of civil society groups in appreciating health service delivery results.

68. Strengthening management capacity and promoting innovation are essential to achieving results in low-capacity environments. The previous Bank-financed project demonstrated that, in a post-conflict country with weak project management capacity, the recruitment of dedicated staff at central and regional levels, the sub-contracting of specific technical and managerial functions to appropriate agencies and NGOs, and the investment in capacity-building will strengthen capacity at all levels. These lessons have been incorporated into the project in two ways: (i) implementation arrangements for the outreach and facility-based components of the community-based health strategy will be confirmed and appropriate contracts concluded as a condition for disbursement; and (ii) a roadmap for developing and formalizing operational arrangements for the future sustainability of the community-based health strategy will be agreed upon with the Government and milestones established to monitor progress in institutionalizing the requisite administrative technical, and financial elements.

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

69. At the central level a PBF Steering Committee (created in 2010 and expanded in 2014) will oversee the achievement of the project’s objectives. Chaired by the MoH General Director

13 of Health Activities (Directeur Général des Activités Sanitaires), the steering committee includes: (i) the most pertinent directorates of MoH; (ii) key ministries whose support is needed for successful implementation and sustainability of PBF in Chad (Ministry of Economy and Planning and Ministry of Finance and Budget). The steering committee will: (i) validate the overall strategic direction of the PBF; (ii) ensure that the procedures set forth in the project implementation manual are followed; (iii) examine the different contracts and intervene where necessary to resolve issues; (iv) monitor PBF implementation and intervene where problem resolution may require the support of committee members; and (v) disseminate the results of the evaluations with a view toward mobilizing additional resources and expanding the PBF approach in the country.

70. To support the project Steering Committee, MoH has established a PBF Technical Unit (Cellule Technique PBF) responsible for day to day implementation of the project and for informing the PBF Steering Committee of the progress achieved in implementing the PBF approach. The PBF Technical Unit is composed of representatives of the MoH key directorates and will: (i) collect and analyze information requested by the PBF Steering Committee for consideration at its meetings; and (ii) carry out the decisions and instructions reached by the steering committee; and (iii) serve as the project implementation unit.

71. The Coordinator of the PBF Technical Unit will be appointed by the Minister of Health through a merit-based internal competitive process. Other experts, such as the PBF Expert, the Financial Management Specialist, the Procurement Specialist, and the Monitoring and Evaluation Specialist will be recruited in accordance with IDA guidelines for the selection of consultants. Other experts may be recruited on a need basis. The PBF Technical Unit will be headed by a Coordinator who will rely on the existing services within MOH to meet the needs of the PBF Steering Committee. To this end,

 the General Directorate for Health Activities (which includes the regional and district coordination units) will contribute to assessments of: (i) the autonomy of the health facilities; and (ii) the increased use and improved quality of health services;  the General Directorate for Pharmacy, Drugs, and Laboratories will evaluate the situation with respect to the availability of drugs and medical consumables in the health facilities; and  the General Directorate for Resources and Planning will assess issues related to human resources, planning and implementation of the semi-annual action plans, evolution of the key indicators, and the opinions of the population.

A focal point within each of these General Directorates will ensure coordination of the activities and the synthesis of results for presentation to the PBF Steering Committee.

72. The project policies and procedures will be incorporated in a project implementation manual. It will be completed by a national PBF manual prepared by the PBF Technical Unit. The PBF Technical Unit and the Bank will ensure that implementation manuals prepared by the Performance Purchasing Agencies (PPAs) are consistent with each other and with the project overall implementation manual and national PBF manual. A more detailed description of the implementing arrangements is presented in Annex 3.

14 73. Two PPAs will be contracted by the Ministry of Health (MoH) to manage the purchasing of (i) MCH services from public and private health facilities; and (ii) specific technical support from the regional and district entities. The MoH will provide the PPA with the resources to: (i) pay health facilities for specified health services delivered to the population according to the norms and standards of service as defined by the Ministry of Health; and (ii) provide project support and verification activities. The PPA will contract with health facilities and district hospitals to deliver an agreed package of technical support and MCH services. Payments will be based on (i) the technical support provided to the health centers and MCH services delivered to the population and (ii) the technical quality of these services. An independent third party, or external evaluation agency (EEA), will be contracted by the MoH to ensure the veracity of the information provided by health services.

B. Results Monitoring and Evaluation

74. The Results Framework focuses on accountability for results in the delivery of maternal and child health services. The project approach to results monitoring aims at extending beyond tracking of inputs and outputs by placing a strong emphasis on intermediate outcomes. When possible, the proposed results framework uses existing indicators and data to measure the progress of both the project and its contribution to the overall national program; this will benefit the program by strengthening and increasing the efficiency of existing data collection mechanisms. For example, routine monthly and quarterly data collected from Chad’s HMIS via the web-based PBF system will be aggregated for the project’s quarterly and annual indicators to reinforce the national system and avoid creating a parallel structure. The project monitoring system will include (i) identification and consolidation of M&E indicators; (ii) training and capacity building initiatives at the national, regional, and local levels; (iii) standardized methods and tools to facilitate systematic collection and sharing of information; (iv) an independent review by external technical consultants (External Evaluation Agency); and (v) annual program evaluations and strategic planning exercises for each component.

75. The mid-term review (MTR) will assess the project’s performance, intermediate results, and outcomes. The MTR will be conducted in the last half of 2016. In combination with the MTR, an independent assessment will be conducted to ensure that all processes (targeting, registration and payments) function as planned.

76. The results of the PBF component of the project will be assessed through an Impact Evaluation (IE). The policy objectives of the IE are to (i) identify the effects of PBF on maternal and child health service coverage and quality; (ii) identify key factors responsible for the project’s observed outcomes; and (iii) assess the cost-effectiveness of PBF as a strategy to improve coverage and quality. In doing so, results from the IE are expected to be useful to fine tune the design of the national PBF policy in Chad and will also contribute to the larger body of knowledge on PBF.

C. Sustainability

77. Technical sustainability will be ensured by capacity building and knowledge transfer activities throughout the project. While capacity already exists for implementing Component 1 through previous experience with the PBF pilot, capacity in the PIU will be strengthened during project implementation through trainings and on the job coaching. Subsequently training of

15 trainers will create a pool of knowledgeable PBF trainers who will then train additional trainers using cascade training to ensure capacity at all levels of the health system.

78. Financial sustainability of PBF can be reasonably achieved given the limited cost of this mechanism and current level of financing the Government is investing in the health sector. The project will help improve the efficiency of health spending by improving the outcomes obtained from the current total health expenditure of US$35 per capita. By spending US$2-3 per capita per year (including overhead costs) the cost is likely to be affordable and sustainable in the long term. Additionally, by integrating an ongoing policy dialogue on key issues including free health care policies (such as the current policy, which is financed by the MOH at approximately US$5 million/year through the provision of free pharmaceuticals to each district in the country), HMIS strengthening, human resources for health strengthening, health financing reform, the project is expected to institutionalize these PBF reforms.

79. Financial sustainability following the close of the project will be a continuing process, but the Government has already demonstrated its commitment to increasing the budget line for maternal and child health and establishing a dedicated budget line for PBF. This signals government’s recognition of the importance of continuing to deliver results post-Bank support. These efforts will also require continued capacity building at all levels of the system (from civil society upwards) and close collaboration with other development partners.

16 V. KEY RISKS AND MITIGATION MEASURES

A. Risk Ratings Summary Table

Table 2: Risk Rating Summary

Risk Category Rating Stakeholder Risk Substantial Implementing Agency Risk - Capacity Substantial - Governance Substantial Project Risk - Design Moderate - Social and Environmental Moderate - Program and Donor Moderate - Delivery Monitoring and Sustainability Moderate Overall Implementation Risk Substantial

B. Overall Risk Rating Explanation

80. The overall project risk is rated substantial. Despite the previous PBF pilot and Government’s commitment to continue this activity, project design and implementation require strong in-country capacity which is not yet fully developed. It is expected that during the implementation stage, specific activities will be undertaken to build the Government and other stakeholders’ capacity in this area and will result in a better understanding and design of the project. Implementation risks are heightened by: (i) the serious shortage of Human Resources for Health (HRH); and (ii) weak supply chain system for drugs and essential commodities, which has resulted in frequent stock outs that limited the impact of PBF. In addition, country risks, governance, and potential fraud and corruption (particularly with the introduction of the PBF approach) should not be minimized, although the project design proposes measures to mitigate these risks.

81. Implementation risks are moderate because the higher risks associated with the expansion of the PBF approach are mitigated by the strong TA that will be rolled out under the project, and the long delays in approval of large contracts will be mitigated through launching the bids before board approval. The risks associated with the maternal and child health components are low, except for family planning that may require very complex communication for behavior change approaches.

82. Several factors will contribute to moderating the substantial implementation risk rating. First, the Government's implementation team from the previous project is still mostly available; it is familiar with both the proposed interventions and with World Bank procedure and has

17 demonstrated the ability to monitor project results. Secondly, the Ministry of Health has a unit that already oversees the implementation of PBF in the country and is making great efforts to strengthen its HMIS. Thirdly, since the Bank started financing the health sector, fiduciary capacity, including financial management, disbursement and procurement capacity, has been regularly assessed through regular implementation support, follow-up of external audit recommendations, and strengthening of internal audit functions.

VI. APPRAISAL SUMMARY

A. Economic and Financial Analysis

83. Access to healthcare services and health status are well-established determinants of an individual’s well-being and a country’s development. Providing health services equitably to all citizens to prevent the ill-effects of diseases and injuries, and to do so without exposing them to burdensome and often catastrophic medical expenses, has been demonstrated to yield significant socioeconomic as well as health benefits at the individual and population levels. Child mortality, including both infant and under five mortality rates, is higher and decreases more slowly in Chad than in any other sub-Saharan African country. Main underlying factors for such a deteriorated health status in Chad are to be found in the low accessibility (distance and opportunity costs), affordability and quality of the supply of services (DHS 2004 and MICS 2010). Low health spending in Chad is another undeniable factor impairing the availability and quality of health care services in the country. Chad spends below US$35 per capita in current US$ (2009-2013) and health spending represents 4.3 percent of GDP (WDI, 2011).

84. The overall goal of the project is to strengthen maternal and child health services in Chad. It comprises two main components: (i) improving accessibility and quality of maternal and child health services through result-based financing, and community health (ii) strengthening the institutional capacity to implement and sustain Performance-based Financing and community level health care services. The first component would focus on five main regions, targeting over 2.17 million Chadians in 12 health districts. This component is intended to provide financial incentives to service providers following the effective delivery of a limited benefit package at PHC level (targeting women and children) and a complementary package in district hospitals.

85. Investing in mother and child health services will be critical to ensure access to quality services for direct beneficiaries. The economic justification relies on the disproportionate burden of maternal and neonatal deaths in Chad and the fact that affordable and cost-effective interventions to prevent these avoidable deaths are well-established. Evidence for low-income countries suggests that improved coverage with a package of interventions directed to mother and child is extremely cost-effective (US$82-142 per DALY averted)3. The interventions proposed under this project are all considered global “best buys”.

86. The choice of the two project approaches (RBF and community-based approach) also rely on strong economic rationale. The RBF approach has demonstrated its effectiveness and efficiency in addressing health system bottlenecks in the context of Chad through three major elements4. First, the RBF approach operates through decentralizing health financing to front-line providers. The mechanism responds to the concern that a large source of system inefficiency

3 Disease Control Priorities, Second Edition 4 Lessons learnt from a pilot implemented in four regions/8 districts of Chad in 2011-2013.

18 originated from the extremely limited share of decentralized financial flows (less than a one percent). Closing the gap between financial resources and effective service delivery is an obvious direct benefit for users. Second, the RBF approach relies on the assumption that an extrinsic motivation, without crowding out the intrinsic values, will encourage health personnel to adopt an entrepreneurial approach aimed at increasing the use and quality of services provided. Third, the pilot implemented in Chad has proven to be strongly cost-effective for increasing use of services. With less than US$1.55 spent per inhabitant, the pilot has led to a two-fold increase in assisted delivery and immunization rate in targeted districts.

87. The second approach of the project also relies on a strong economic rationale. Community-based approaches have proven their cost-effectiveness for improving coverage and access to basic and integrated health services (Ethiopia, Uganda, Kenya, Mali, Mozambique, Malawi, etc.). Recent analysis indicates that 41–72 percent of newborn deaths can be prevented by available interventions, if provided at high coverage, and around half of this reduction is possible with community-based interventions (Darmstadt et al, 2005). The selection of the project components, especially the community-based approach, creates the conditions for a sustainable investment in the sector. By boosting system’s reliance on existing communities, the project will be directly contributing towards the sustainability of the sector.

88. A cost-benefit analysis (CBA) was conducted to measure project’s economic performance, and to ultimately assess its net returns against alternatives (e.g. status quo). This analysis focused on the RBF project component and excluded the community health component. The method consisted of: (i) identifying the RBF project’s inputs and outputs, (ii) monetizing benefits of project, (iii) discounting benefits and costs and (iv) computing the net returns. The CBA analysis shows a net value of US$3.23 million, with a rate of return of approximately 28 percent. Those results demonstrate the positive economic performance of the RBF approach proposed in this project and its capacity to generate large returns for the country economy and society.

89. The selection of the project interventions, especially the RBF and the community-based approach, creates the conditions for a sustainable investment in the sector. By boosting system’s reliance on existing health facilities and communities, the project will be directly contributing towards the sustainability of the sector. Despite the fiscal fragility of the health sector in Chad, there is a noticeable space to further enhancing the fiscal room for health, notably through: (i) a re-prioritization in resource allocation (towards PHC, community-based approaches, human capital); (ii) mobilizing innovative resources (non-oil revenues through economic diversification, ear-marked taxes); and (iii) gains in efficiency (reduced leakages, increased transfers, better governance and management of service delivery).

B. Technical

90. The project will support packages of basic and complementary health services, predominantly maternal and child health interventions aimed principally at improving health related MDGs in the four selected regions. The approach of investing in maternal and child health interventions is aligned with the National Health Development Plan (Plan National de Development Sanitaire, PNDS), which outlines the Republic of Chad’s health priorities over the coming three years (2013-2015). This project will reinforce the government’s priorities, using PBF to strengthen maternal and child health interventions as well as the overall health system.

19 91. The design of PBF arrangements in Chad is based on the best practices and experiential knowledge gained in other successful PBF projects. For example, the mechanism to determine PBF credits is a “fee-for-service conditional on quality” system, which has been applied with successful results in Chad as well as in other PBF projects in Rwanda, Burundi, Democratic Republic of Congo, Zambia, Zimbabwe, Nigeria, Benin and Cameroon. Such a system ensures that (i) the PBF mechanism is clear and can easily be understood by health workers and communities and (ii) the increase in the quantity of care does not adversely affect quality.

92. Community-based approaches are recognized cost-effective strategies to accelerate progress towards MDG 4 and 5. Delivering an integrated basic package of preventive and curative health services is commonly used in the region with documented improvements in child and maternal mortality. Chad’s health sector priority has called for a stronger focus on community-based approaches to complement facility-focused service delivery, especially to reach the poorest and most disadvantaged segments of the population. The project will effectively support the government in institutionalizing and systematically scaling-up innovative delivery approaches, through the elaboration of a national action plan. The training and deployment of up to 1,000 community health workers will be a milestone of this project.

