Completion Report - Asian Development BankNew Model of Desa Siaga Development 33.590 Rehabilitation...

Completion Report Board of Directors

Project Number: 34149 Loan Number: L2074/75-INO September 2014

Indonesia: Second Decentralized Health Services Project This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency Unit – rupiah (Rp)

At Appraisal At Project Completion (21 November 2003) (31 December 2013)

Rp100 = $0.000117 $0.0000818063 $1.00 = Rp8,560 Rp12,224

ABBREVIATIONS

ADB – Asian Development Bank BAPPEDA – Badan Perencana Pembangunan Daerah (Provincial/District-level

Development Planning Agency ) BAPPENAS – Badan Perencanaan dan Pembangunan Nasional (National

Development Planning Agency) BKKBN – Badan Kependudukan dan Keluarga Berencana Nasional (National

Family Planning Coordinating Board) DALY – disability-adjusted life year EIRR – economic internal rate of return ENPV – estimated net present value KPPN – Kantor Pelayanan Perbendaharaan Negara (Regional Treasury

Office) MDG – Millennium Development Goal MODS – Desa Siaga Operational Models MOH – Ministry of Health

NOTES

(i) The fiscal year (FY) of the Government of Indonesia and its agencies ends on 31

December. (ii) In this report, "$" refers to US dollars.

Vice-President S. Groff, Operations 2, Director General J. Nugent, Southeast Asia Department (SERD) Officer-in-Charge N. LaRocque, Human and Social Development Division, SERD Team leader B. Lochmann, Senior Social Sector Specialist, SERD Team member M. Camara-Crespo, Project Analyst, SERD

L. Marin-Manalo, Operations Assistant, SERD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page

BASIC DATA i MAP vi I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1 B. Project Outputs 3 C. Project Costs 5 D. Disbursements 6 E. Project Schedule 7 F. Implementation Arrangements 7 G. Conditions and Covenants 7 H. Consultant Recruitment and Procurement 8 I. Performance of Consultants, Contractors, and Suppliers 8 J. Performance of the Borrower and the Executing Agency 9 K. Performance of the Asian Development Bank 9

III. EVALUATION OF PERFORMANCE 9 A. Relevance 9 B. Effectiveness in Achieving Outcome 10 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 12 E. Impact 13 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A. Overall Assessment 13 B. Lessons 14 C. Recommendations 14 APPENDIXES 1. Design and Monitoring Framework 16 2. Projected and Actual Loan Disbursements 20 3. Annual Disbursements 21 4. Project Implementation Schedule 22 5. Status of Compliance with Loan Covenants 25 6. Summary of Gender Equality Results and Achievements 33 7. Use of National Consultants for Project Management 40 8. Procurement of Civil Works and Goods 41 9. Project Outcome Indicators 42 10. Recalculation of Economic and Financial Viability 45 11. Project Organizational Structure 61

BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number

Indonesia Loan 2074 (OCR) and 2075 (ADF) Second Decentralized Health Services Project Republic of Indonesia Ministry of Health Loan 2074 $46,372,873 Loan 2075 SDR24,400,954 ($37,950,347) PCR: INO-1491

B. Loan Data 1. Appraisal

– Date Started – Date Completed

2. Loan Negotiations

– Date Started – Date Completed

3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness

– In Loan Agreement – Actual – Number of Extensions

6. Closing Date

– In Loan Agreement – Actual – Number of Extensions

7. Terms of Loan Loan 2074

– Interest Rate – Maturity (number of years) – Grace Period (number of years)

Loan 2075

– Interest Rate – Maturity (number of years) – Grace Period (number of years)

8. Terms of Relending (if any)

– Interest Rate – Maturity (number of years) – Grace Period (number of years) – Second-Step Borrower

21–31 October 2003 21 October 2003 31 October 2003 19 November 2003 20 November 2003 19 December 2003 16 December 2004 15 March 2005 29 March 2005 1 31 December 2010 31 December 2013 2 LIBOR + 0.6% 25 5 1.0% per annum (grace period); 1.5% per annum thereafter 32 8

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9. Disbursements

a. Dates

Initial Disbursement 19 October 2005

27 September 2005

Final Disbursement 8 August 2014

Loan 2074 8 August 2014

Loan 2075

Time Interval 108.5 months

108.5 months

Effective Date

29 March 2005 Original Closing Date

31 December 2010 Time Interval

70 months Revised Closing Date

31 December 2013 Time Interval 106 months

b. Amount

Loan 2074 ($)

Category Original

Allocation Last Revised

Allocation Amount

Canceled Net Amount

Available Amount

Disbursed Undisbursed

Balance

Civil Works 9,784,000 253,800 9,530,200 253,800 247,478 6,322

Civil Works (West Sumatra)

8,250,000 (8,250,000) 8,250,000 7,961,601 288,399

Equipment 2,676,000 2,327,184 348,816 2,327,184 2,314,692 12,492

Vehicles 16,885,000 1,126,000 15,759,000 1,126,000 1,119,610 6,390

Equipment (West Sumatra)

616,000 (616,000) 616,000 612,848 3,152

Materials and Consumables

505,000 8,600 496,400 8,600 3,695 4,905

Training, Fellowships and Seminars

10,406,000 9,401,680 1,004,320 9,401,680 9,328,064 73,616

Consulting Services and System Development

5,211,000 497,500 4,713,500 497,500 490,257 7,243

Consulting Services and System Development (West Sumatra)

520,000 (520,000) 520,000 492,918 27,082

Project Management 5,414,000 5,812,042 (398,042) 5,812,042 5,784,873 27,169

Project Management (West Sumatra)

80,585 (80,585) 80,585 80,829 (244)

Project Management (Extension)

142,958 (142,958) 142,958 137,818 5,140

Project Management (West Sumatra - Extension)

50,000 (50,000) 50,000 49,832 168

Front End 324,000 324,000 0 324,000 324,000 0

Interest and Commitment Charge

9,225,000 4,700,000 4,525,000 4,700,000 3,627,580 1,072,420

Unallocated 4,370,000 759,278 3,610,723 759,278 0 759,278

Community Health Program

13,800,000 (13,800,000) 13,800,000 13,796,778 3,222

Total 64,800,000 48,669,627 16,130,374 48,669,627 46,372,873 2,296,754

Note: Total undisbursed amount of $2,296,753.05 was cancelled on the financial closing date of 8 August 2014.