C. Financial Management

93. The Ministry of Health (MoH) has established a PBF Technical Unit that will be responsible for the technical aspects of the project; while day to day fiduciary management of the project will be the responsibility of the Direction Générale des Ressources et de la Planification (DGRP)5.

94. In compliance with the Financial Management Manual for World Bank-financed Investment Operations (March 1, 2010) and AFTEM Financial Management Assessment and Risk Rating Principles, the Bank conducted a financial management assessment to determine: (a) whether there are adequate Financial Management (FM) arrangements in place within the MoH, especially within the directorate in charge of fiduciary management the DGRP, to ensure that the funds provided under the project will be used for the purposes intended in an efficient and economical manner and the responsible entity is capable of correctly and completely recording all transactions and balances related to the Project; (b) the Project’s financial reports will be prepared in an accurate, reliable and timely manner; (c) the entity’s assets will be safely guarded; and (d) the Project will be subjected to auditing arrangements acceptable to the International Development Association (IDA).

95. The FM assessment concluded that the DGRP will have the overall financial management responsibility of the project implementation and has general experience with donor-financed activities, including the World Bank. However it does not fulfill all minimum FM requirements to carry out properly FM aspects of the project activities: (i) the DGRP is not endowed with an adequate procedures manual, except the one developed for the European Union (EU) financed projects; (ii) the accounting software TOMPRO is under its mono-project and multisite version that will not allow to include any additional project unless the DGRP acquires the multi-projects version currently used for the International Fund for Agriculture project. Furthermore, the FM staffing arrangements are not adequate. Not all FM staff have enough experience and capacity to

5 Also referred to as the General Directorate for Resources and Planning

20 work on an IDA-financed project.. Finally, the internal and external control arrangements are not adequate enough to provide timely and thorough audits of the project activities and performance.

96. As a result of the above mentioned financial management constraints, the DGRP will ensure a project implementation manual is prepared before the effectiveness of the project along with a specific PBF procedures manual. As dated covenants the following actions will be undertaken as well to mitigate the related weaknesses: (i) recruit a Financial Management officer with qualifications and experiences acceptable to the Bank no later than three months after effectiveness; (ii) purchase and set up adequate accounting software factoring in its ability to generate automatically financial statements within two months of effectiveness; (iii) no later than four months after the project becomes effective, appoint an internal auditor; and (iv) recruit an external auditor no later than six months after project effectiveness.

97. Component 1 of the project that is about 60 percent of the project cost will finance a Performance-based Financing in health centers in a country where health service delivery has been poor and governance somewhat weak. As PBF Grants to health facilities under Sub- Component 1.1 “Expansion of Performance-based Financing for health facilities” will not begin until after contract management, fund flow and verification mechanisms are put in place (under Sub-Component 1.2), disbursement for this sub-component is expected to begin 6-12 months after disbursement begins for other project sub-components. Specific measures will then be incorporated in the project design to ensure smooth implementation and mitigate related risks:

- Governance action: Decentralized governing boards should be created for PBF at the regional level, and would comprise civil society in the approval process of PBF invoices; - Satisfaction surveys: Client satisfaction surveys will be conducted with grassroots organizations; - External verification: The MoH will contract with (i) two performance purchasing agencies (PPA) to manage the purchasing of predetermined technical support from the regional and district entities and the MCH services from public and private health facilities; and (ii) an independent verification agent to ensure the verification of the PBF outputs according to the specified and agreed technical and quality standard.

98. The overall FM residual risk for the project is rated Substantial due mainly to the complex nature of the project and the weak internal control environment within the MoH. It is considered that the financial management arrangements in place at MoH/DGRP will meet the Bank’s minimum FM requirements under OP/BP 10.00 after the proposed mitigation measures have been implemented. The FM action plan is presented below:

21 Table 3: Financial Management Action Plan

Action Responsible Deadline Elaboration the Project Implementation DGRP Before effectiveness Manual (PIM) including financial, administrative, accounting and RBF procedures acceptable to IDA Recruitment of a Financial Management DGRP Three months after effectiveness Officer Procurement of an adequate accounting DGRP Within two months after effectiveness software Recruitment of an internal auditor to DGRP Within four months after carry out ex-post reviews and qualitative effectiveness reviews of result reports by health centers on a risk based approach Recruitment of the external auditor DGRP Within six months after effectiveness

D. Procurement

99. Due to current weaknesses in Chad’s procurement system, which have caused substantial delays in the procurement process, the Bank team recommends the following measures to facilitate speedy implementation of project activities: (i) a waiver authorizing the Ministry of Health and Ministry of Plan to manage all the project’s procurement processes including the signature and approval of contracts; (ii) a procurement plan anticipating all procurement activities; and (iii) close supervision of procurement.

100. The Procurement under the proposed project would be carried out in accordance with the following World Bank Guidelines: “Procurement of Goods, Works and Non- Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” January 2011; “Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” January 2011; “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, October 15, 2006, updated January 2011 and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame has been agreed upon between the Recipient and the Association in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

101. The procurement process and the standard bidding documents ( SBD) that will be used by the implementing agencies will be defined in the project implementation manual (PIM) and in the procurement and financial management manual.

22 E. Social (including Safeguards)

102. The project is expected to have a positive social impact by improving access to health care services for the poorest households. Component 1 (through PBF) will provide incentives for health facilities to reduce staff absenteeism and to improve staff responsiveness with patients. As a result, health facilities with PBF contracts will in turn provide more and better care for marginalized populations.

103. The project will have a positive impact on gender in Chad. Given that the project’s objectives are to improve maternal and child health, improving women’s health is an essential component of the intervention. Particular attention will also be given to ensuring active participation of women in project areas through the use of community-based organizations (CBOs, local NGOs, women’s groups, agricultural groups, etc.). The project is expected to have a positive impact not only on pregnant women but on all women, as PBF credits will improve the quality of care for the identified package of health services essential for the general population.

104. The project will also enhance community ownership for monitoring the quality of basic health services. CBOs will be identified and strengthened so that they can be involved in monitoring health facilities.

105. The preparation process of the project has been highly participatory with extensive work and consultation among the key stakeholders: selected line ministry representatives and representatives of the donor community, including NGOs. To avoid opposition to PBF, a strong emphasis on using a participatory approach was introduced very early in project preparation to explain PBF to the project stakeholders through workshops and meetings. The monitoring and evaluation system has been designed to ensure the adequate targeting of project activities, including their social impact.

106. The project will not be implemented in the area where indigenous peoples (IPs) are located.

F. Environment (including Safeguards)

107. The project is classified as Environmental Assessment (EA) Category B as the project activities may lead to an increase in Health Care Risk Waste (HCRW). The indirect potential negative environmental and social impacts of the project : (i) are linked to the handling and disposal of medical and health waste (such as placentas, syringes, and material used for delivery of pregnant women) in health facilities covered by the project area; and (ii) are expected to be site-specific, small to moderate and easily mitigated.

108. A new Medical Waste Management Plan (MWMP) was developed in July 2012 and proposed a comprehensive remedial plan and budget. Over US$1 million was invested in buying adequate equipment for medical waste management that was deployed in health facilities that will host the upcoming new project and training was rolled out throughout the country.

109. The National Medical Waste Management Plan, which was updated under the Additional Financing (AF) for the PACP 2 project, will serve as the safeguards instrument for this project. The revised MWMP was reviewed, consulted upon during project preparation and was disclosed in country on April 10, 2014 and at the InfoShop on April 21, 2014. Key mitigation measures are

23 outlined in the implementation action plan of the MWMP and will also include refresher training of health workers and staff delivering health services in the adequate handling and disposal of medical waste and maintenance of adapted incinerators and equipment that were deployed between April and June 2013.

110. In addition, under the proposed project, environmental concerns have been included as elements for assessing health facility performance and are considered criteria for results-based financing. These criteria should lead to improved management of medical waste in order for the health facility to receive the applicable points; if not, the project will also have the means to increase the weighting of environmental criteria in order to trigger increased attention and even to promote the acquisition of medical waste management equipment with PBF funding.

Other Safeguards Policies Triggered

111. No other safeguard policies were triggered.

24 Annex 1: Results Framework and Monitoring

CHAD: Mother and Child Health Services Strengthening Project (P148052)

Project Development Objective (PDO): The objective of the Project is to increase the utilization and improve the quality of maternal and child health services in targeted areas PDO Level Cumulative Target Values Responsibility Unit of Baseline Data Source/ Results 6 YR 1 YR 2 YR 3 End Frequency for Data Measure Methodology

Indicators Core Target Collection 1. Pregnant women receiving 48,300 Report from antenatal care Number (MICS 55,000 60,000 70,000 80,000 Quarterly MoH PBF statistics during a visit 2010) to a health provider 2. Births 20,836 (deliveries) (MICS Number Report from attended by 2010) 23,000 26,000 30,000 35,000 Quarterly MoH PBF statistics skilled health personnel 3. Children 15,389 Number Report from fully (MICS 17,000 20,000 22,000 25,000 Quarterly MoH PBF statistics immunized 7 2010)

6 Baseline indicators where labeled “TBD” will be determined at the time of the baseline survey expected to be done by January 2015. The targets will also be determined at that time. Where possible, baseline values were included using MICS 2010 survey results and population estimates for the targeted areas. These values will be updated upon completion of the baseline survey report. 7 The project will look at the number of fully immunized children under one which would be inclusive of BCG and Penta3.

25 4. Average score of the +15 +25 +25 +30 Report from Percentage TBD Quarterly MoH quality PBF statistics checklist8 Intermediate Results and Indicators Intermediate Target Values Responsibility Unit of Baseline Data Source/ Results YR 1 YR 2 YR 3 End Frequency for Data Measurement Methodology

Indicators Core Target Collection 5. Number of health Report from Number 0 500 600 800 1000 Annually MoH workers PBF statistics trained 6. Women of reproductive 7,916 age using Report from Number (MICS 9,000 11,000 12,000 14,000 Quarterly MoH modern PBF statistics 2010) contraceptive methods 7. Number of children under five years of age Report from Number TBD TBD TBD TBD TBD Quarterly MoH receiving PBF statistics preventive nutritional services9

8 The quality check list is a comprehensive quality assessment of the quality in a health facility, including more than a hundred of items related to the following aspects: hygiene, drug availability, clinical care, equipment availability, drug management, financial management, laboratory, etc. Clinical audits are also part of the quality assessment. The quality checklist will have heavy weighting for process oriented quality of care measures. 9 Services include preventative consultations checking for malnutrition and growth monitoring.

26 8. Tracer drugs MoH available in targeted Report from % 50 55 60 65 75 Annually health PBF statistics facilities on the day of the visit 10 9. Health facilities MoH reporting Supervision monthly % 65 70 75 85 95 Quarterly report from activities PBF using standard report forms 10. CHWs trained for MoH delivering an integrated preventive and curative package at Ministry Number 0 0 100 300 500 Annually household reports level

10 The list of tracer drugs has been finalized and will be included in the PBF Manual. The list is reflective of the MCH indicators that will be purchased through the PBF scheme.

27 Definition of Indicators Indicator Numerator Denominator Comments UTILIZATION 1. Pregnant women Number of pregnant women N/A Given the extremely low level of coverage, all antenatal receiving antenatal receiving antenatal care care visits will be counted. care during a visit to a during a visit to a health health provider provider (number) 2. Births (deliveries) Number of births (deliveries) Total number of attended by skilled attended by a trained births expected health personnel professional (4.23% of total (number and population) percentage) 3. Children fully Number of fully immunized Total number of A child is considered fully immunized when she/he has immunized (number children under one children 0-11 received immunization for BCG, polio, DTC3, and and percentage)11 months (3.60% of Pentavalent 3. total population) Sum of the quarterly quality Number of health The quality check list is a comprehensive quality 4. Average score of score (%) of all PBF health facilities in the assessment of the quality in a health facility, including the quality checklist12 facilities PBF mechanism more than a hundred of items related to the following aspects: hygiene, drug availability, clinical care,

equipment availability, drug management, financial management, laboratory, etc. Clinical audits are also part of the quality assessment.

11 The project will look at the number of fully immunized children under one which would be inclusive of BCG, polio and Pentavalent 3. 12 The quality check list is a comprehensive quality assessment of the quality in a health facility, including more than a hundred of items related to the following aspects: hygiene, drug availability, clinical care, equipment availability, drug management, financial management, laboratory, etc. Clinical audits are also part of the quality assessment.

28 Intermediate Outcomes Indicators 5. Health personnel Number of health trained N/A Training will include midwifery, PBF, monitoring and who received training professionals evaluation, etc. (number) 6. Women of Number of new and existing Number of Modern methods such as injections, pills, implants and reproductive age acceptors of modern women of IUDs, excluding condoms, would be taken into account. using modern contraceptive methods reproductive age contraceptive (22.8% of the total methods (number and population) percentage) Number of children under N/A Nutritional services included in this indicator will be 7. Number of children five years of age receiving preventive (growth checks and monitoring). under five years of nutritional services age receiving nutritional services

8. Tracer drugs Number of health facilities Number of health This indicator would provide some information about available in targeted that have 100% of tracer facilities improvement in quality of care (availability of essential health facilities on the drugs available at the last medicines) day of the visit visit 9. Health facilities Number of health facilities Number of health This indicator would provide information indicating reporting monthly that submitted standard facilities whether the health facilities are up-to-date in their data activities using monthly report forms in the recording and a means for evaluating data availability on a standard report forms preceding month regular basis. 10. CHWs trained for Number of CHWs trained N/A This indicator would provide information on the number of delivering an CHWs trained nationally. integrated preventive and curative package at household level

29 Annex 2: Detailed Project Description

CHAD: Mother and Child Health Services Strengthening Project (P148052)

Background

1. Chad is unlikely to achieve either the objectives set forth in its “National Road Map for Accelerating the Reduction of Maternal and Child Mortality (2009-2015)” or the Millennium Development Goals (MDG).

2. Chad has the highest maternal mortality in Central African countries. Chad’s maternal mortality ratio, estimated at 1,100 per 100,000 live births in 2010, is the highest among the Central African countries and is currently four times higher than the MDG Goal 5. The maternal mortality ratio in Chad has even increased over the past 10 years due to a lack of access to quality maternal health care and the low proportion of deliveries attended by skilled health personnel. In 2010, half of the women in Chad (53 percent) received prenatal care as compared to 42 percent in 2004. According to the 2010 MICS, only 22 percent of deliveries were assisted by skilled providers, and only 15 percent of deliveries took place in health facilities (compared to 20 percent and 13 percent in 2004, respectively). These figures remain very low compared to West African countries where over 80 percent receive prenatal care.

Figure 3: Coverage for assisted deliveries through PBF, October 2011 – March 2014

800 + 19% 700 1990 2000 2010 +0% 600

500 +8%

400 +33% ‐43% 300 ‐60% 200 ‐13% ‐79% 100 ‐54%

0 Chad Central Cameroon Republic Angola Gabon Equatorial Sao Tome African of the Democratic Guinea et Principe Republic Congo Republic of the Congo

Source: WHO (2013) 3. The child mortality rates in Chad are some of the highest in the world. Chad’s infant mortality rate was estimated at 98 per 1,000 live births in 2010. The child mortality rate is higher and decreasing more slowly than in other Sub-Saharan African countries; from 1990 to 2010, child mortality has declined from 210 to 170 per 1,000 live births, but will not attain the MDG 4. Children under five years old die primarily from malaria (20 percent), acute respiratory infections (ARI) (19 percent) and diarrhea-related diseases (14 percent). Nutritional status among children has not improved since 1997, and malnutrition accounts for more than one third of child

30 mortality in the country. Immunization coverage of children under 12 months old is extremely low and has even decreased since 2001 (WHO 2012).