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Loan 2075 ($)

Loan 2075 Category

Original Allocation

Last Revised Allocation

Amount Canceled

Net Amount Available

Amount Disbursed

Undisbursed Balance

Civil Works 5,314,702 464,048 4,850,653 464,048 456,546 7,502

Equipment 9,172,216 6,267,155 2,905,060 6,267,155 6,322,589 (55,434)

Vehicles 1,452,868 1,348,539 104,329 1,348,539 1,363,681 (15,142)

Equipment (West Sumatra)

1,140,555 (1,140,555) 1,140,555 1,167,620 (27,065)

Materials and Consumables

275,022 143,165 131,857 143,165 136,928 6,237

Training/ Fellowship and Seminars

11,729,494 8,838,669 2,890,825 8,838,669 8,845,171 (6,502)

Training/ Fellowship and Seminars (West Sumatra)

165,130 (165,130) 165,130 165,273 (143)

Consulting Services and System Development

3,573,853 2,879,877 693,976 2,879,877 2,911,283 (31,405)

Consulting Services and System Development (West Sumatra)

249,650 (249,650) 249,650 247,057 2,593

Interest Charge 1,179,285 691,616 487,669 691,616 691,616 0

Unallocated 2,502,561 76,454 2,426,107 76,454 0 76,454

Community Health Program

15,753,692 (15,753,692) 15,753,692 15,642,583 111,109

Total 35,200,000 38,018,551 (2,818,551) 38,018,550 37,950,347 68,204 Note: Total undisbursed amount of $68,204 was cancelled on the financial closing date of 8 August 2014. 10. Local Costs (Financed)

- Amount ($) 60,592,192 - Percent of Local Costs 77% - Percent of Total Cost 59% C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 73.200 23.731 Local Currency Cost 69.800 79.198 Total 143.000 102.929

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2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Implementation Costs Borrower Financed 43.000 18.606 ADB Financed 89.596 79.680 Other External Financing 0.000 0.000 Total 132.596 98.286

IDC Costs Borrower Financed 0.000 0.000 ADB Financed 10.404 4.643 Other External Financing 0.00 0.00 Total 10.404 4.643

ADB = Asian Development Bank, IDC = interest during construction.

3. Cost Breakdown by Project Component ($ million)

Component Appraisal Estimate Actual

Strengthened regional capacity to ensure the provision of health and family planning and welfare services (Combined Strengthening Maternal and Child Health and Revitalization of Family Planning)

90.000 29.763

More equitable, higher quality, and more sustainable local health services (Improving District Capacity in Managing Decentralization)

8.000 15.968

Strengthened capacity of national government to support decentralized health services (Strengthening Government’s Role to Support Decentralization)

22.000 6.751

New Model of Desa Siaga Development 33.590 Rehabilitation and Reconstruction of West Sumatra 12.214 Contingency 12.600 Interest Charges 10.400 4.643 Total 143.000 102.929

4. Project Schedule

Item Appraisal Estimate Actual

Date of Contract with Consultants Q3 2004 Q1 2005 Civil Works Contract Date of Award Q3 2004 Q3 2005 Completion of Work Q4 2009 Q4 2013 Equipment and Supplies First Procurement Q1 2005 Q1 2005 Last Procurement Q1 2005 Q3 2012 Completion of Equipment Installation Q4 2008 Q2 2013 Start of Operations Completion of Tests and Commissioning Beginning of Start-Up Other Milestones Q = quarter.

5. Project Performance Report Ratings

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 19 December 2003 to 31 May 2004 Satisfactory Satisfactory From 1 June 2004 to 28 February 2005 Satisfactory Unsatisfactory From 1 March 2005 to 31 December 2011 Satisfactory Satisfactory

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Implementation Period

Ratings

Development Objectives

Implementation Progress

From 1 January 2012 to 31 December 2013 On Track On Track

D. Data on Asian Development Bank Missions Name of Mission

Date

No. of Persons

No. of Person-

Days

Specialization of Members

a

Fact finding/Preappraisal 7–18 Jul 2003 2 20 a, f Fact finding 2 12–15 Aug 2003 2 8 a, f Fact finding 3 23 Sep–3 Oct 2003 3 27 a, f, g Fact finding 4 21–31 Oct 2003 2 a, f Loan negotiations 19–20 Nov 2003 4 Inception 4–15 Oct 2004 3 25 a, d, e Special review mission 29 Nov–9 Dec 2004 1 3 a Inception 2 6–16 Jun 2005 3 22 a, d, e Review mission 1 21 Nov–9 Dec 2005 2 22 a, d Review mission 2 12–22 Jun 2006 1 7 a Review mission 3 27 Nov–11 Dec 2006 1 14 a Review mission 4 28 Jan–8 Feb 2007 3 21 a, d Midterm review 30 Oct–15 Nov 2007 4 56 a, c, d, e Review mission 5 17–27 Jun 2008 2 14 a, g Review mission 6 25 Mar–1 Apr 2009 3 12 b, c, e Special review 2 3–11 Sep 2009 3 21 b, d, e Review mission 7 10–19 Feb 2010 3 12 a, b, e Special review 3 17–21 May 2010 3 15 a, b, e Review mission 8 1 –10 Dec 2010 10 Review mission 9 30 May–2 Jun 2011 1 3 a Review mission 10 30 Nov–7 Dec 2011 1 8 a Review mission 11 4–12 Jun 2012 2 16 a, d Review mission 12 22–27 Nov 2012 3 15 a, d, e Review mission 13 1–5 Jul 2013 1 5 a Special review 4 5–11 Feb 2014 1 7 b Project completion review 21 Apr–2 May 2014 2 20 b, e a a = health specialist/health economist, b = social sector specialist, c = project implementation specialist, d =

national officer (economics, project implementation, finance, procurement), e = project analyst, f = young professional, g = consultant, h = counsel.

Source: Asian Development Bank.

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I. PROJECT DESCRIPTION 1. The Government of Indonesia (the government) is committed to achieving the Millennium Development Goals (MDGs) by 2015. While Indonesia has made considerable progress in improving the health status of women and children, progress at the national level is not replicated in all regions and provincial disparities exist—the under-5 mortality rate in 2007 varied from 96 per 1,000 live births in West Sumatra to 24 in Yogyakarta.1 In 2002, there was also considerable concern that progress with regard to the MDGs related to maternal and child health would slow or even reverse as a result of the government’s ongoing decentralization reforms. Since the 2001 decentralization reforms, the main responsibility for managing the health system has been delegated to district governments. In 2003, the government requested the Asian Development Bank (ADB) to finance the Second Decentralized Health Services Project 2 to help improve the health and nutritional status of vulnerable segments of the population, particularly women and children, in eight provinces.3 The outcome was improved health services in nine provinces and 90 districts and cities.

II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation

2. The project was highly relevant at appraisal. It was designed at a time when Indonesia had just experienced a major restructuring of the health system involving decentralization, which commenced in 1999 and which shifted responsibility for most health and family planning services to the district level.4 Although it posed obvious challenges, decentralization was viewed as offering new opportunities to strengthen provincial health and family planning services. Locally adapted reforms gave health care providers more appropriate incentives, skills, supervision, and discretionary authority to offer quality services. The low quality of public health services in Indonesia was viewed as affecting mainly the poor and vulnerable groups and was linked to a range of shortcomings in the health sector, many of which reflected chronic underfunding.5 The project supported key elements of the government’s National Medium Term Development Plan (2006–2010), with emphasis on areas such as health and poverty reduction, and the government’s long-term strategy for the health sector. 6 It was anticipated that successful decentralization would increase access to better quality care, particularly for vulnerable groups. The project (i) drew on the experience of the ADB-financed Decentralized Health Services Project,7 which aimed to help local governments identify their health care needs

1 Government of Indonesia. 2012. National Report. Child Poverty and Disparities in Indonesia. Challenges for

Inclusive Growth. Jakarta. 2 Asian Development Bank (ADB). 2003. Report and Recommendation of the President to the Board of Directors:

Proposed Loan for the Government of Indonesia for the Second Decentralized Health Services Project. Manila. 3

The eight provinces are South Sumatra, Bangka Belitung, Central Kalimantan, South Kalimantan, South Sulawesi, West Nusa Tenggara, East Nusa Tenggara, and Gorontalo. A ninth province, West Sulawesi, was subsequently added to the project.

4 In May 1999, the Indonesian Parliament adopted the Law on Regional Autonomy (Law No.22/29) and Law on

Fiscal Balance (Law No.25/99) requiring decentralization of government services and functions by 2001. 5 Consultations during project preparation confirmed that low quality and inadequate services that did not respond

to the needs of the local population were important reasons for the low utilization of public health services and that, for the poor, even minimal user fees were an obstacle to the use of health services.

6 Ministry of Health. 2010. Development Plan towards Healthy Indonesia. Jakarta: Government of Indonesia.

7 ADB. 2000. Report and Recommendation of the President to the Board of Directors: Proposed Loan for the

Government of Indonesia for the Decentralized Health Services Project. Manila.

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and improve the quality of services; and (ii) was viewed as a geographical expansion of the Decentralized Health Services Project. 3. At the time of project preparation in 2003, Indonesia had made strong progress in key health and family planning indicators. However, a number of challenges to achieving the health-related MDGs remained, especially in maternal health. Between 1994 and 2002, the maternal mortality rate fell from 390 per 100,000 live births to 307 per 100,000 live births, compared to the MDG goal of 102. Over the same period, the infant mortality rate fell from 57 per 1,000 live births to 35 deaths per 1,000 live births, while the under-5 mortality rate almost halved, from 81 deaths per 1,000 live births to 46 deaths per 1,000 live births. 8 With prompt and proper treatment, most of these deaths could have been prevented. 9 A consistent pattern of interprovincial disparities exists, with the majority of provinces lagging behind the national average. Income disparities are reflected in indicators of child and maternal mortality, which may be due to gaps in coverage of health services between the rich and the poor.10 The project was designed to support comprehensive reform and capacity building efforts of the Ministry of Health (MOH) and the National Family Planning Coordinating Board (BKKBN) in the context of the ongoing decentralization process. The project was expected to increase the quality and effectiveness of health and family planning services in the project provinces by improving the clinical and managerial skills of health personnel, upgrading health facilities and equipment, and involving civil society in planning and monitoring the delivery of health services. 4. The project design was consistent with ADB’s country strategy and program, 2003–2005 which emphasized reducing poverty and regional inequalities and promoting human development.11 ADB’s health sector policy emphasized access for all to basic health services that are effective, cost-efficient, and affordable.12 The policy highlighted (i) the health of the poor, women, and indigenous peoples; (ii) setting clear priorities to ensure the most efficient use of resources; (iii) mobilizing resources for the public health sector; (iv) building managerial capacity; (v) testing innovative approaches; (vi) introducing effective technologies; (vii) focusing on functions that involve public goods; and (viii) encouraging collaboration between public and private health care providers. 5. The project was designed to cover 90 districts and cities in eight provinces. The project incorporated lessons learned from the Decentralized Health Services Project (footnote 7) and other projects being implemented at that time.13 The lack of professional and managerial skills

8 United Nations. 2004. Indonesia: Progress Report on the Millennium Development Goals. Jakarta; United Nations.

2007. Report on the Achievement of Millennium Development Goals 2007. New York. The prevalence of

moderately underweight children under 5 years of age in the same period decreased from 35.5% to 27.3%, compared to the MDG goal of 18.7%. The percentage of births attended by skilled health personnel increased from 47.2% in 1994 to 68.4% in 2002 (compared to an MDG of 90.0%). The modern-method contraceptive prevalence rate was unchanged at 54.2% between 1994 and 2002, while the total fertility rate decreased moderately from 2.85% to 2.60% during the same period.