Figure 4: Chadian women are exposed to the highest maternal mortality risk amongst central African countries

CHAD 189 180 171 Sub‐Saharan Africa (average) 105 101 98 176 161 148 104 95 89

2000 2005 2010 2000 2005 2010 Infant Mortality Under 5 Mortality (per 1000 live births) (per 1000 live births)

Source: INSEED (2001, and 2010) and FNUAP (2005, 2010)

4. Chad has benefited from a positive experience with Performance-based Financing. Since October 2011, the Government with support from the World Bank (Second Population and AIDS Control Project) has introduced a Performance-based Financing (PBF) scheme in eight health districts across four regions (Batha, Guera, Mandoul, and Tandjile) covering a total population of 1,450,000 people (102 health centers and nine hospitals). The pilot program included the financing of two packages of services: One basic package of health services comprising 12 key health services, principally targeting pregnant women and children under five, to be delivered at the health centers in targeted areas. The second package consisted of 12 key complementary health services to be delivered at district hospitals in targeted areas. In addition to these health services packages, a quality checklist was also introduced to improve quality of health services provided.

5. In less than a year, utilization of health services in PBF targeted areas increased substantially, as did the quality of these services. Based on operational data and independent evaluation, achievements of the PBF pilot were documented. The evaluation demonstrated that the pilot program has achieved substantial results. Utilization of health services has greatly increased in the health centers that implemented PBF (AEDES Report, September 2013). For instance, the proportion of women of reproductive age accepting modern contraceptive methods increased from 1.2 percent to 6.9 percent from October 2011 to end of March 2013 (18 months of implementation). The proportion of children immunized with Pentavalent 3 rose from 50 percent to 95 percent in that same period. Finally, the proportion of women who gave birth in a health facility (caesarean sections included) also increased from 17 percent at the start of the PBF scheme to 40 percent after 18 months of implementation. Quality of care has also improved (with improved availability of drugs, equipment, and motivation of health workers). An increased autonomy of health facilities to use additional resources to better meet the priorities of their area was also observed.

31 Figure 5: Coverage for assisted deliveries through PBF, October 2011-March 2013

Batha & Guera Mandoul & Tandjile Global 60% 50% 40% 30% 20% 10% 0% Jul-12 Jan-13 Jan-12 Jun-12 Oct-12 Oct-11 Feb-13 Sep-12 Feb-12 Apr-12 Dec-12 Dec-11 Mar-13 Mar-12 Nov-12 Aug-12 Nov-11 May-12

Figure 6: Family planning coverage (modern methods) through PBF – Oct. 2011-March 2013 Batha & Guera Mandoul & Tandjile Global 10% 8% 6% 4% 2% 0% Jul-12 Jan-13 Jan-12 Jun-12 Oct-12 Oct-11 Feb-13 Sep-12 Feb-12 Apr-12 Dec-12 Dec-11 Mar-13 Mar-12 Nov-12 Nov-11 Aug-12 May-12

6. An external evaluation of the PBF pilot experience in Chad was conducted in mid-2013 which identified several key lessons for future PBF operations in the country (Rapport de l’Evaluation de l’Expérience Pilote du Financement Basé sur les Résultats au Tchad). These lessons include, but are not limited to:

(a) At 41 percent of the total budget, overhead costs were found to be substantially higher than international best practices for PBF. For future PBF operations, at least 70 percent of the total PBF budget should be dedicated to the output budget, including the purchasing of health services;

(b) To ensure appropriate levels of financing for the delivery of a comprehensive package of services, the PBF output budget should be increased to at least US$2.00 per capita per year;

(c) The package of services purchased by PBF should be increased from the 12-14 services targeted to 15-25 services at both the primary and secondary care levels;

(d) Increased managerial autonomy should be provided to health facilities for efficient use of resources generated from PBF subsidies and locally-generated revenue;

32 (e) Increased utilization of PBF tools such as Business Plans and indices tools;

(f) Geographical and pro-poor equity bonuses should be introduced to ring-fence financial resources for where they are most needed; and

(g) Community and counter-verification mechanisms should be rigorously implemented on a regular basis.

7. Building on the experience of the pilot PBF program, grants will be paid to health facilities in the selected regions and districts based on: (i) the number of maternal and child health (MCH) services delivered to the targeted population; (ii) the quality of those services; and (iii) the geographical disparities to take into account the far off areas. Facility payments will be made quarterly after quantity and quality of services have been declared and verified (ex-ante and ex post). The set of incentivized indicators (defined by the Ministry of Health) will mostly focus on reproductive, maternal and child health as well as quality of services. The total target population is estimated at 2.17 million inhabitants in the targeted districts of the five regions.

Project Development Objective and Project Components

8. The PDO is to increase the utilization and improve the quality of maternal and child health services in targeted regions and districts. The project comprises two components. Component 1 will combine facility-based, outreach, and community-based services to increase the accessibility and improve the quality of health services for women of reproductive age (including young women, pregnant women and mothers) and children. Component 2 will strengthen the institutional capacity to implement and sustain community-level health care services.

Component 1: Improving accessibility and quality of Maternal and Child Health Services through Performance-based Financing and Community Health (US$17.8 million, of which IDA:US$13.3 million, HRITF :US$4.5 million)

Sub-component 1.1: Expansion of Performance-based Financing for health facilities

9. Building on the pilot experiences of the previous project, the proposed project will strengthen the PBF approaches in all four regions included in the previous project (Batha, Guera, Mandoul and Tandjile) and a fifth region (Logone Oriental). Facility-based services will expand on the Performance-based Financing (PBF) approach piloted by PACP 2 and will: (i) comprise the packages of essential and complementary health activities adopted by the Government; and (ii) include interventions to improve the quality and availability of preventive health services at health centers and district hospitals, availability of drugs, and the capacity and motivation of human resources.

10. Targeted areas. The total target population is estimated at 2,170,000 inhabitants in the targeted districts of the five regions. The targeted areas are described in the table below were confirmed during the appraisal mission.

33 Table 4: Targeted Areas

Health Population Region District 2014 Oum Batha 247,400 Hadjier Sub-total 247,400 Bitkine 205,272 Guera Melfi 125,097 Sub-total 330,369 Doba 191,494 Logone Bodo 120,955 Oriental Bebidjia 168,202 Sub-total 480,651 Moissala 259,275 Koumra 200,930 Mandoul Bedjodo 184,622 Sub-total 644,827 Donomanga 131,072 Lai 172,819 Tandjile Bere 162,881 Sub-total 466,772 Total 2,170,019

11. Essential and complementary packages of health services. The experience in Chad, along with international experiences and PBF best practices, was used by the MOH for developing the list of health services to be purchased at the primary and secondary levels (see Annex 7). The list approved by the Ministry of Health, as of April 2014, is presented below and is subject to revision on an annual basis. Two benefit packages of health services have been designed in Chad for use in the government health system. They are the Minimum Package of Activities (MPA), which contains preventive and curative primary health services to be provided in government health centers, and the Complementary Package of Activities (CPA), with services to be delivered in first level referral government hospitals. The fee schedule for PBF payments will be finalized during the costing exercise that will be conducted during project implementation.

12. The Minimum package of activities (MPA) at health center and community levels consists of: 1. New curative consultation (patient lives less than 5km from health facility) 2. New curative consultation (patient lives 5km or more from health facility) 3. New curative consultation – indigent (fee exemption) 4. Admission day 5. Admission day – indigent (fee exemption)

34 6. Minor surgery 7. Pentavalent 3 8. Measles vaccination 9. Childhood preventative consultation: child aged 0-5 years checked for malnutrition, latent diseases or received growth monitoring 10. Antenatal consultation (new and standard visit) 11. Prevention of mother to child transmission of HIV: pregnant woman tested for HIV 12. Antenatal care: second to the fifth tetanus toxoid vaccination 13. Antenatal care: second dose of prophylactic antimalarial 14. Post natal consultation 15. Institutional delivery 16. Family planning: new and recurrent user of modern family planning method (pills and injection) 17. Referral for a severe condition arrived at the hospital 18. Household visits according to protocol

13. The Complementary Package of Activities (CPA) at the first referral hospital include: 1. Outpatient consultation by a medical doctor 2. Outpatient consultation by a medical doctor of an indigent (fee exemption) 3. Admission day 4. Admission day – indigent (fee exemption) 5. Referred patient arrived at the hospital and counter-referred arrived at the health center 6. Major Surgery (defined list) 7. Institutional delivery - normal 8. Caesarean section 9. Institutional delivery - complicated 10. Family planning: new and recurrent user of modern family planning method (pills, implant, IUD, injection) 11. Child 0-59 months treated for moderately severe malnutrition.

14. The project will finance grants to health facilities based on: (i) the quantity of maternal and child health (MCH) services delivered to the targeted population; (ii) the quality of those services; and (iii) geographical disparities to take into account the far off areas. The PBF grants will be used to: (i) improve the working environment of the health facility (minor repairs in the facility, procurement of additional small equipment, drugs, etc.); and (ii) finance performance based bonuses to the health personnel. For health facilities that are located in highly remote and poor areas (where it is more difficult to achieve results), additional “equity bonus” adjustments will be made to allow for increased output financing to the worst off zones.

15. A quantified quality checklist will be designed for each level of the service package and will provide the foundation for measuring results (with increased weights given to process measures). The quality checklist will introduce measures related to rational prescribing of generic drugs, essential drug management and tracer drugs. Facility payments will be made quarterly: (i) on the basis of a set of incentivized indicators (defined by the Ministry of Health)

35 emphasizing reproductive, maternal and child health; and (ii) after the quantity and quality of services have been declared and verified (ex-ante and ex post).

16. Based on an external evaluation of the PBF pilot experience in Chad, which identified several key lessons for future PBF operations in the country, the PBF output budget will be increased substantially from the previous PBF pilot experience.

17. Overhead costs of the pilot were estimated at 41 percent of the total budget, which is substantially higher than international best practices for PBF. The PBF output budget for the proposed project is estimated at 70 percent of the total PBF budget, including the purchasing of health services.

18. To ensure appropriate levels of financing for the delivery of a comprehensive package of services, the PBF output budget will be increased to close to US$2.00 per capita per year.

19. As the target population is about 2.17 million per year over a three-year PBF implementation period, the estimated per capita per annum PBF budget for a three-year implementation period is US$2.50. The output budget for PBF (purchasing of services) is estimated at 70 percent of the total PBF budget, or US$1.85 per capita per year. While not reaching the international norms of US$2-3 dollars per capita per year, it is a substantial increase from the previous pilot, in which the output budget was US$1 per capita per year.

20. A detailed costing of the variable costs (excluding HR) of the basic and complementary package of health services will be concluded during the project implementation. Based on an examination of similar contexts and the previous Chadian PBF pilot (which cost US$1.50 per capita per year including overhead), it is estimated that an output budget of close to US$2.00 per capita per year would be necessary for full PBF implementation for three years. The increase in cost would be essential to cover costs associated with strengthened internal and external verification mechanisms, the introduction of geographical and pro-poor fee-waiver mechanisms, and more thorough training and capacity building activities. In particular, these changes include: a. Hiring, training and financing organizations for conducing rigorous and continual community and counter-verification activities (one of the weaknesses identified from the previous pilot;

b. Geographic equity adjustments are also planned during project implementation, which offers the possibility to ring-fence regional output budgets, as well as health center and hospital output budgets (two thirds for health centers versus one third for hospitals) and to set differential fees based on rural hardship criteria;

c. the introduction of a specific set of indicators for the provision of fee waivers for a pre-defined set of services (for example external consultations and hospitalization days) to poor households and patients;

d. substantial training in PBF implementation and management at all levels of the health system for transferring the role and responsibilities of PPAs from the international

36 NGOs to MOH structures after the first few years of implementation (see Subcomponent 1.2 below).

Subcomponent 1.2: Governance, purchasing, coaching and strengthening health system through Performance-based Financing

21. To support PBF implementation and supervision (capacity building, verification and counter verification, IT system, etc.), the proposed project will finance purchasing arrangements (PPA) covering batches of approximately one million persons (2-3 regions per contractual arrangement).

22. Given the technical challenges of PBF implementation and the previous positive experience with external technical assistance for PBF piloting, the project proposes to identify international NGOs with demonstrated experience with PBF to: (i) act as purchasing and verification agencies; and (ii) provide technical support and capacity building services for maternal and child health services in the targeted districts. Those services will be provided through contracting health facilities at regional, district, and local levels. In the four selected regions, the PPA will contract out with rural public and private health care facilities.

23. The contract management and verification for PBF implementation is estimated to be at maximum 30 percent of the total PBF budget, which is in-line with international experience for recruitment of international NGOs for PBF implementation.

37 Figure 7: Institutional arrangements for PBF in Chad

24. Intense results monitoring is an essential component of Performance-based Financing and consists of a mix of verifications, before and after payments are made. Quarterly performance payments will be based on: (i) ex-ante verification of quantity (Performance Purchasing Agency) and quality of health services (District Health Teams) at health centers; (ii) ex-ante verification of quantity (Performance Purchasing Agencies) and quality of health services (Regional Health Teams) at hospitals; (iii) ex-ante verification by a third party (Performance Purchasing Agencies) for Regional Health Teams and drug regulatory authority/MoH and HMIS/MoH; (iv) ex-ante verification by the Regional Health Teams for the District Health Teams; (v) ex-ante verification by the PBF Technical Unit for the certified drug distributors; and (vi) ex-ante verification by an ad-hoc committee consisting of development partners for the PBF Technical Unit.

25. Ex-post verification, that is, verification after payment has been made, will be carried out by the independent third party (External Evaluation Agency) – through a protocol using random sampling- on the quantity of services; the quality of services; and the performance frameworks of the District, Regional, and Central MoH units under contract.

26. Verification and counter-verification of the health facilities and MoH administrative units with performance contracts will occur every quarter. The purchasing agent and the team of

38 development partners will assess the performance of the various entities being contracted to provide a set of services. Activities to be carried out every quarter include:

a. Verification of the performance of the HMIS and drug regulatory authority/MoH;

b. Counter-verification of the quantity and quality of services provided by health facilities through verification, including a community verification client satisfaction survey component;

c. Counter-verification of a random sample of district and regional performance assessments;

d. Counter-verification of a random sample of health center quality checklists;

27. In the case of discrepancies surpassing pre-determined percentage points in any of the verified samples (whether quantity, quality or performance frameworks for the district), penalties will be introduced through reductions in future payments through PBF grants. The penalties for fraud will be clearly outlined in the various contracts and procedures and will be detailed in the PBF manual.