9 Most maternal deaths in Indonesia can be traced to delays in (i) making decisions to refer pregnant women to a

facility that can manage complications, (ii) finding transport to get there, and (iii) appropriate medical care and blood transfusion.

10 United Nations Children’s Fund (UNICEF). 2012. MDGs, Equity and Children: The way forward for Indonesia.

Issues Brief. Jakarta. 11

ADB. 2002. Country Strategy and Program: Indonesia, 2003–2005. Manila. 12

ADB. 1999. Policy for the Health Sector. Manila. 13

South Sumatra and Central and South Kalimantan participated in previous ADB-supported health sector projects. East and West Nusa Tenggara were included to help integrate inputs of various externally financed interventions into a more comprehensive and efficient local health system. Bangka Belitung and Gorontalo were two newly created provinces that required additional support to develop managerial capacity for health services.

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at the provincial level emerged as the biggest challenge, which implied the need for a technically strong project implementation unit to support district implementation units. Like its predecessor, the project was designed to support full ownership by district and city governments through detailed subproject proposals and substantial expected budget contributions.14 6. Changes in scope. The project design allowed flexibility to respond to major health policy changes. The project underwent two major adjustments. The first, upon completion of the midterm review in 2007, was to support the desa siaga (alert village) program which uses a community mobilization approach to promote safe pregnancies and deliveries at the village level. The government launched the program in 2006 and aimed to extend it to 80% of the country’s 75,000 villages by 2015 through training of village midwives, investments in health services, and improved access to emergency obstetric care.15 The second change was in the aftermath of the 2009 earthquake in West Sumatra, when the government requested ADB to utilize savings of loan proceeds of $15.6 million for the reconstruction and rehabilitation of 102 health facilities and the provision of medical and nonmedical equipment for puskesmas (community health centers) and poskesdes (village health posts). B. Project Outputs 7. The project was implemented in two phases because the midterm review in October 2007 led to a restructure of the project. During the first phase (2004–2007), the project had three outputs: (i) strengthened regional capacity to ensure the provision of health and family planning; (ii) more equitable, higher quality, and more sustainable local health services; and (iii) strengthened capacity to support decentralized health services. Activities during the first phase included (i) capacity building in clinical skills such as training and fellowships for doctors (including specialists for master’s and doctorate degrees), and training and fellowships for midwives and nurses; (ii) capacity building in managerial skills in order to better identify local health and family planning needs and poor and other vulnerable groups, and address barriers to access by the poor; and (iii) investments in health care infrastructure through the rehabilitation of health centers and provincial training facilities, and the procurement of medical equipment and vehicles including ambulances.16 During the second phase (2008–2013), upon completion of the midterm review, the project had five outputs (paras. 8–13) and was to develop professional capacity, strengthen regional capacity for referral hospitals and training facilities, and advocate health sector reforms at the provincial level. Overall, the project performed well and achieved most of its targets. 17 Additional benefits should be noted, such as the reconstruction of health facilities in the aftermath of the 2009 earthquake in West Sumatra. At its conclusion, the overall physical completion was 98.7%. 8. Output 1: Strengthened maternal and child health services. This output provided capacity building focusing on neonatal care, particularly in the management of low birth weight

14

Regional governments were required to prepare annual plans in order to access project funding. These were to be reviewed by the central government to ensure compliance with obligatory functions and minimum service standards.

15 About $29.5 million was reallocated, out of which about $21.2 million was utilized for block grants (implemented

during 2009–2011) including salaries of facilitators, small-scale equipment for poskesdes (village health posts), and training for midwives. About 60% of the block grant funds were allocated for civil works (the construction of poskesdes) and the remainder for operational costs for desa siaga.

16 Most of the project’s first-phase outputs were completed during the project’s second phase and are therefore

reported together with those of the project’s second phase. 17

According to outputs and performance indicators agreed upon during the midterm review.

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and neonatal asphyxia in districts with low indicators for maternal and child health. Training at the district level involved 6,224 midwives and 243 health center teams. The project financed the construction and renovation of eight health centers and nine subhealth centers, eight midwife stations, and 13 village health posts. At the provincial level, hospital teams were trained in emergency obstetric care and provided with equipment. 9. Output 2: Enhanced community participation for improved maternal and child health (desa siaga block grants). Desa siaga aims to ensure that each childbirth is attended by a skilled midwife at an adequate health facility through increasing community awareness and preparedness. The four pillars of desa siaga are (i) development of notification systems in which all pregnant women are identified and recorded, (ii) establishment of voluntary blood donor systems in villages, (iii) community transportation and communications system identifying volunteers to assist in transporting pregnant women to health centers, and (iv) a financial support system in which funds are collected to encourage facility-based deliveries.18 The project recruited and trained desa siaga facilitators in 90 districts and cities to help communities prepare village action plans to address maternal and child health issues. 10. The facilitators, ideally with knowledge on maternal and child health, were recruited from the villages. The project prepared training manuals for facilitators, including guidelines for the preparation of block grants to finance the activities to improve maternal and child health, as well as environmental health, including a clean environment. Under this output, 732 block grants totaling $29.4 million were allocated as follows: (i) $17.7 million (60%) to construct 449 poskesdes; (ii) $4.4 million (15%) to support the activities of village health forums, including health education and feeding sessions targeted at mothers and underweight children; (iii) $4.4 million (15%) for capacity building of village midwives in basic emergency obstetric and neonatal care, including timely referral procedures; and (iv) $2.9 million (10%) to finance operating costs of poskesdes, as part of the desa siaga operational models (MODS) in villages to improve access to maternal and child health services.19 11. Output 3: Revitalized family planning services. This output strengthened the family planning program through improved capacity for counseling, access to contraceptives, and targeting of the family planning program to poor and vulnerable groups. It supported the registration of poskesdes as family planning clinics serving the village community wherein villages became eligible to receive contraceptives from the family planning program. Activities included

(i) training 38,650 family planning field workers and family planning village institution staff and cadres;

(ii) distributing 4,783 information, education, and communication materials to family planning field workers;

(iii) establishing 3,022 information and counseling centers for adolescent reproductive health;

(iv) training 10,348 program executors on family planning; (v) establishing 90 family planning district offices, including centers for information

and youth counseling for reproductive health; (vi) establishing 3,970 private family planning clinics; (vii) providing 2,197,781 contraceptive services to the poor and urban slum dwellers;

18

German International Cooperation (GIZ). 2011. Making childbirth a village affair. Eschborn. 19

Desa siaga operational models were established in accordance with Ministry of Health Decree 564/Menkes/SK/VIII/2006, which was intended to accelerate the achievement of the health-related MDGs.

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(viii) certifying 1,123 village midwives as family planning service providers; and (ix) providing family planning advocacy to stakeholders at the provincial and district

levels. 12. Output 4: Improved district capacity in managing decentralization. This output strengthened human resource development at the district level through health planning and budgeting. Activities included

(i) training 300 district and city staff from 81 districts on the preparation of district health accounts;

(ii) training 53 district staff in integrated health planning and budgeting; (iii) providing 776 fellowships to district health office and provincial health office staff

to obtain bachelor’s, master’s, or doctoral degrees; (iv) providing 935 fellowships to midwives to obtain diplomas 3 or 4; (v) training 100 district health office staff in reporting, monitoring, and evaluation; (vi) developing 90 district exit strategies to support district planning for financial

sustainability; (vii) using national socioeconomic survey data for planning, monitoring and

evaluation, and sex-disaggregated analysis at the district and provincial levels; and

(viii) developing memoranda of understanding between local district health offices and local civil society organizations.

13. Output 5: Strengthened central government capacity to support decentralized health services. This output supported interventions to build government capacity to operate a decentralized health system. The following activities were supported:

(i) preparing and disseminating revised operational guidelines for the desa siaga program;

(ii) developing user-friendly instruments and guidelines for community-based surveillance;

(iii) preparing and disseminating national survey data on local areas; (iv) identifying and disseminating best practices in serving the poor and vulnerable; (v) formulating recommendations on best practices for priority programs; (vi) completing nine operations research studies on desa siaga and other priority

programs; and (vii) developing and disseminating guidelines for advocacy and health promotion.

14. Rehabilitation of West Sumatra. On 30 September 2009, a powerful earthquake struck West Sumatra province, affecting 13 of 19 districts and killing more than 1,000 people. Many government buildings collapsed, including hospitals and health centers. The reconstruction and rehabilitation of health facilities and provincial and district health offices covered 102 units (reconstruction of 64 units and rehabilitation of 38 units) and the provision of medical and nonmedical equipment for the reconstructed health facilities. C. Project Costs 15. At appraisal, the estimated total project cost including taxes was $143.0 million equivalent, comprising $73.2 million in foreign exchange cost and $69.8 million equivalent in local currency cost. The project was financed by two ADB loans: (i) $64.8 million from ADB’s ordinary capital resources under ADB’s London interbank offered rate-based lending facility, and (ii) $35.2 million from ADB’s Special Funds resources. The two ADB loans were to cover all of the project’s foreign exchange costs (51.2% of the total project cost) and 38.4% of the project’s

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local currency cost (18.8% of the total project cost). The government was expected to provide the remaining $43.0 million equivalent (61.6% of local currency cost and 30.0% of the total project cost). The government was expected to provide loan proceeds as grants to regional governments participating in the project, taking into account the fact that the project was expected to directly benefit the poor and would therefore focus on non-revenue-generating essential health services. Participating regional governments were expected to contribute to the project costs in accordance with their fiscal capacity. However, such cofinancing did not occur. 16. At completion, the actual total project cost was $102.9 million (28.0% lower than estimated at appraisal), comprising $23.7 million of foreign exchange cost and $79.2 million of local costs. The total loan amount was $84.3 million (15.7% lower than at appraisal) and the government contribution was $18.6 million (56.7% lower than at appraisal). As a result of exchange rate fluctuations of the special drawing right against the dollar, the total loan value increased to $102.8 million before taking into account loan cancellations. The government requested two partial cancellations—of $13.1 million in August 2008 and $3.0 million in April 2012—bringing the available loan total amount to $86.7 million, of which $84.3 million was disbursed. 17. The project was substantially restructured, with two major reallocations. The first was following the midterm review mission in October 2007 to support the desa siaga program. At that time, $14.2 million was reallocated to the desa siaga program, with accompanying reductions in the allocation for civil works ($11.2 million or 74.5%), equipment and vehicles ($15.1 million or 50.2%), and materials and consumables ($0.7 million or 97.1%). The second, in September 2010, followed the powerful earthquake in West Sumatra. Total damage in the health sector was estimated at $83.2 million and the reconstruction needs were estimated at about $77.6 million. The government requested ADB to extend the project for 2 years and utilize project funds to support the rehabilitation of provincial health infrastructure in the province. Based on the midterm review figures, this second reallocation resulted in revised budgets for civil works (+247.6%), materials and consumables (+547.6%), consulting services and systems development (–57.8%), training and seminars (–34.9%), and community health program (+102.7%). In comparing the appraisal and actual costs, there was a significant decrease in total expenditures relating to materials and consumables (–82.0%), equipment and vehicles (–57.3%), consulting services and system development (–52.9%), and civil works (–42.6%). Expenditures for the desa siaga program (mainly to finance block grants) were $29.4 million, or 34.9% of the actual loan. These changes in project costs and financing were mainly due to the restructuring of the project. Projected and actual project costs are in Appendix 2.