28. The public entities that will be involved in the operation, such as the PBF Technical Unit and regional and district health administrative units will enter into performance frameworks to be accountable for services and activities agreed upon action plans. These performance framework contracts will clearly outline the expected performance of these entities vis-à-vis their roles in the health system and lead to successfully scaled up PBF approaches. The performance frameworks will also be assessed quarterly using a combination of internal and external verifications before payment is made (ex-ante), and are randomly counter-verified after payment (ex-post) using a third party agent to ensure reliability of the performance assessments. A system of tested penalties will be instituted to discourage gaming. Performance frameworks of the national PBF technical Units will be assessed by the MoH General Inspectorate (Inspection Générale du Ministère de la Santé). Performance frameworks of the Regional Health Delegations will be assessed by the National PBF technical Unit.

Sub-component 1.3: Development of community-based approaches for MCH services

29. To complement the PBF approach and accelerate progress toward MDGs 4 and 5, the proposed project will stimulate demand for health services through support to the development and implementation of community-based approaches, including promotion of the National Community Health Policy.

30. A draft National Community Health Policy has been formulated by the Ministry in close collaboration with other concerned partners (UNICEF, UNFPA, EU, etc.); the policy will be followed by the preparation of a budgeted medium-term strategic plan based on the three priorities of the Policy: (i) the development of an appropriate package of community-based preventive health services; (ii) the strengthening of an existing and tested cadre of community health worker (the relais communautaire); and (iii) the expansion of the role of the existing

39 Health Center Management Committee (Comité de santé or COSAN) to include health promotion as well as health center management.

31. The project will support the government in implementing the plan, based on the inputs of other donors, the funding gaps identified, and the availability of project resources. More specifically, the project intends to finance a mix of national and project specific components. Nationally, the project will: (i) support a systematic review of successful community strategies used in the region to accelerate progress in MCH (e.g., Ethiopia, Mali, Rwanda, Mozambique, Mali, Niger etc.); and (ii) contribute to fora for the ongoing discussion of the problems and possible solutions for community health services development.

32. An illustrative list of cost effective community-based interventions is presented in the following table:

Table 5: Illustrative list of cost-effective community-based interventions

- Treatment for diarrhoeal disease, pneumonia and malaria; - Immunizations (only in order to fill gaps not met by current or imminent efforts and where cost effectiveness is high – specifically <$500 per death averted); - Long-lasting insecticide treated bed nets (LLIN) (for both pregnant women and children under five); - Vitamin A supplementation; - Intermittent preventative therapy for malaria for pregnant women; - Tetanus immunization for pregnant women; - Breastfeeding promotion and counseling; and - Family planning counselling and services. Source: UNICEF, 2012

33. In the areas targeted by the project, the focus will be on developing the complementarity of community-based health services and facility-based PBF. To this end, the project is expected to finance: (i) adaptation of the existing training curriculum for community health workers; (ii) undertaking a study on best practice in community health service provision; and (iii) support for workshops on community sensitization. The following figure describes the anticipated steps test intended to guide the project implementation:

Figure 8: Anticipated steps intended to guide the project implementation

40 Phase 1: Diagnosis and Phase 2: Validation and Phase 3: Implementation Design Costing •Needs assessment for •Validation process of the •Division of labor among community‐based National Community stakeholders approaches Health Policy •Financial and •Mapping of existing •Communication and administration community‐based dissemination arrangements interventions •Costing study •Initiation of training and •Review of successful •Elaboration of an action deployment in priority strategies in the region plan areas •Elaboration of the National Community Health Policy through participatory approach

Component 2: Strengthening the institutional capacity to implement and sustain Performance-based Financing and community-level health care services (US$2.99 million, of which IDA = US$2.49 million, HRITF = US$0.5 million) 34. This component will: (i) strengthen institutional capacities for improved program and health sector management; and (ii) strengthen capacity for better M&E, supervision and project implementation.

Sub-component 2.1: Strengthening institutional capacities for improved program and health sector management

35. The project recognizes the importance of health system strengthening for PBF in the short term, specifically strategies for: adequately financing the sector, deploying and motivating human resources, and strengthening supply chain management.

36. The project will support the Government’s efforts to implement PBF through policy dialogue and reform. Activities that will be organized include forums and workshops to discuss regulatory reforms that: (i) can improve the availability of quality essential medicines at all levels of the health system, (ii) ensure better allocation of human resources for health by providing managerial autonomy for contracting health personnel; and (iii) ensuring continuous review and assessment of bodies regulating and implementing PBF.

Sub-component 2.2: Strengthening capacities for better M&E and supervision, and Project Implementation

37. This sub-component supports project management and supervision as well as monitoring and evaluation of the PBF.

38. Project management and supervision. A PBF Steering Committee and a PBF Technical Unit have existed since 2010 and 2012 respectively. Given the experience of these structures and the expanded tasks required for the PBF approach, MOH has endorsed in April 2014 revisions to the existing organizational texts to establish arrangements for project management and supervision.

41 39. The project will support operating costs for the PBF Steering Committee and the PBF Technical Unit for activities directly related to the project.

40. Monitoring and evaluation of PBF. Given the fragmentation, unreliability, and inaccuracy of the existing routine reporting system for the health sector, challenges exists in using the results from such system as the basis for measuring health facility performance. The EU is proposing to build the capacity of the National HMIS unit at central and district level by reinforcing needed skills in the areas of data collection, recording, and analysis. However, since payments made under PBF grants are to be made based on service volumes and quality, external reviewers will assess the declared results and ex post verification activities will be conducted by an independent third party, an external evaluation agency (EEA). The EEA will be contracted by the MoH to check the veracity of the information provided by health services. Modalities for contracting and remunerating these services will be described in the PBF manual.

41. The EEA’s roles will include (i) random ex-post verification of service volumes and quality delivered by contracted health facilities, verified through a combination of facility record checks, technical quality assessments (using a checklist), home visits to a subsample of facility clients, and interviews with community group members to assess perceived quality; and (ii) building in-country M&E capacity. The EEA will explore partnerships with community-based organizations to conduct targeted household surveys. Data collected by the PPA and EEA will not only serve to verify results and validate PBF payments, but will also contribute to strengthening the health management information system through more routine and higher quality reporting by health facilities that sign PBF contracts.

43. Another tool for monitoring and evaluation that the project will use will be a web- application to manage both the public front-end and the back-end strategic purchasing. The backbone of the web-application for Chad currently exists, developed during the previous pilot (http://fbrtchad.org/). The project will work closely with the HMIS department to revamp the web-application. The ICT solution is part of the system of intense monitoring and evaluation for PBF results. Verified and purchased results including the results for the health administration will be visible on the public website whereas the raw data will be downloadable from the website. Benchmarking both the quantity and quality of health facilities and the public health administration will lead to a powerful tool to employ results monitoring and better governance. Introducing the web-application to the project will build the capacity of the MoH and allow health facilities to systematically keep track of funding and payments, record data, and use this data at both the facility and central level to make informed management and policy decisions to improve the health system of Chad.

44. The project will also incorporate an impact evaluation (IE) to generate evidence on the effectiveness and impact of PBF in combination with training and recruitment of community health workers. As target districts for the PBF intervention have already been identified, the experimental design will introduce the rollout of the community health worker scheme (which may include performance contract components) through randomized assignment at the health facility catchment area level. To measure the effect of PBF on health outcomes of interest, PBF districts will be matched with non-PBF districts through a quasi-experimental evaluation design.

42 45. The specific context of Chad, where substantial geographical barriers exist for accessing facility-based health services, provides an ideal context to evaluate community-level RBF mechanisms that address these barriers. In particular, the impact evaluation will contribute to global knowledge on RBF by studying the introduction of RBF mechanisms such as sub- contracting by health facilities professionally (and recently) trained community health workers to provide community case management of basic illnesses such as malaria, diarrheal diseases and respiratory infections. While this approach has been introduced haphazardly in other contexts where geographical barriers are substantial (such as the North-West of Cameroon), the effectiveness of such approaches have never been rigorously evaluated through an impact evaluation. The detailed of the IE research questions and identification strategy will be developed during project implementation.

43 Annex 3: Implementation Arrangements

CHAD: Mother and Child Health Services Strengthening Project (P148052)

Project Institutional and Implementation Arrangements

1. At the central level, a steering committee was in place since 2011 and its composition has been expanded (through an Arrêté dated April 9, 2014) to include finance and budget ministries, thus ensuring greater sustainability through increased national budget allocation to PBF. The committee will guide project implementation and is chaired by the Director General Of Health Activities (Direction Générale des Activités Sanitaires). It includes key directorates of the MOH, the Ministry of Planning and Economy, the Ministry of Finance, and representatives from the donor community. The steering committee will oversee the implementation of PBF, document the lessons learned from various initiatives of PBF in the country, provide guidance to the implementing partners, and generate policy direction for the institutionalization of PBF in Chad.

2. To support the project Steering Committee as well as to coordinate and provide technical leadership for Performance-based Financing in Chad, the Ministry of Health has established a National PBF Technical unit (CT-PBF) responsible for: (i) preparing steering committee meetings and supporting implementation of the decisions made by the Steering Committee; (ii) supporting the regulatory function that the Ministry has to assume in PBF implementation; (iii) monitoring the progress of PBF implementation in the field, and promoting ownership of PBF by the Ministry; and (iv) exploring ways and mechanisms to institutionalize PBF as a national policy in Chad and to progressively expand PBF.

3. The CT-PBF is staffed by a multidisciplinary team and whose members will possess the skills and experience needed for implementing the project. Such skills could have been gained through the implementation of the PBF pilot in the Second Population and AIDS Control Project (PACP 2) project. The CT-PBF will be staffed by a mix of government staff and consultants recruited through a merit-based process. The CT-PBF unit will be assessed regularly through a performance-framework by the General Inspectorate of the MOH. This performance framework will contain indicators including but not limited to (i) timely processing of the PBF payment orders submitted by the Performance Purchasing Agency, (ii) timeliness and management of the national PBF steering committee meetings, (iii) technical support to the PPA related to contract management and verification activities and related to strategic purchasing, and (iv) capacity building and coordination related to PBF implementation.

4. The project policies and procedures will be incorporated in an implementation manual. It will be completed by a national PBF Manual, prepared by the PBF Technical Unit. The PBF Technical Unit and the Bank will ensure that implementation manuals prepared by the Performance Purchasing Agencies (PPAs) are consistent with each other, with the overall project implementation manual and the national PBF Manual.

5. Two Performance Purchasing Agencies will be contracted by the Ministry of Health to manage the purchasing of predetermined technical support from the regional and district entities and the MCH services from public and private health facilities. The PIU will provide the PPA

44 with the resources to: (i) pay health facilities for predetermined health services delivered to the population according to the norms and standards of service as defined by the Ministry of Health; and (ii) provide project support and verification activities. The PPA will contract with health facilities and district hospitals to deliver an agreed package of technical support and MCH services. Payments will be based on (i) the technical support provided to the health centers and MCH services delivered to the population and (ii) the technical quality of these services. An independent third party, the EEA, will be contracted by the MOH to ensure the veracity of the information provided by health services.

6. Overall implementation responsibilities are summarized in the following table: Table 6: Implementation Responsibilities

Technical Fiduciary responsibility responsibility Component 1: Improving accessibility and quality of Maternal and Child Health Services through Performance-based Financing and Community Health 1.1. Performance-based Financing PBF unit (MoH) DRF (MoH)/ PBF unit for health facilities 1.2. Governance, purchasing, coaching and strengthening health PBF unit (MoH) DRF (MoH)/ PBF unit system through Performance- based Financing 1.3. Development of community- Direction de based approaches for MCH l’Organisation des services services de Santé DRF (MoH)/ PBF unit (DOSS) and Community Health Working Group (MoH/Partners) Component 2: Strengthening the institutional capacity to implement and sustain PBF and community-level health care services 2.1. Capacity building in health service delivery, policy and PBF unit (MoH) DRF (MoH)/ PBF unit management 2.2. Strengthening institutional Direction Générale des DRF (MoH)/ PBF unit capacities for improved program Ressources et de la and health sector management Planification (DGRP) 2.3. Strengthening capacities for better M&E and supervision, and PBF unit (MoH) DRF (MoH)/ PBF unit Project Implementation

45 Financial Management and Disbursement

7. The MoH has set up a national PBF Technical Unit to be responsible for the technical aspects of the project; day to day fiduciary management of the project will be the responsibility of the DGRP.

8. In compliance with the Financial Management Manual for World Bank-financed Investment Operations (March 1, 2010) and AFTEM Financial Management Assessment and Risk Rating Principles, the Bank conducted a financial management assessment to determine: (a) whether there are adequate Financial Management (FM) arrangements in place within the MoH, especially within the directorate in charge of fiduciary management the DGRP, to ensure that the funds provided under the project will be used for the purposes intended in an efficient and economical manner and the responsible entity is capable of correctly and completely recording all transactions and balances related to the Project; (b) the Project’s financial reports will be prepared in an accurate, reliable and timely manner; (c) the entity’s assets will be safely guarded; and (d) the Project will be subjected to auditing arrangements acceptable to the International Development Association (IDA).

9. The FM assessment concluded that the DGRP that will have the overall financial management responsibility of the project implementation has general experience with donors financed activities including the World Bank. However it does not fulfill all minimum FM requirements to carry out properly FM aspects of the project activities. Indeed, (i) the DGRP is not endowed with an adequate procedures manual except the one developed for the EU financed projects, (ii) the accounting software TOMPRO is under its mono-project and multisite version that could not allow to include any additional project, unless the DGRP relies on the multi projects version in use for the International Fund for Agriculture project. Furthermore, the FM staffing arrangements are not adequate. Not all FM staff have enough experience and capacity to work on an IDA-financed project. Finally, the internal and external control arrangements are not adequate enough to provide timely and thorough audits of the project activities and performance.

10. To address the above financial management constraints, the DGRP will ensure preparation of a project implementation manual before effectiveness of the project starts along with a specific PBF procedures manual. As dated covenants the following actions will be undertaken as well to mitigate the related weaknesses: (i) recruit a Financial Management Officer with qualifications and experiences acceptable to the Bank no later than three months after effectiveness; (ii) purchase and set up adequate accounting software factoring in its ability to generate automatically financial statements within two months of effectiveness; and (iii) no later than four and six months after the project becomes effective, appoint an internal auditor and an external auditor, respectively.

11. Component 1 of the project constitutes about 60 percent of the project cost and will finance Performance Based Financing in health centers in a country where health service delivery has been poor and governance weak. As PBF Grants to health facilities under Sub- Component 1.1 “Expansion of Performance-based Financing for health facilities” will not begin until after contract management, fund flow and verification mechanisms are put in place (under Sub-Component 1.2), disbursement for this sub-component is expected to begin 6-12 months

46 after disbursement begins for other project sub-components. Specific measures will then be incorporated in the project design to ensure smooth implementation and mitigate related risks:

- Governance action : Decentralized governing boards should be created for PBF at the department level, and would comprise civil society in the approval process of PBF invoices - Satisfaction surveys : Client satisfaction surveys will be conducted with grassroots organizations - External verification: The MoH will contract with (i) two performance purchasing agencies (PPA) to manage the purchasing of predetermined technical support from the regional and district entities and the MCH services from public and private health facilities, (ii) an independent verification agent to ensure the verification of the PBF outputs according to the specified and agreed technical and quality standard

12. The overall FM residual risk for the project is rated Substantial due mainly to the complex nature of the project and the weak internal control environment within the MoH. It is considered that the financial management arrangements in place at MOH/DGRP will meet the Bank’s minimum FM requirements under OP/BP 10.00 after the proposed mitigation measures have been implemented

13. FM action plan: Table 7: Financial Management Action Plan

Action Responsible Deadline Elaboration of the Project DGRP Before effectiveness Implementation Manual, including financial, administrative, accounting and RBF procedures Recruitment of a Financial DGRP Three months after Management Officer effectiveness

Procurement of an adequate DGRP Within two months of accounting software effectiveness Recruitment of an internal DGRP Within four months of auditor to carry out ex-post effectiveness reviews and qualitative reviews of result reports by health centers on a risk based approach Recruitment of the external DGRP Within six months of auditor effectiveness

47 Budgeting arrangements:

14. The project budget process (elaboration, implementation and monitoring) will be clearly stipulated in the Project procedures Manual that would include detailed accounting financial and administrative procedures. The annual work program and budgets will be prepared by the DGRP in coordination with all the implementing entities and submitted to the Steering Committee for approval before the beginning of the year. The Steering Committee would also approve changes in the budget and revised action plans. The annual budget would be managed through the accounting software.

Accounting arrangements:

15. Project accounting, policies and procedures will be documented in the FM section of the manual. Accounting software will be customized to record all the project’s transactions following Bank guidelines, and to prepare the financial statements for the project. The accounting team would be familiar with handling accounting and reporting activities through the software consistent with Bank procedures.

Internal control and internal auditing arrangements:

16. Internal Control Systems: Before effectiveness, the MoH will prepare the project implementation manual (PIM) including internal controls, budget process, assets safeguards, and roles and responsibilities of all the stakeholders. PBF implementation procedures will also be included in the implementation manual and detailed in a specific PBF manual that would specify among other (i) credible unit costs that will be taken into account in budget elaboration, (ii) the criteria to be eligible to PBF will be defined in the operational manual, (iii) the results control process.

17. Internal Auditing: The internal control environment will also be strengthened with the recruitment of an internal auditor under terms of reference acceptable to IDA. Internal audit field missions (including PBF activities) will be conducted on a risk-based approach

18. With regards to the PBF activities, The MoH will recruit an independent verification agent to ensure the verification of the PBF outputs according to the specified and agreed technical and quality standard.

Financial Reporting Arrangements

19. DGRP will produce quarterly unaudited Interim Financial Reports (IFRs) during project implementation encompassing activities for all components. The IFRs are to be produced on a quarterly basis and submitted to the Bank within 45 days after the end of the calendar quarterly period. The IFR will present the consolidated financial statements (sources and used of funds and use of funds per component/categories/activities).

48 20. DGRP will also produce the projects Annual Financial Statements and these statements will comply with SYSCOHADA and World Bank requirements. These Financial Statements will be comprised of:

 Statement of Sources and Uses of Funds which includes all cash receipts, cash payments and cash balances ;  Statement of Commitments  Accounting Policies Adopted and Explanatory Notes  A Management Assertion that project funds have been expended for the intended purposes as specified in the relevant financing agreements.

21. The PPAs will report on a quarterly basis no later than 15 days after each calendar quarter on the use of funds transferred to them for payment of health centers and for expenditures related to additional technical support provided. The reporting procedures and content will be described in the project procedures manual. The reporting format would comprise (i) a statement of funds received and used which included cash payment and cash balances; (ii) detailed used of funds including amount and beneficiaries; and (iii) a statement of commitment.

Funds Flow and Disbursement Arrangements

Designated Account

22. Two pooled Designated Accounts (DA-A and DA-B) will be opened at commercial banks acceptable to IDA to co-mingle proceeds of IDA financing with the proceeds of the HRITF. DA-B will be dedicated to PBF activities. The HRITF and IDA grants will be used to jointly finance expenditures of all eligible expenditures in eligible components in the pro-rata share of their contribution to the cost of each component. HRITF funds will not finance community health activities. The proceeds of IDA financing and HRITF grants will be advanced into the pooled DAs. A fixed disbursement ceiling will be determined for each DA and allocated to each financing. The DAs will be managed by DGRP according to the disbursement procedures described in the Administrative, Accounting and Financial Manual and Disbursement Letters which were discussed in detail with the relevant government officials during negotiations. The initial advance of the Designated Accounts would cover approximately four months of expenditures as specified in the disbursement letter. The minimum value of direct payment and special commitment is 20 percent (20 percent) of outstanding advance made to the DAs.

Disbursement methods

23. Disbursement procedures arrangement will be detailed in the manual of accounting, administrative and financial procedures and the disbursement letter. Replenishment through SOEs (Statement of Expenditures), Direct Payment methods and special commitments will apply to the project. The option to disburse against submission of quarterly unaudited Interim Financial Report (also known as the Report-based disbursements) could be considered, as soon as the project meets the criteria.

49 Funds flow

24. Funds’ flow will be from the DAs to suppliers, contractors’ accounts and the performance purchasing agencies’ (PPA) accounts. The PPAs will then transfer money to PBF beneficiaries (heath facilities, health workers, technical cell PBF, etc.) for predetermined health services delivered. The funds flow diagram is presented below:

Diagram 1: Funds flow diagram for IDA Grant

Financing sources IDA HRITF-

Direct payment

Direct payment DGRP DA-A DA-B PPAs SERVICES AND (PBF) GOODS PROVIDERS

Transactions Reviewed by an IVA

SERVICES, GOODS PROVIDERS PBF Beneficiaries (HSP, Health (Contractors, Suppliers) workers, Regional Delegation, etc.)

Flow of documents

Flow of funds

Auditing Arrangements

25. The Financing Agreement (FA) will require the submission of Audited Financial Statements for the project to IDA within six months after year-end. An external auditor with qualification and experience satisfactory to the World Bank will be appointed to conduct annual audits of the project’s financial statements. A single opinion on the Audited Project Financial Statements in compliance with International Federation of Accountants (IFAC) will be required. The external auditors will prepare a Management Letter giving observations and comments on the projects activities especially the PBF ones, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants stipulated in the FA. The project will comply with the Bank disclosure policy of audit reports

50 and place the information provided on the official website within one month of the report being accepted as final by the team.

Financial Covenants

26. The Borrower shall establish and maintain a financial management system including records, accounts and preparation of related financial statements in accordance with accounting standards acceptable to the Bank. The Financial Statements will be audited in accordance with international auditing standards. The Audited Financial Statements for each period shall be furnished to the Association not later than six (6) months after the end of the project fiscal year. The Borrower shall prepare and furnish to the Association not later than 45 days after the end of each calendar quarter, interim un-audited financial reports for the Project, in form and substance satisfactory to the Association. The Borrower will be compliant with all the rules and procedures required for withdrawals from the Designated Accounts of the project.

Implementation Support Plan

27. Based on the outcome of the FM risk assessment, the following implementation support plan is proposed. The objective of the implementation support plan is to ensure the project maintains a satisfactory financial management system throughout the project’s life.

Table 8: Implementation support plan

FM Activity Frequency Desk reviews Interim financial reports review Quarterly Audit report review of the project Annually Review of other relevant information such as interim Continuous as they become internal control systems reports. available On site visits Review of overall operation of the FM system Semi-annual

Monitoring of actions taken on issues highlighted in As needed audit reports, auditors’ management letters, internal audit and other reports Transaction reviews (if needed) As needed Capacity building support FM training sessions During implementation and as needed.

51 Conclusion of the assessment

28. The conclusion of the assessment is that the financial management arrangements will meet the Bank’s minimum requirements under OP/BP10.00 once the proposed mitigation measures are implemented. The overall FM residual risk rating is Substantial.

Procurement

29. General. A Country Procurement Assessment Report (CPAR) for Chad carried out in 1993 and 2000, and the audit of five large contracts carried out by the Audit Office of the Supreme Court in 2002, together highlighted the dysfunction of the procurement system in Chad. The principal deficiencies identified in the CPAR included: (i) absence of a procurement regulatory body; (ii) the lack of a formal recourse available to the tenderers to allow them to dispute the decisions of contract awards; (iii) very low procurement thresholds and lack of harmonization of procurement thresholds; (iv) very cumbersome and time consuming approval process of contracts, compromising the rapid disbursements of national and external resources; and (v) excessive recourse to direct contracting.

30. Based on the recommendations made in these reports, the Government, with technical and financial support from the World Bank, undertook procurement reforms, and a new Procurement Code was published in December 2003. The Procurement Code and its implementation decrees took into account most of the recommendations of the CPAR. The Code, in Line 2 of Article 5, recognizes the primacy of international agreements in the event of a conflict with the provisions of the Code and the implementation decrees. The present key deficiencies of the national procurement system include: (a) the requirement that foreign bidders have to associate with national bidders or subcontract to national bidders; (b) the obligation for all bidders (national and foreign alike) to obtain a qualification certificate prior to the submission of a bid; and (c) a cumbersome procedure for the award and signature of contracts, involving the Minister of Finance and the President of the Republic in contracts of relatively low value.

31. The deficiencies were discussed with the Government during appraisal mission, and their rectification in the Code and national procurement regulations is part of the broader governance dialogue. Due to this situation, the Bank Team agreed with the Government of Chad that the following measures will be adopted to facilitate the speed implementation of project activities: (i) to get a waiver authorizing the Ministry of Health and the Ministry of Plan to manage all procurement process including signature and approval of contracts, (ii) accelerate all procurement activities in the procurement plan, and, (iii) closely supervise procurement plan implementation.

32. Guidelines. Procurement for the Project will be carried out in accordance with the World Bank “Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011; the World Bank “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011 and the provisions stipulated in the Legal Agreement. The various items falling under the different expenditure categories are described in general below. For each contract to be financed by the resources of IDA, the different procurement methods or consultant selection

52 methods, the need for prequalification, estimated costs, prior review requirements, and time frame has been agreed between the Recipient and the World Bank and recorded in the Procurement Plan. The Procurement Plan will be updated at least annually, or as required to reflect the actual Project implementation needs and improvements in institutional capacity. The procurement process and the SBDs that will be used by the implementing agency will be defined in the PIM, which includes procurement and financial management procedures.

33. Advertising. A General Procurement Notice (GPN) will be prepared and published in the United Nations Development Business following Board Approval, to advertise for major consulting assignments and any ICB. Publication of a GPN in the national press or official gazette will be carried out for NCB. The GPN shall be prepared and published after board approval. It shall include all contracts under ICB and all large consulting contracts (e.g., estimated to cost US$200,000 or more). The GPN will be updated on a yearly basis and will show all outstanding International Competitive Bidding (ICB) for works and goods contracts and all international consulting services. In addition, a Specific Procurement Notice (SPN) is required for all goods to be procured under ICB, and an Expression of Interest (EOI) for all consulting services costing US$200,000 equivalent or more will be published in the UNDB, Dg Market, as well as in the national press.

34. Procurement Plan. At this time, the Recipient has prepared a procurement plan for project implementation that provides the basis for determining the procurement methods. This plan, covering the first 18 months of project implementation, has been reviewed and approved by the Bank as part of the negotiations process. It will be updated in agreement with the project team at least once each year to reflect the proposed activities for the following 18 months of project implementation, to reflect actual project implementation plans and improvements needed in institutional capacity. The updated Procurement Plan will be maintained in the Project database and made available through the Bank’s external website, once the Financing is approved by IDA Board of Directors.

35. Procurement Capacity Assessment. A procurement capacity assessment of the Ministry of Health has been carried out and the main conclusions are as following:

 The assessment revealed that a body in charge of opening and awarding bids (Commission d’Ouverture et de Jugement des Offres – COJO) exists in the Ministry of Health. It is composed of the following members:

 The General Secretary of the Ministry of Health – President;

 The Representative of MEP – Vice-President – Member;

 The Procurement Specialist of the MoH Procurement Unit (Service de Passation des Marchés) – Member;

 The Director of Financial Control in the Ministry of Finance and Budget – Member;

 The Public Procurement Body – Observer.

53 36. In addition to the COJO, there is a Procurement Unit (Service de Passation des Marchés) in the Ministry of Health which prepares and monitors all procurement activities. The Unit is staffed with five staff. Two of them have been trained in bank procurement procedures and the three other are not familiar with World Bank procurement procedures. In order to develop capacity building and get a permanence of staff, the bank team recommends using the Chief of Division of Procurement Unit to handle all procurement activities for this Project.

37. The assessment did not reveal any anomalies in the functioning of COJO. The submission of evaluation reports by the sub-commission in charge of bids evaluation normally does not exceed one week, and COJO rules on the evaluation report within three days. However, certain deficiencies which may affect project implementation were reported during the assessment, including: (i) slow process for contract validation and approval; (ii) insufficient information technology equipment and (iii) insufficiency of bank procurement training for the staff working in the Procurement Unit. To address these deficiencies, the project will: (i) finance the recruitment of a high level procurement specialist to support the implementation of the procurement plan, (ii) provide computer notebook with procurement monitoring and management software, (ii) ensure that World Bank procurement training is provided at the specialized Regional Procurement Training Centers to the staff of the MoH, and, (iii) anticipate all procurement activities in the procurement plan.

38. The following is a schedule of actions to be carried out for the strengthening of procurement capacities in Procurement Unit in the Ministry of Health:

Table 9: Schedule of procurement actions

Responsible Actions to be undertaken Date institution Recruitment of a Procurement Specialist No later than three months DGRP after Project effectiveness Purchase of computer notebooks with After Project effectiveness DGRP procurement monitoring and management programs Anticipate all activities in procurement plan Before Project effectiveness DGRP Participation in procurement workshops at the After Project effectiveness DGRP/ PBF Technical specialized regional procurement training Unit centers

39. The overall project risk for procurement is rated Substantial because of the country conditions, the provisions of the national procurement code, delays experienced in the past with approval of evaluation reports and signature and approval of contracts, and the overall experience of poor management of contracts in the past despite the fairly strong arrangements in place at the level of the PIUs in Chad. For mitigating these procurement risks, in addition to the above actions, the Recipient and the World Bank team have agreed to carry out at least three missions per year for the two first years of project implementation to minimize the risk of failing

54 to follow procurement procedures as well as for supervision of project activities. The Recipient and the World Bank have also agreed two supervision field visits per year to carry out post- review of procurement activities. The Bank team recommends to the Government to get a waiver authorizing the Ministry of Health and the Ministry of Plan to manage all procurement procedures for this project including signature and approval. It also agreed to continue the dialogue with other partners (African Development Bank, European Union and AFD) to push Government to review some provisions of the new Code and its implementation decrees.

40. Frequency of procurement supervision. In addition to the prior review supervision to be carried out from World Bank, the Recipient and the World Bank team have agreed to at least three missions per year for the first two years of project implementation to minimize the risk of failing to follow procurement procedures as well as for supervision of project activities. The Recipient and the World Bank have also agreed to conduct two supervision field visits to carry outpost-review of procurement activities.

41. Publication of contract awards: The outcomes of all international competitive bidding and national competitive bidding on works, goods and consultancy contracts estimated of cost US$200,000 or more, should be published in UNDB Online and dgMarket.

42. Fraud and corruption: All participants to the bidding process, bidders and service providers, for example supplier, sub-contractors, and consultants, should uphold the highest levels of ethical conduct during the procurement process and the execution of contracts financed under the project, in accordance with paragraph 1.14 of the Procurement Guidelines and paragraph 1.23 of the Consultants Guidelines.