D. Disbursements

18. During the first 3 years of the project, disbursement was slow ($4.3 million, or 4.3% of the loan amount). It was only after the midterm review in 2007 that disbursements started to pick up and then increased sharply in 2008. At completion, the project had a total disbursement of $84.3 million, approximately 84.3% of the original loan amount. This included output 3 (the desa siaga component) at $29.4 million; training, fellowships, and seminars at $18.3 million (21.7%); equipment and vehicles at $12.9 million (15.3%); civil works at $8.6 million (10.3%); project management at $6.0 million (7.2%); consulting services at $4.1 million (4.9%); and fees and/or interest charges at $4.6 million (5.5%). The loan account was financially closed on 8 August 2014, with a cancellation of $2.4 million. The imprest accounts, with initial advances totaling $2.5 million, were established and managed in accordance with ADB guidelines. Actual disbursements started in September 2005 and were completed in August 2014. Annual disbursements are in Appendix 3.

7

E. Project Schedule

19. Project implementation commenced from the date of effectiveness—29 March 2005—and continued until 31 December 2013. The government requested two extensions to complete the civil works in West Sumatra. The actual implementation period was 8.8 years; however, project activities under outputs 1–5 were completed within the original project period. Overall implementation progress was rated satisfactory. The actual project implementation schedule against the original is in Appendix 4. F. Implementation Arrangements

20. The MOH was the executing agency for the project. A central project implementation unit in the MOH and a subunit in the BKKBN coordinated project implementation at the national level. A similar management structure was established at the two regional levels of government. Provincial project implementation units supported and coordinated district and city implementation units. Health committees with a wide representation of government services, professional associations, and civil society were established to advise the regional project directors and to ensure participation and transparency of decision making. In the districts and cities, regular government staff worked full time on project implementation. Project funds were to be used to contract additional project management staff where needed. As local capacity increased with project support, regional governments progressively replaced contracted staff with civil servants. As the BKKBN was decentralized in 2004, family planning was merged with other local government offices such as health and social welfare, which implied that at least 50% of BKKBN staff was assigned to other services. The 732 block grants made to villages under the desa siaga program component were administered by 732 village forums. During project implementation, the number of project provinces increased from eight to 10, including West Sumatra to support the earthquake rehabilitation. G. Conditions and Covenants 21. Covenants were largely complied with, except for compliance with the availability of counterpart funds every year, which were delayed during the project’s first phase. The submission of quarterly reports and audited project accounts was delayed. The auditor issued an unqualified opinion for all audit reports. No major governance issues were identified. The project completion report was submitted in a timely manner. Appendix 5 summarizes compliance with covenants. 22. The implementation of the project’s gender strategy was satisfactory. The expansion of poskesdes and improved referral helped women’s access to health care services, especially in remote areas. Desa siaga aimed to provide adequate delivery and post-delivery rooms, ambulances, and medical equipment; however, in poor areas the provision of continuous water and electricity in health facilities remains a challenge. The proportion of deliveries attended by skilled medical staff increased slowly, from 56.2% in 2003 to 74.9% in 2012, against the final year target of 80%. Project interventions benefited women through increased access to training opportunities for female medical staff and involved women in the delivery of health promotion activities, including vaccinations and family planning through the posyandu (integrated health service post) at the community level. The project supported fellowships for midwives and doctors. A total of 2,147 staff (1,160 midwives and 987 doctors and maternal and child health workers) against a target of 2,000 staff benefited from these scholarships. A total of 6,224 district midwives were trained on maternal and child health and obstetric care, exceeding the target of 5,000. Based on project data, about 80% of staff in the poskesdes were female and

8

about 65% in the puskesmas.20 At the community level, more women prefer delivery in the poskesdes and puskesmas and benefit from antenatal services. Appendix 6 summarizes key achievements of the gender strategy. H. Consultant Recruitment and Procurement

23. The project envisaged 130 person-months of international consultants and 388 person-months of national consultants for support in project management, health system development, health planning and financing, human resources development, public health, health information and health promotion, civil works, and health technology. The consultants were engaged by the central project implementation units of the MOH and BKKBN according to needs at the national level and on request by the regions. The initial budget for consultants was $8.7 million. Actual expenditure was $4.1 million, 52.9% lower than the costs at appraisal. The use of consultants was fundamentally different to the original requirements planned at appraisal. After the midterm review, it was expected that only one international consultant (2 person-months) and four national consultants (a total of 80 person-months) would be used for civil works and architecture, human resource development, financial management, and information and communications technology and health information. Instead, the consultant budget was used mainly to hire project management staff for the project implementation units (359 staff for a total of 12,556 person-months) and three national consultants in the areas of system development and financing (7 person-months), community empowerment (7 person-months), and monitoring and evaluation (2 person-months). Most of the consultants who were used for project management worked at the district level (76% of consultants and 74% of person-months), while 18% of consultants worked at the province level (accounting for 17% of person-months) and 7% of consultants worked at the central level (accounting for 9% of person-months). Appendix 7 provides the details on the use of national consultants for project management. 24. The project experienced major delays in the procurement of goods. The main problem was delays in initiating and completing procurement actions. For example, district civil works for new construction were expected at appraisal to begin in January 2004 and to be completed at the end of 2005. In fact, this did not begin until January 2006 and was not completed until the end of 2011. Originally, the project anticipated the procurement of 162 packages of civil works, including 62 packages of new construction and 100 packages of building renovations. However, fewer facilities were built or renovated than expected, and the actual procurement involved only 51 packages of civil works, made up of 13 packages of new construction and 38 packages of building renovations. At appraisal, the procurement of medical equipment for districts was expected to begin in January 2005 and to be completed by the end of 2008. In fact, procurement did not begin until January 2006 and was not completed until the end of 2011. Procurement of civil works and goods is described in Appendix 8. I. Performance of Consultants, Contractors, and Suppliers 25. In general, the performance of consultants, contractors, and suppliers was satisfactory. The executing agency noted that the civil works contractors provided moderate-quality construction of health facilities. During the project’s first phase, most construction was for new and renovated health centers and for contraceptive warehouses. In the second phase, most construction was for new and renovated poskesdes and posyandu with community participation,

20

Ministry of Health. 2011. Second Decentralized Health Services Project. Final Report. Benefit and Evaluation. Jakarta.