Procurement Implementation Arrangements

43. The bulk of procurement for vehicles, equipment, construction or rehabilitation works, consulting services, studies and training will be managed by the Procurement Unit through the Procurement Specialist. The Procurement Specialist will be in charge of preparing all bidding documents (ICB, NCB, shopping and direct contracting, etc.) and all requests for proposals, as well as for submitting them to the World Bank for no objection before their publication. In collaboration with the other senior members of the Project he/she will manage the evaluation of the bids and proposals and will seek the no objection of IDA before making any award for contracts not governed by the National Tender Board (Commission d’Ouverture et de Jugement des Offres). For contracts governed by the National Tender Board, the current legislation will apply, provided that it is not in contradiction with IDA Guidelines. The Chief of Division and the staff designated by the Coordinator of himself will participate in the evaluation before seeking the no objection of the World Bank. The Project will use consultants as necessary to carry out specific tasks in procurement. The recruitment of all consultants should be acceptable to the World Bank, throughout the life of the Project

Procurement Methods

44. Procurement methods which may be used in the project will include ICB, NCB, Shopping, Direct Contracting, QCBS, CQ, LCS, QBS, IC and SSS.

55 45. Civil Works. There will be no civil works financed directly with the credit proceeds, but facilities implementing RBF can use their bonuses to improve their working environment.

46. Goods. Goods procured under this project would include Information Technology (IT) equipment, software, office equipment, office furniture, vehicles, fuel, etc. Medicinal products, mosquito nets, anthropometric equipment, etc., will be procured by ICB (via UNICEF). The other contracts are with small value (IT equipment, office equipment, office furniture etc.) and will be procured by NCB. The procurement will be done using Bank’s SBD for all ICB and for all NCB subject to any adaptation as required. Small contracts for goods may be procured using the shopping procedures as per paragraph 3.5 of the Procurement Guidelines.

47. Consultants Services, Audits, Studies and Training.

 Quality-and-Cost-based Selection (QCBS). Unless indicated otherwise in the Procurement Plan, all consulting service contracts costing US$200,000 equivalent or more for firms would be awarded through the Quality and Cost Based Selection (QCBS) method. To ensure that priority is given to the identification of suitable and qualified national consultants, short-lists for contracts estimated at or less than US$100,000 equivalent may be made up entirely of national consultants (in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines), provided that a sufficient number of qualified individual or firms is available (at least three). However, if foreign firms have expressed interest, they would not be excluded from consideration. The Project will ensure that expressions of interest are widely publicized, to attract multiple interested candidates. Based on agreed criteria, the Project will maintain and update a list of consultants which will be used to establish short-lists.

 Least-Cost Selection (LCS). For financial and technical audits estimated to cost less than US$200,000, selection of consultants will be made on the basis of Least-Cost Selection (LCS).

 Selection Based on Consultants Qualifications (CQ). Consultants for small studies, engineering designs and supervision, monitoring and evaluation, and short term assignments, costing less than US$300,000, will be selected through the Selection Based on Consultants Qualifications (CQ).

 Individual Consultants (IC). Consultants for project implementation, and assignments in sectors such as environmental and impact studies, baseline studies. Technical assistance for project implementation etc. and other types of short term appointment which can be delivered by individuals, costing less than US$100,000, will be selected through comparison of qualifications among Individual Consultants (IC) expressing interest in the assignment or approached directly.

 Single-Source Selection (SSS). In exceptional cases, Single-Source Selection (SSS) could be used, in accordance with the provisions of paragraphs 3.8 to 3.11 of the Guidelines, with IDA’s prior agreement.

56  UN Agencies: In accordance with the provisions of paragraph 3.10 of the Guidelines for the Procurement of Goods, Works, and non-Consulting services (January 2011) the project will contract directly agencies of the UN (UNICEF, WHO or UNFPA), following their own procurement procedures if it is the most appropriate method of procurement for the acquisition of health-related goods, including medical equipment, vaccines, drugs and pharmaceuticals, preventive health and contraceptive devices, and long lasting insecticide treated nets (LLINs).

 Training, Workshops, Seminars and Conferences. Training, workshops, seminars and conferences (also study tours) will be carried out on the basis of approved annual programs that will identify the general framework of these activities for the year, including the nature of training/study tours/workshops, the number of participants, and the estimated cost

48. IDA Reviews: As specified in the Procurement Plan.

49. Modification or waiver of the scope and conditions of contracts. Before agreeing to any material extension, or any modification or waiver of the conditions of contracts that would increase aggregate cost by more than 15 percent of the original price, the Recipient should specify the reasons thereof and seek the World Bank's prior no-objection for the proposed modification.

50. Project Implementation Manual (PIM). The PIM will be produced and will be submitted to Bank for review. It will define the Project’s internal organization and its implementation procedures, and will include, among other things: (i) the procedures for calling for bids, selecting consultants, and awarding contracts; (ii) the procedures for community-based procurement and sample contracts; (iii) the internal organization for supervision and control, including operational guidelines defining the role of the executing agency and reporting requirements; and (iv) disbursement procedures. The PIM will be reviewed and approved by the Bank before effectiveness.

Environmental and Social (including safeguards)

51. The project is expected to have a positive social impact by improving access to health care services for the poorest households. Component 1 (through PBF) will provide incentives for health facilities to reduce staff absenteeism and to improve staff responsiveness with patients. As a result, health facilities with PBF contracts will in turn provide more and better care for marginalized populations.

52. The project will have a positive impact on gender in Chad. Given that the project’s objectives are to improve maternal and child health, improving women’s health is an essential component of the intervention. Particular attention will also be given to ensuring active participation of women in project areas through the use of community CBOs (local NGOs, women’s groups, agricultural groups, etc.). The project is expected to have a positive impact not only on pregnant women but on all women, as PBF credits will improve the quality of care for the identified package of health services essential for the general population.

57 53. The project will also enhance community ownership for monitoring the quality of basic health services. CBOs will be identified and strengthened so that they can be involved in monitoring health facilities.

54. The preparation process of the project has been highly participatory with extensive work and consultation among the key stakeholders: selected line ministry representatives and representatives of the donor community, including NGOs. To avoid opposition to PBF, a strong emphasis on using a participatory approach was introduced very early in project preparation to explain PBF to the project stakeholders through workshops and meetings. The monitoring and evaluation system has been designed to ensure the adequate targeting of project activities, including their social impact.

55. The project will not be implemented in the area where indigenous peoples (IPs) are located.

56. The project is expected to have a positive social impact by improving access to health care services for the poorest households. Component 1 (through PBF) will provide incentives for health facilities to reduce staff absenteeism and to improve staff responsiveness with patients. As a result, health facilities with PBF contracts will in turn provide more and better care for marginalized populations.

Monitoring & Evaluation

57. The Results Framework focuses on accountability for results in the delivery of maternal and child health services—it moves beyond the usual tracking of inputs and outputs and places a strong emphasis on intermediate outcomes. When possible, the proposed results framework uses existing indicators and data to measure the progress of both the project and its contribution to the overall national program; this will benefit the program in two ways, increase efficiency and strengthen existing data collection mechanisms. For example, routine monthly and quarterly data collected from Chad’s HMIS via the web-based PBF system will be aggregated for the project’s quarterly and annual indicators to reinforce the national system and avoid creating a parallel structure. The project monitoring system will include (i) identification and consolidation of M&E indicators; (ii) training and capacity building initiatives at the national, regional, and local levels; (iii) standardized methods and tools to facilitate systematic collection and sharing of information; (iv) an independent review by external technical consultants (External Evaluation Agency); and (v) annual program evaluations and strategic planning exercises for each component.

58. The mid-term review (MTR) will assess the project’s performance, intermediate results, and outcomes. The MTR will be conducted in the last half of 2016. In combination with the MTR, an independent assessment will be conducted to ensure that all processes (targeting, registration and payments) function as planned.

59. The results of the PBF component of the project will be assessed through an Enhanced Program Assessment (EPA). The policy objectives of the EPA are to (i) identify the links between PBF on maternal and child health service coverage and quality, (ii) identify key

58 factors responsible for the project’s observed outcomes, and (iii) assess the cost-effectiveness of PBF as a strategy to improve coverage and quality. In doing so, we expect that the results from the EPA will be useful to fine tune the design of the national PBF policy in Chad and will also contribute to the larger body of knowledge on PBF.

Role of Partners (if applicable)

60. Multilateral and bilateral partners in the health sector have been consulted throughout the process of developing the project by the government to ensure close coordination and collaboration. UNFPA UNICEF, WHO and the European Union have agreed to be members of the PBF Steering Committee that will oversee project implementation, draw lessons from implementation and share best practices to expand health service delivery in rural areas.

59 Annex 4: Operational Risk Assessment Framework (ORAF)

CHAD: Mother and Child Health Services Strengthening Project (P148052)

Stakeholder Risk Rating Substantial Risk Description: Risk Management: As the proposed program is multi-faceted (health Implementing a successful project relies on a strong sense of commitment and financing, HRH, pharmaceuticals), there may be some ownership from the government counterpart; the Ministry of Health, the Ministry of issues of coordination between various Finance and the Ministry of Planning, Economy and International Cooperation are very stakeholders/ministries regarding the allocation of dedicated to this project as they were in the previous projects, and to institutionalizing responsibilities for implementation. PBF in Chad, however capacity for designing and implementing PBF is still weak The Bank will continue its policy dialogue with the Government, and more precisely with the Ministries of Health, of Finance and of Planning, and provide technical assistance for implementing the PBF reforms. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Both CONTINUOUS Implementing Agency (IA) Risks (including Fiduciary Risks) Capacity Rating Substantial Risk Description: Risk Management: Low implementation capacity at the MoH could The project will strengthen the MoH procurement, financial management and internal hamper the timely achievement of program outcomes. audit capacity through the component 2.4. The project will also provide training in M&E Indeed, regarding the previous health project, limited and improve the health information system implementation capacity of the MoH was partly Resp: Status: Stage: Recurrent: Due Date: Frequency: responsible for delays in project implementation and inadequate management of project funds. Both In Progress Both CONTINUOUS Governance Rating Substantial Risk Description: Risk Management: Regarding the PBF component, health facilities may The institutional arrangements for the project consider Governance as a core activity. To exaggerate or falsify their records in order to obtain be transparent in its process, a very detailed operational manual will be updated and more funds, thereby corrupting the health management shared with main stakeholders; and the purchasing, verification and technical assistance

60 information system. will be mostly contracted-out. In addition, decentralize coordinating committees should be created for PBF at the department level, and involve civil society in approving series. An external evaluation agency will also be recruited to provide additional assurances. Finally, governance mechanisms will be strengthened at the health facility levels (COGEs) by involving them in the oversight over public funds (which includes user fees generated by the health facility, but also government funds and PBF income). Additionally, grassroots organizations will be enlisted to do client satisfaction surveys. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Both CONTINUOUS Risk Management: The Bank carried out its usual procurement and financial management assessments during preparation and identified key actions to limit procurement and financial management risk. In designing the procedures to be included in the PIM, a strong focus was given to the incentives that guide the behavior of officials, and measures were taken to recalibrate incentives as required. The project implementation manual will outline clear procurement and financial management processes. The financial management functions of the project will be centralized in the coordination unit, who will carry out the payment function. In addition to fulfilling a quality control function, the same unit will also provide support to build the capacity of Ministries. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Both CONTINUOUS Project Risks Design Rating Moderate Risk Description: Risk Management: The project focuses on implementation of an innovative The institutional arrangements for the project consider Governance as a core activity. To health financing mechanism, the PBF program be transparent in its process, a very detailed operational manual will be updated and (combined with mobile and outreach community health shared with main stakeholders; and the purchasing, verification and technical assistance interventions). The PBF program adds complexity to will be mostly contracted-out. In addition, decentralize coordinating committees should project design. It has been piloted for 18 months be created for PBF at the department level, and involve civil society in approving series. (January 2012 to June 2013). An external evaluation agency will also be recruited to provide additional assurances. Finally, governance mechanisms will be strengthened at the health facility levels (COGEs) by involving them in the oversight over public funds (which includes user fees generated by the health facility, but also government funds and PBF income).

61 Additionally, grassroots organizations will be enlisted to do client satisfaction surveys. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Both 31-May- 2014 Social and Environmental Rating Moderate Risk Description: Risk Management: Several studies have shown that the utilization of Workshops will be held with key stakeholders - political, religious, traditional leaders, Family Planning services is constrained by socio- and other prominent personalities in Chad to present the project and explain expected cultural barrier, and it is particularly the case in Chad. impacts on population and economic development. These workshops would promote an There is a high desire among men (and women) to have environment supportive to family planning, and to the family and women’s rights. many children, but a relatively low decision making Moreover, the previous Population projects (PACP1 and 2) and UNFPA activities have power of women. The focus of the project on created a better environment to discuss family planning issues. reproductive health might come up with some Resp: Status: Stage: Recurrent: Due Date: Frequency: reluctance from stakeholders and populations. Client In Progress Both CONTINUOUS Program and Donor Rating Moderate Risk Description: Risk Management: Few international partners are present in Chad and The World Bank is coordinating with other development partners in Chad. Previous there is a coordination effort to ensure that the various missions in Chad ensured a solid relationship with different ministries and other partners are responding to the government’s priorities. partners. During project preparation and implementation donor agencies and relevant ministries will be consulted and given the opportunity to provide inputs. Resp: Status: Stage: Recurrent: Due Date: Frequency: Both In Progress Both CONTINUOUS Delivery Monitoring and Sustainability Rating Moderate Risk Description: Risk Management: The National Health Information System is weak and Monitoring and Evaluation (M&E) is a key component of the project; data are critical in does not produce reliable data. order to inform the Government, the World Bank and other development partners about the results and impacts of the various sub-components. More specifically the project will finance, through sub-components 1.2. and 2.4, capacity building activities for a better M&E system, including enhancement of the actual Health Information System.

It is important to note that PBF is designed in a way that it provides 100% data availability from all PBF systems, through an open platform (see for instance the

62 Nigerian one http://nphcda.thenewtechs.com). These data are publicly available to inform decision makers and managers at all levels. There are also complete monthly and quarterly health facility assessments, which feed into this public forum. Resp: Status: Stage: Recurrent: Due Date: Frequency: Client In Progress Both CONTINUOUS Resp: Status: Stage: Recurrent: Due Date: Frequency:

Overall Risk Overall Implementation Risk: Rating Substantial Risk Description: Implementation Risk Rating: The overall implementation risk is rated substantial in part because the higher risks associated with the expansion of the results-based financing approach, long delays in approval of large contracts. However the risks associated with the maternal and child health components are low, except for family planning that may require very complex communication for behavior change approaches.

63 Annex 5: Implementation Support Plan

CHAD: Mother and Child Health Services Strengthening Project (P148052)

1. The approach for implementation support has been developed based on the nature of the project, including its risk profile. It will aim to render implementation support to the client more flexible and efficient, and will focus on implementation of the risk mitigation measures defined in the ORAF.

2. The project will need intensive supervision given the geographic spread of the proposed operation (13 districts in four regions), and given implementation capacity weaknesses at the country and project level. The project will be implemented at three levels: the central MOH, regions, and prefectures. A budget of US$150,000 would be required for the Bank team to thoroughly supervise the project during the first 12 months of implementation.