9

and was of better quality. According to the executing agency project completion report, suppliers generally provided good-quality medical, information and communication technology, and office equipment. However, in a few locations the suppliers did not deliver complete sets of equipment or failed to provide spare parts. Most of the furniture was locally supplied and was of good quality. Anecdotal evidence suggests that, in both East Nusa Tenggara and West Sumatra, the overall quality of health centers was moderate. Buildings tended to deteriorate easily, which may be partly related to the lower quality of materials used and inadequate provision of operational funding due to limited local government budgets.21 J. Performance of the Borrower and the Executing Agency 26. The performance of the borrower was satisfactory. During the first phase of the project (2004–2007) counterpart funds were not released in a timely manner, which not only delayed project implementation but also contributed to the need to redesign the project at the time of the midterm review. During the project’s second phase (2007–2013), however, counterpart funds were received in a timely manner. However, key administrative personnel in the executing agency changed frequently, and project coordination in respect of output 3 was hampered because of limited interaction between the MOH and BKKBN. K. Performance of the Asian Development Bank 27. ADB’s performance was satisfactory. ADB paid close attention to the implementation of the project and provided technical support. During the midterm review, ADB worked closely with the MOH in aligning the project to government priorities to help achieve the MDGs related to maternal and child, adjust the project scope, and reallocate resources. ADB was proactive and demonstrated flexibility in responding to the disaster in West Sumatra caused by the 2009 earthquake. In the course of project implementation, 22 missions, including both review and special project administration missions, were fielded and site visits were undertaken to gain in-depth information about project implementation in a large number of districts. ADB approved two extensions. However, there was high turnover in project officers, and five different staff implemented the project.

III. EVALUATION OF PERFORMANCE A. Relevance 28. The project is rated relevant. During the three decades preceding the design of the project, Indonesia had given high priority to improving physical access of the rural population to primary health care services. To address persistently high levels of maternal mortality and to improve access to clinical methods of contraception, trained nurses and midwives were placed in most rural villages. 22 From January 2004, regional governments also became responsible for ensuring access to family planning and reproductive health programs, taking over this function from the successful BKKBN family planning program, which had operated according to a highly centralized model. The project supported the local-government-led family planning program and helped to build the required capacity and commitment at the district level to support family

21

ADB review missions. July and November 2013 and February 2014. 22

The average distance to a health facility in 2002 was 5.0 kilometers in rural areas and 1.5 kilometers in urban areas.

10

planning.23 One of the BKKBN’s key policies was to provide free or subsidized contraceptives to the poor. 29. The government was in the process of decentralizing both the health system and the family planning program, and it was unclear how this would affect the provision of basic health services and, ultimately, the achievement of the health-related MDGs. Given the low rate of utilization of public health services, there was also a need to develop effective models of public–private partnership in the delivery of health services, which the project did not address during implementation. The redesign of the project at the time of the midterm review, although aiming to accelerate key MDG targets on maternal and child health, resulted in a centralized rather than decentralized project and, hence, a loss of ability to influence the decentralization policies adopted by the districts. Instead, the project focused on strengthening the provision of village maternal and child health services as part of the desa siaga program. This focus may have become less relevant because of rapid socioeconomic changes in the rural areas at the time and the introduction of jamkesmas (community health insurance schemes) and jampersal (birth delivery insurance scheme).24 Rural roads had improved significantly and so access to health facilities improved, which may have implied that village health services could be expected to be less well utilized as rural people began to make greater use of hospitals and urban private health services. B. Effectiveness in Achieving Outcome 30. The project is considered less effective. The assessment of the outcome is based on the Indonesia Demographic and Health Surveys 2002–2003 and 2012,25 which are considered to provide highly reliable estimates.26 The project was designed to improve health services in the project area, which implied improved utilization, especially by the poor, of key maternal and child health services needed to achieve the government’s health-related MDGs.27 As in the Decentralized Health Services Project (footnote 7), the project continued to support the government’s expansion of the number of health facilities in remote areas. The main hindrance to boosting immunization coverage remains access to, and limited health facilities in, remote areas where road access remains limited, such as in parts of eastern Indonesia. One goal of the project was to increase measles immunization coverage from 71.8% (2003) to 85.0% (2012). By 2012, the measles vaccination rate was lower than the target of 85.0% and lower still in the project provinces (77.9%).28 The slow increase in measles immunization rates can be explained by the fact that, between 2006 and 2010, the government budget allocation for maternal and child health decreased significantly.29 Further, during the second phase of the project, significant

23

Unites States Agency for International Development (USAID), the main source of contraceptives for Indonesia’s family planning program, discontinued provision of contraceptives.

24 Jampersal has provided free delivery, prenatal, and postnatal care to all pregnant women, postpartum women (up

to 42 days postpartum), and newborn babies (0–28 days) who are not covered by any other maternal health program. Consultation and delivery care are provided in health centers or third-class wards in hospitals to all women who show their ID cards.

25 Statistics Indonesia et. al. 2003. Indonesia Demographic and Health Survey 2002–2003. Maryland; Statistics

Indonesia et. al. 2012. Indonesia Demographic and Health Survey 2012. Maryland. 26

The same data sets were used in ADB’s performance evaluation report of the Decentralized Health Services Project in December 2013.