3. The supervision by the Bank will be leveraged by the supervision carried out by the MOH and the project on a regular basis. The MOH will have teams visiting each region several times per year, and will prepare action-oriented supervision reports that will be reviewed by the Bank and donors during their bi-annual supervision missions, and through desk reviews. This system will allow the MOH to distinguish between the better and lesser-performing regions and prefectures, and provide more assistance to the latter. Sufficient funds to that effect have been included in the project design with a total of about US$400,000 over the five-year lifespan of the project.

4. The overall supervision of PBF implementation will be the responsibility of the national PBF steering committee and technical team within the MOH. Health districts, regional directorates and the Performance Purchasing Agencies (international NGOs with extensive experience in PBF) contracted by the MOH for the verification of health services delivered will also contribute to regulatory and supervision activities. The External Evaluation Agency will verify the reported quality performance through regular data quality audits at health facilities and carry out regular community client satisfaction surveys. Bank supervision will consist in ensuring that the PPA and EEA are performing their functions properly according to the terms of its contract through direct interaction with agencies, sample verification of its records, and interviews and feedback from the MOH, selected prefectures, and health facilities interacting directly with the entity.

5. Some of the skills required by the Bank team for supervision will be needed on a regular basis while others will be required on a periodic basis. It is therefore proposed to establish a core supervision group, that will emphasize financial, procurement, PBF, and operational basic needs, complemented by technical specialists, in particular those covering monitoring and evaluation.

6. While regular Bank supervision will take place at least twice a year, this will be leveraged by regular visits by the country-based Bank health sector, procurement and financial management specialists who take advantage of their field presence to verify progress and provide ongoing assistance to the client.

64 7. A much more intensive than usual supervision program should be carried out during the first year of the project to put in place a sound institutional base and properly begin interventions to be undertaken by the operation.

8. The supervision team includes the following members: (i) the Task Team Leader; (ii) the co-Task Team Leader; (iii) a monitoring and evaluation specialist whose experience includes health sector evaluations; (iv) a PBF specialist with technical expertise in the field; (v) a financial management specialist who will review adherence to Bank procedures with regard to fiduciary responsibilities; (vi) procurement specialist; and (vii) an environmental and social specialists.

9. Financial management. FM implementation support missions will use a risk-based approach, and collaborate with the Task Team, including the procurement specialist. A first implementation support mission will be performed six months or earlier after effectiveness, especially for the review of PBF mechanisms. Afterwards, the missions will be scheduled by using a risk-based approach model and will include the following: (i) monitoring of the financial management arrangements at intervals determined by the risk rating assigned to the overall FM Assessment at appraisal, and subsequently during implementation; (ii) review the IFRs; (iii) review the audit reports and management letters from the external auditors and follow-up on material accountability issues by engaging with the Task Team, client, and auditors. The quality of the audits (internal and external) will be monitored closely to ensure that they are comprehensive and provide enough confidence on the appropriate use of funds by the client; (iv) physical supervision especially for the PBF mechanism; and (v) assistance to build or maintain appropriate financial management capacity.

10. Procurement. Implementation support will include: (i) provision of training to the PIU staff as needed; (ii) review of procurement documents and provision of timely feedback to PIU; (iii) provision of guidance on the Bank’s Procurement Guidelines to the PIU; (iv) monitoring of procurement progress against the detailed Procurement Plan; (v) monitoring that implementation of contracts is compliant with the World Bank’s fiduciary guidelines as well as with contract obligations.

11. Environmental and Social Safeguards. Implementation support will include: (i) guidance on the preparation and disclosure of an Environmental and Social Assessment; (ii) supervision of the implementation of the prepared Process Framework and provision of training and guidance to the PIU team; (iii) third party monitoring assessing compliance with safeguards as a specific, separate component will be included in the M&E system.

12. Coordination with other Development Partners. Implementation support will include: (i) planning for joint local and national meetings and missions with UNICEF, WHO, and UNFPA; (ii) close coordination with other development partners, research institutions and international, national and local NGOs engaged in the health sector in Chad.

Implementation Support Plan

13. The project will require substantive technical support due to the rather complex and technical nature of the activities to be financed. Formal implementation support missions and

65 field visits will be carried out every six months. Detailed inputs from the Bank team and partners are outlined below:

 Technical inputs: Technical inputs will be provided by members of the abovementioned supervision team, and additional Bank staff who have expertise in Monitoring & Evaluation. As needed, the task team will seek additional highly-specialized technical inputs from technical partners with whom close coordination and collaboration has been established during project preparation.

 Fiduciary requirements and inputs: Training will be provided by the Bank’s financial management specialist and procurement specialist before the commencement of project implementation. The task team will further provide support to the PIU to improve fiduciary efficiency. Formal supervision of financial management will be carried out semi-annually, while procurement supervision will be carried out on a timely basis as required by the client.

 Safeguards: Inputs from an environment specialist and a social specialist will be provided, despite the project’s limited expected social and environmental impacts. Capacity building will be required for environment monitoring and reporting. On the social side, supervision will focus on implementation of the Process Framework and indigenous peoples’ issues. Field visits will be conducted on a semi-annual basis. The social and environmental specialists are based in the sub-region.

 Operation: The TTL and co-TTL will provide timely supervision of all operational aspects, as well as ensure coordination with the client and among World Bank team members. The TTL will lead two formal field supervisions a year and, as needed, conduct punctual missions to resolve operational issues.

Table 10: Timeline of main focus of support to implementation

Time Focus Skills Needed Resource Partner Role Estimate First twelve Preparing for Team US$150,000 per Technical months implementation of Leadership, year support and PBF PBF, M & E, policy dialogue FM, Procurement, Environment, Social 12-48 months Implementation of Same as above Same as above Same as above PBF and institutional strengthening Other

66 Table 11: Skills Mix Required

Skills Needed Number of Staff Weeks Number of Trips Comments Team Leadership 8 annually Three in the first Washington based year and two annually from the second year M & E Specialist 4 annually 2 annually Based in the Region PBF Specialist 4 annually Field trips as Washington based needed Financial 4 annually Field trips as Based in the Region Management needed Procurement 3 annually Field trips as Based in the Region needed Environment 2 annually Field trips as Based in the Region needed

Table 12 List of partners

Name Institution/Country Role UNICEF, WHO, and Contributing to UNFPA PBF implementation and technical knowledge of country health

sector

Support to the UNICEF Country Office in implementation of Chad the Component 2 of the project

67 Annex 6: Key Theories and Design Elements of Performance-based Financing

CHAD: Mother and Child Health Services Strengthening Project (P148052)

1. Results-Based Financing (RBF) is an instrument that links financing to pre-determined results, with payment made only upon verification that the agreed-upon results have actually been delivered. Different RBF mechanisms include Output-Based Aid (OBA), Performance- based Financing (PBF), or other provider payment mechanisms that link payments to service volume and quality, and conditional cash transfers. The central theme in all of these is that a principle entity provides a reward, conditional on the recipient undertaking a set of actions to produce a desired outcome.

2. Performance-based Financing (PBF) is a supply-side Results-Based Financing (RBF) approach.13 PBF pays for outputs or results and this is different from classical programs which focus on procuring inputs. In the health sector, outputs or results are predominantly produced by health facilities whereas some results are produced by the health administration. Such outputs or results include quality services produced by health facilities and certain actions by the health administration. Income from PBF is used by health facilities and the health administration to procure necessary inputs and to pay performance bonuses.

3. Even though performance-related payment models have been implemented in developed and developing countries in various settings and forms, the scientific evidence base of the impact of these mechanisms on specific outcomes remains thin. In Rwanda, PBF proved an efficient way to increase health service quality and utilization, resulting in improved child health outcomes14. In Argentina, RBF led to improved birth weights, a reduction in neonatal mortality, and an increase in the use of prenatal services15.

4. Appropriate design and implementation are vital for successful PBF pilots. Based on trial and error, PBF programs evolved to certain design and implementation characteristics. These characteristics and their expected outcomes on health system performance are summarized in the PBF Toolkit16 and described in Table 6A.

13 Musgrove, P. (2011). Financial and Other Rewards For Good Performance or Results: A Guided Tour of Concepts and Terms and a Short Glossary. Washington DC. 14 Basinga, P., Gertler, P.J., Binagwaho, A., Soucat, A.L., Sturdy, J., & Vermeersch, C.M. (2011). Effect on maternal and child health services in Rwanda of payment to primary health-care providers for performance: an impact evaluation. Lancet, 377, 1421-1428. 15 Gertler, P., Giovagnoli, P., & Martinez, S. (2013). Rewarding Performance To Enable a Healthy Start: The Impact of Plan Nacer on Birth Outcomes of Babies Born into Poverty. Under Review for Publication: The World Bank. 16 Fritsche, G., Soeters, R., Meessen, B., Ndizeye, C., Bredenkamp, C., & Heteren, G. (2014, forthcoming) Performance-based Financing Toolkit. Washington, DC: The World Bank.

Table 13: PBF design and implementation characteristics linked to improved results

Characteristic Detailed information Well-balanced benefit package A minimum of 15–25 services exist at each level: health at all levels center/community level and first-level referral hospital. Rigorous results verification A mix of ex ante verification and ex post verification occurs. Separation of functions Separation of functions among regulator, provider, and purchaser serves to improve accountability and credibility of results. Use of community client Feedback is gained on use of services and opinion of the population satisfaction surveys to gather information from clients on use and to gather their opinions Use of a quantified quality A comprehensive mix of measures on structure and process gives a checklist (balanced score card) balanced view on quality. The quality checklist is applied by the with the result tied to payments district or provincial health administration (regulatory function). Other results include observational and supervisory effects and improvement of technical efficiency. Use of a fee-for-service provider Using a fee-for-service mechanism is evidence based. It makes payment mechanism measuring outputs easier and links efforts directly to rewards. Strategic purchasing with a Fees are open at the micro-level (health facility), which leads to focus on underprovided and money following the effort, and budgets are closed at the macro- underutilized preventive level, which leads to cost containment. Fees are adapted as a services function of results (what is desired) and available budget (use of lever services—high-volume services such as curative services—to stay within budget at the macro-level). ICT solutions allow individual health facility fees to be managed on a quarterly basis. Individual fees and total Income from PBF and other sources needs to be sufficient to (a) pay earnings that are significant and staff a significant monthly bonus income and to hire additional staff paid regularly if necessary and (b) pay for non-salary recurrent cost items. Most money to the most cost- Two-thirds of the money goes to the community or health center effective services level and one-third to the first-level referral hospital. Improvement of allocation efficiency (reprogramming existing money to the frontlines) occurs. Equity Various equity instruments exist: (a) delivering more money to destitute areas (ring-fenced global budget); (b) delivering more budget to destitute health facilities (higher fees); and (c) providing higher fees for services consumed by indigents. Autonomy Health facilities’ decision rights include procuring their drugs and other inputs, having their own bank accounts, and deciding on their income. Capacity to make decisions to contract out staff or terminate their contract would be ideal. Health facility management The committee enhances local decision rights of health facilities committee combined with making the local population part of the oversight and governance mechanisms.

Payments and financial A quarterly payment cycle can still be combined with a monthly management bonus payment to staff. The indices tool aids in managing all cash income in a holistic fashion and managing bonus payments. Performance frameworks for Health administration at the district and provincial levels and the regulator sometimes at the national level is made responsible for tasks that are under its control. Quality improvement units and Negotiated through the business plan, the quality improvement and investment units investment units provide means for a health facility to upgrade its quality. Health facility management Instruments include the business plan, indices tool, and individual instruments monthly performance evaluation. Coaching and technical Usually occurring with the purchasing agent, coaching and technical assistance assistance are vital. District PBF steering committee The committee furnishes governance at the decentralized level, links health system performance to the health administration, and provides a platform for government and the local community to discuss health system performance. Web-enabled application with The application provides access to data at all levels, enables public front end strategic purchasing, and enhances public accountability for performance. Coordination Coordination occurs between technical assistance and the government to support and enhance system performance. Capacity building System strengthening occurs at health facility, district, and national levels.

70 Annex 7: 2011-2013 Chad Performance-based Financing Pilot Indicator List

CHAD: Project Health Services Result for Women and Children (P148052)

1. Between October 2011 and March 2013, the Government with support from the World Bank (Second Population and AIDS Control Project) introduced a Results-Based Financing (PBF) scheme in eight health districts across four regions (Batha, Guera, Mandoul, and Tandjile) covering a total population of 1,450,000 people (102 health centers and nine hospitals). The Pilot included the financing of two packages of services: One basic package of health services comprising 12 key health services, principally targeting pregnant women and children under five, to be delivered at the health centers in targeted areas. The second package consisted of 12 key complementary health services to be delivered at district hospitals in targeted areas.

2. The Basic Package of Services (Primary Care Level) included:

Table 14: Basic Package of Primary Care Level Services

Indicators Price (FCFA) Price (US$) Curative Care New curative consultation (patient lives less than 5km 100 0.2 from health facility) New curative consultation (patient lives 5km or more 120 0.24 from health facility) New under-5 curative consultation (patient lives less 150 0.3 than 5km from health facility) New under-5 curative consultation (patient lives 5km 200 0.4 or more from health facility) Treatment of Sexually Transmitted Infections 1000 2 Preventative Care Childhood preventative consultation 100 0.2 Pentavalent 3 600 1.2 Measles vaccination 750 1.5 Antenatal care: second to the fifth tetanus toxoid 2500 5 vaccination HIV Voluntary Counseling and Testing (VCT) for 3000 6 pregnant women and transfer to hospital

Reproductive Health

Pre-natal consultation 600 1.2 3rd pre-natal consultation 3000 6 Institutional delivery (simple) 5000 10 Family planning: new and recurrent user of modern 4000 8 family planning method (pills and injection) 3. The Complementary Package of Services included:

71 Table 15: Complementary package of services

Indicators Price (FCFA) Price (US$) New curative consultation referred by facility or 1000 2 presenting urgent symptoms, seen by a doctor Major surgery 7500 15 Minor surgery 2000 4 Institutional delivery (simple - Eutocic) 3000 6 Cesarian 10000 20 Institutional delivery (complicated - Dystocic) 5000 10 Voluntary Counseling and Testing (HIV/AIDS) 1000 2 Hospitalization days 750 1.5 HIV+ pregnant woman put on ARV treatment 5000 10 Number of new causes on ARV treatment 5000 10 Number of ARV patients followed semi- 6000 12 annually Tuberculosis cases testing positive 4000 8 Family planning: new and recurrent user of modern family planning method (pills and 4000 8 injection) Counter-referral to health facility 2500 5

4. The primary and secondary care benefit packages have been revised for the new operation, taking into account lessons from the previous pilot experience and experiences from neighboring countries such as Cameroon and Central African Republic. Two benefit packages of health services have been designed in Chad for use in the government health system. They are the Minimum Package of Activities (MPA), which contains 18 preventive and curative primary health services to be provided in government health centers, and the Complementary Package of Activities (CPA), with 10 services to be delivered in first level referral government hospitals. Changes from the previous benefit package encompass the inclusion of indicators linked to fee exemptions for the poor, post-natal care, and childhood preventative consultations. The fee schedule for PBF payments will be finalized during the costing exercise that will be completed during the first stage of implementation. The PBF output budget is estimated at 70 percent of the total PBF budget, which is in line with international standards and PBF best practices.

5. MPA- Minimum package of activities at the health center and community level consists of: 1. New curative consultation (patient lives less than 5km from health facility) 2. New curative consultation (patient lives 5km or more from health facility) 3. New curative consultation – indigent (fee exemption) 4. Admission day 5. Admission day – indigent (fee exemption) 6. Minor surgery

72 7. Pentavalent 3 8. Measles vaccination 9. Childhood preventative consultation: child aged 0-5 years checked for malnutrition, latent diseases or received growth monitoring 10. Antenatal consultation (new and standard visit) 11. Prevention of mother to child transmission of HIV: pregnant woman tested for HIV 12. Antenatal care: second to the fifth tetanus toxoid vaccination 13. Antenatal care: second dose of prophylactic antimalarial 14. Post natal consultation 15. Institutional delivery 16. Family planning: new and recurrent user of modern family planning method (pills and injection) 17. Referral for a severe condition arrived at the hospital

6. CPA- Complementary Package of Activities at the first level referral hospital include: 1. Outpatient consultation by a medical doctor 2. Outpatient consultation by a medical doctor of an indigent (fee exemption) 3. Admission day 4. Admission day – indigent (fee exemption) 5. Referred patient arrived at the hospital and counter-verification arrived at the hospital 6. Major Surgery (defined list) 7. Institutional delivery - normal 8. Caesarean section 9. Institutional delivery - complicated 10. Family planning: new and recurrent user of modern family planning method (pills, implant, IUD, injection) 11. Child 0-59 months treated for moderately severe malnutrition

73 Annex 8: Economic and financial analysis

CHAD: Strengthening Mother and Child Health Services (P148052)

1. Economic analysis plays a crucial role in informing the choice of project alternatives, especially in resource-constrained environments, and is often used to make decisions on how a project could enable efficient and equitable use of resources. The economic analysis of the proposed Mother and Child Health Services Strengthening Project will (i) provide a quick overview of the macro-fiscal and health financing context of Chad, (ii) analyze the economic rationale for investing in the health sector in Chad; (iii) conduct a cost-benefit analysis of the selection of project components and activities. The analysis is informed by existing secondary sources, including a Multiple Indicator Cluster Survey (2010), a Chad Public Expenditure Review (2011), benefit-incidence analyses of social and health spending (2007, 2013) and additional analytical work conducted by the project team.

(I) Health financing in Chad: key macroeconomic, fiscal and health financing outcomes

2. Chad is among the poorest countries in the world. Around 55 percent of the population lives below the poverty line and about 36 percent of the population lives in extreme poverty. In 2004 the Chadian economy underwent a fundamental transformation, as the country began to exploit its oil resources. Oil production has led to a remarkable increase in GDP per capita, reaching US$737 per capita in constant 2005-US$ -almost a doubling in about a decade. Some notable improvements have been achieved. Substantial investments have been made in physical infrastructure; the network of paved roads has more than tripled in ten years. Investment in the health and education sectors has also increased substantially during the oil era. The opportunity to reduce widespread poverty provided by the increase in revenues has been, however, mostly missed to date. Chad’s first National Poverty Reduction Strategy (NPRS - I) was adopted in June 2003, aiming towards a 50 percent cut in poverty by 2015. In April 2008, the Government adopted a second generation NPRS. Despite both strategies, little progress is being made towards the Millennium Development Goals (MDGs): following the current trend, Chad is unlikely to achieve all but possibly one of the MDGs by 2015.

3. Chad’s fiscal policy is considered unsustainable, driven by high levels of government spending and limited non-oil revenues. The Government is highly reliant on oil revenues to finance public spending. Government revenues increased more than six fold between 2003 and their height in 2008. Over 2006-09, oil represented on average about 43 percent of GDP and government oil revenues represented 71 percent of total government revenues. Compared with a group of other oil producing Sub-Saharan African countries, Chad mobilizes relatively little non- oil revenues. While Chad’s non-oil revenue represents only about nine percent of non-oil GDP, other Sub-Saharan African Countries have managed to mobilize between 20-25 percent (PER, World Bank). Government spending as a share of non-oil GDP has increased from 14 percent in 2004 to above 40 percent in 2009, suggesting that Chad’s fiscal expansion will hardly be sustainable at medium term (PER 2011, Report IV article IMF, 2011). Although the stock of external debt declined from 63 percent of GDP in 2001 to 24 percent in 2009, current fiscal

74 policies need to be monitored and controlled to limit risks for additional debt burden given Chad has not yet reached the achievement point of debt under the HIPC initiative. As oil stocks are expected to be depleted in the next 10 years, prospects for economic growth at medium term are relatively constrained below five percent (IMF forecasts, 2013).

4. Allocation of government resources has hardly followed priority sectors, including health and social protection. Priority sectors for poverty reduction, including health, have been crowded out by unbudgeted and unexpected expenditures, for instance for security and military services (53 percent of budget for security spending and other non-priority sectors). Analysis of budget execution reveals even larger discrepancies, with only 88 percent of budget executed in the health sector. Health and social protection represented only 7 percent of the budget between 2004 and 2007, while the NPRS I aimed for 14 percent (PER, World Bank, 2011.

5. The mobilization of resources for the health sector, both public and private, is a major concern in Chad. Given its economic level, health spending per capita is substantially lower than in neighboring countries. As of 2010, total health spending represents 4.3 percent of GDP in Chad (6.5 percent in the region). Total health spending has increased from US$42 per capita in PPP in 2000 to US$60 in 2010 (a 43 percent increase) but remains far below the average in the region (above US$150 in sub-Saharan Africa (developing countries only)). Public sources of health financing are limited. Government health spending only represents 12 percent of total health expenditure and accounts for one percent only of GDP (average 2009-2011). Chad is below the regional average and peer countries. At 5.4 percent on average of the overall government budget over 2008-2012, the share of health in total budget is also very low. The government has, however, taken steps towards increasing budget allocation to the health sector. In 2013, the health budget represented 9.8 percent of the government budget. Over two thirds of total health expenditures are supported by households, 96 percent of which through out-of- pocket payments. The large portion of the health financing supported by direct payments increases the risk of catastrophic expenditures for the Chadian population.

(II) Economic rationale for investing in the health sector in Chad

6. Investment in health pays off. Improving health outcomes and access to health services is critical to building all citizens’ capabilities and enabling them to compete for jobs and opportunities generated through inclusive and sustainable development. Providing health services equitably to all citizens to prevent the ill-effects of diseases and injuries, and to do so without exposing them to burdensome and often catastrophic medical expenses, has been demonstrated to yield significant socioeconomic as well as health benefits at the individual and population levels. Returns to investing in health have been increasingly documented, recognizing economic benefits, through increase in personal and national incomes, and the value of better health in and of itself. Health improvements have accounted for about 11 percent of economic growth in low-income and middle-income countries between 2000 and 2011 (The Lancet Commission on Investing in Health 2013).

7. The health status in Chad is appalling. Child mortality, including both infant and under five mortality rates, is higher and decreases more slowly than in any other sub-Saharan African

75 country. With child and infant mortality ratios respectively estimated at 171 and 98 per 1,000 live births in 2010, the MDG related to child mortality will not be achieved by 2015. Only three percent of 12-23 months old children are totally immunized (MICS, 2010), putting the entire population at significant risks for major avoidable diseases (e.g. poliomyelitis, measles). Child malnutrition in Chad has increased since 1997. 30 percent of children suffer from wasting, 39 percent from chronic malnutrition, and 16 percent from stunting in 2010; these indicators were respectively estimated at 28 percent, 28 percent and 12 percent in 2000. Chad’s maternal mortality ratio, estimated at 1,100 per 100,000 live births in 2010, is also the highest among Central African countries and is four times higher than the related MDG 5 target.

8. Main underlying factors for such a deteriorated health status in Chad are to be found in the low availability and quality of the supply of services (DHS 2004 and MICS 2010). Over 200+ facilities are considered dysfunctional throughout the territory. As a result, there is a noticeable very low use of existing health care services, including at Primary Health Care level, especially among women and children (0.18 contact per year and per child). Only a quarter of children with diarrhea receive appropriate care on time (MICS 2010). Similarly only half of pregnant women attend ANC, while less than 15 percent deliver in health facilities and approximately 20 percent are assisted by skilled birth attendants. Demand-side factors include: (i) educational and cultural barriers (10 percent of poor women are literate), (ii) geographical barriers, and (iii) financial barriers (MICS 2010).

9. The overall goal of the project is to strengthen maternal and child health services in Chad. The project will improve the delivery of health services, particularly in remote areas through a combination of facility-based through result-based financing (RBF), outreach, and community- based services. The project will target 12 health districts located in five distinct regions (Batha, Guera, Mandoul, Tandjile, and Logone Oriental). The RBF project will target 2.17 million Chadians, including 410,400 women of reproductive age, 76,140 pregnant women and 64,800 infants. Based on performance, RBF grants will be provided for improving work environment and staff motivation.

10. Investing in mother and child health services is critical to improve access to quality services for direct beneficiaries. The economic justification relies on the disproportionate burden of maternal and neonatal deaths in Chad and the fact that affordable and cost-effective interventions to prevent these avoidable deaths are well-established. Evidence for low-income countries suggests that improved coverage with a package of interventions directed to mother and child is extremely cost-effective (US$82-US$142 per DALY averted)17. The interventions proposed under this project are all considered global “best buys” in this respect.

17 Disease Control Priorities, Second Edition, 2006

Table 16: Cost-effective interventions for mother and child health

Health Percent of Global Cost per DALY Estimated annual Included in interventions Disease Burden averted (global) cost per capita project Averted (global) Integrated 14.0 40.00 1.60 Yes management of childhood illness Expanded 6.0 14.50 0.50 Yes Program for Immunization Prenatal and 4.0 40.00 3.80 Yes delivery care Family planning 3.0 25.00 0.90 Yes Source: Adapted from Cleason et al, 2000

(III) Cost-benefit analysis of the project

11. The choice of the project components, notably through a result-based approach, relies on strong economic rationale. The RBF approach has already demonstrated its effectiveness and efficiency in addressing health system bottlenecks in the context of Chad18. The RBF approach operates through decentralizing health financing to front-line providers. The mechanism responds to the concern that a large source of system inefficiency originated from the extremely limited share of decentralized financial flows (less than a one percent). Closing the gap between financial resources and effective service delivery is an obvious direct benefit for users. The RBF approach also relies on the assumption that an extrinsic motivation, without crowding out the intrinsic values, will encourage health personnel to adopt an entrepreneurial approach aimed at increasing the use and quality of services provided. A pilot implemented in Chad has proven to be strongly cost-effective for increasing use of services. With less than US$1.55 spent per inhabitant, the pilot has led to a twofold increase in assisted delivery and immunization rate in targeted districts.

12. A Cost-Benefit Analysis (CBA) was conducted to measure project’s economic performance and to ultimately assess its net returns against alternatives (e.g. status quo). The analysis focused on the RBF project component. The method consisted of: (i) identifying the RBF project’s inputs and outputs, (ii) monetizing benefits of project, (iii) discounting benefits and costs and (iv) computing the net returns. Costs and benefits have been discounted with a real social discount rate over three years19, estimated at five percent in real terms in this setting. It

18 AEDES: Lessons Learnt from a RBF Pilot Implemented in Four Regions of Chad, Brussels, 2013 19 Project duration is four years. The cost-benefit analysis was conducted for a four year period, keeping in mind that the first year will consist of finalizing project preparation, and health services are expected to be purchased starting in the second half of the first year of project implementation.

77 defines the rate at which future values in the economic analysis are discounted to the present and therefore reflects the social view on how net future project benefits should be valued against present ones. Computing of economic performance consisted of assessing the economic net present value (NPV) (i.e. the difference between the discounted total benefits and costs) and the economic rate of return (RR) (i.e. the rate that produced a zero value for the NPV). Projects with an RR lower than the social discount rate (five percent) or a negative NPV are generally not considered economically sound.

13. Only direct costs and benefits of the RBF project were accounted for. Direct costs consisted of total RBF project costs for purchasing services. Indirect costs were not included in the analysis due to difficulties to assess and monetize (e.g. opportunity costs supported by users). Direct benefits refer to total gains generated from health services delivered to beneficiaries. The analysis did not account for quality upgrading. Indirect benefits were not accounted for (e.g. user’s behavior change).

Estimation of the NPV and RR:

The CBA relied on the main following project parameters:

Table 17: CBA parameters

Parameter description Cost estimate (US$) Source Total beneficiaries 2,170,000 Project estimation Total infant beneficiaries (0-1 64,800 National health statistics year) Total pregnant women 76,140 National health statistics beneficiaries Total women in reproductive age 410,400 National health statistics Total project budget 15,770,000 Project estimation Total RBF component budget 14,270,000 Project estimation Total RBF-related output budget 9,989,000 Project estimation Per capita output budget (per year) 1.85 Project estimation Social discount rate 5% Budget execution rate 80% Project estimation based on RBF pilot Costed basic package (curative, 42 Costing study (World Bank) immunization, ANC, delivery, PNC, family planning) Costed complementary package 113 Costing study (World Bank) (curative, surgery, delivery, C- Section, hospital stay, PMTCT, Tb treatment, family planning)

Table 18: CBA Table of costs, benefits and balances

Costs Profile Year 1 Year 2 Year 3 Year 4 Total Projected 1.71 4.21 4.18 1.09 Costs (discounted)

Cumulative Total Projected Costs 1.71 5.92 10.01 11.19 (discounted)

Benefits Profile Year 1 Year 2 Year 3 Year 4 Total Projected Benefits 0.91 4.71 5.24 3.81 (discounted) Cumulative Total Projected Benefits 0.91 5.62 10.86 14.67 (discounted)

Cost-Benefits Year 1 Year 2 Year 3 Year 4 Balance Total cost-benefit -0.80 -0.3 0.85 3.48 profile (discounted) Cumulative Total Projected Benefits -0.8 -1.10 -0.25 3.23 (discounted) Net Present Value 3.23 Rate of Return 28.86%

14. The CBA analysis shows a net value of US$3.23 million, with a rate of return of approximately 30 percent. Those results demonstrate the positive economic performance of the RBF approach proposed in this project and its capacity to generate large returns for the country economy and society.

15. Sensitivity analysis allows the determination of the ‘critical’ variables or parameters of the model. Such variables are those whose variations, positive or negative, have the greatest impact on a project’s financial and/or economic performance. The analysis is typically carried out by varying one element at a time and determining the effect of that change on RR or NPV. In the setting of the Chad’s project, results show that it is unlikely that the net return of the project will be sensibly modified, given prices of services purchased will unlikely be modified over the course of the project. A diminishing social discount rate is also expected not to affect results.

16. The selection of the project components, especially the RBF and the community-based approach, creates the conditions for a sustainable investment in the sector. By boosting system’s reliance on existing health facilities and communities, the project will be directly contributing

79 towards the sustainability of the sector. By spending US$2-3 per capita, per year (including overhead costs), the cost is likely to be affordable and sustainable in the long term for the country. Despite the fiscal fragility of the health sector, there is a noticeable space to further enhancing the fiscal room for health, notably through (i) a re-prioritization in resource allocation (towards PHC, community-based approaches, human capital), (ii) mobilizing innovative resources (non-oil revenues through economic diversification, ear-marked taxes), and (iii) gains in efficiency (reduced leakages, increased transfers, better governance and management of service delivery).

80 IBRD 33385

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