27 The utilization of health facilities is largely determined by their physical access—the higher the per capita

expenditure levels the smaller the distance to reach health facilities. 28

Ministry of Health. 2013. Basic Health Research (Riskesdas). Jakarta. 29

Between 2006 and 2010, the Ministries of Health budget allocation for maternal health decreased from 2.23% to 0.56% and the allocation for child health decreased from 1.54% to 0.56%.

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resources were transferred to output 2 (block grants for desa siaga), which did not specifically address immunization. 31. The project included a target that, by the end of 2012, the contraceptive prevalence rate would increase by 10% from the benchmark in every project province. This indicator was used for measuring the success of family planning programs. Data suggest that the project had a significant positive effect on the use of modern contraceptives, which increased from 49.6% to 55.2% between 2003 and 2012 in the project provinces. This compared to a smaller increase from 58% to 59.4% in nonproject provinces. The second indicator for measuring the impact of family planning involved unmet contraception needs among married women aged 15–49 years. It showed no significant effect. In fact, the unmet need for contraception actually increased, from 10.5% to 12.5%, between 2003 and 2012, against a target of 8%. 32. Evidence suggests that the project’s effect on the percentage of obstetric deliveries attended by skilled providers was limited. In the project provinces, rates increased significantly, from 56.5% to 74.9%, between 2003 and 2012, although the target of 80.0% was not met. This can be attributed to the relatively short implementation period (3 years) of the desa siaga approach during the second phase of the project.30 It should be noted that regional variations in births attended by skilled medical staff are substantial. In 2013, in East Nusa Tenggara 66.8% of deliveries were attended by medical staff in comparison to 97.5% in North Sumatra. 33. Data from the project’s internal evaluation report in 2011, which assessed the performance of the desa siaga, showed different and more positive results.31 Key achievements included improved health system performance, including physical access; a 30.0% increase in utilization of maternal and child health care (i.e., antenatal care), and a 44.0% increase in timely referral.32 There is little difference reported in the percentage of births in poskesdes, with 13.1% in project villages compared to 12.1% in nonproject villages. The percentage of births in hospitals was higher in project villages (28.0%) than in nonproject villages (17.0%) and the percentage of births at home was lower in project villages (33.7%) than nonproject villages (49.1%). The report rated the desa siaga approach sustainable, with 68% of desa siaga villages expected to obtain the funding needed to sustain their activities through local government resources such as the village allocation fund and national government budget. Data on health outcomes are summarized in Appendix 9. C. Efficiency in Achieving Outcome and Outputs 34. The project is rated less efficient. The project benefits were expected to be realized by exploiting the opportunities created by decentralization to improve the quality of health services by giving providers the needed incentives, skills, supervision, material support, and discretionary authority. The original project design followed the provisions of government

30

Ministry of Health. 2013. Basic Health Research (Riskesdas). Jakarta; UNICEF reports that, from 2005 to 2010, the national average rate of births attended by a professional birth attendant was 82.2%. However, in 20 out of 33 provinces, the rates were below the national average.

31 Bahana Mitra Buana. 2011. Evaluation of Desa Siaga Operational Model. Final Report for the Second

Decentralized Health Services Project. Manila. 32

However, these sums do not include the additional support that desa siaga operational model villages received from health centers, including (according to the report) about Rp50 million per village in equipment and medicines every 2 years and 24-hour coverage by a midwife.

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regulation KMK 35/2003,33 which established arrangements for financial sharing under which the amount of project grants to districts and cities would be linked to their fiscal capacity, with the local governments providing counterpart funds to finance the balance of project costs. However, KMK 35/2003 did not provide clear implementation guidance, and local governments were not prepared to manage foreign loans or to provide sufficient counterpart funds. Although government regulations were modified from 2005 to 2007 to correct this problem, only 10% of project funds were disbursed after 48% of the elapsed project period, prior to the midterm review. 35. After the midterm review, substantial changes were made to the project’s implementation arrangements. During the second phase, the project (i) became centrally funded and focused mainly on MOH priorities at the central level, (ii) supported long-standing commitments to the control of communicable diseases and maternal and child health, and (iii) focused on village maternal and child health services. Other factors that undermined project efficiency included (i) substantial delays in the release of counterpart funds during the first 3 years, (ii) high staff turnover at the district level, and (iii) gaps in government policy for staff incentives at the peripheral level. On the other hand, the use of project funds to support the rebuilding of health infrastructure in West Sumatra following the 2009 earthquake enhanced the project’s efficiency. D. Preliminary Assessment of Sustainability 36. The project is rated likely sustainable. A review of recent trends in public health expenditure found that, although the level of public health expenditure in Indonesia is still low compared to neighboring countries, expenditures have increased in recent years, especially at the district level.34 However, districts have little effective control over their budgets, controlling mainly nonpersonnel costs, and are challenged by increased inequality both in terms of the share of total district government expenditure allocated to health, and in levels of public health expenditure per capita. It is projected that the project’s annual recurrent costs will absorb 12.6% of nonpersonnel recurrent expenditure in 2014 in the original project area and 11.9% in West Sumatra, decreasing to 7.1% in the original project area and 6.6% West Sumatra in 2024. The projected fiscal burden is likely manageable in most districts. However, growing inequality among districts in levels of public health expenditure may result in some districts facing a higher fiscal burden. 37. It is necessary to reassess the efficiency of the original project investments because (i) the project as implemented was significantly different from the project at appraisal, as it included a community-based approach to improve maternal child health; (ii) the project was subject to substantial delays during implementation; and (iii) an additional geographical area was added to support the reconstruction of the health infrastructure in West Sumatra in the aftermath of the 2009 earthquake. As a result of these and other less important changes, the net present value of the original subproject in originally eight (then nine) provinces is estimated to be $71.4 million, with an estimated economic internal rate of return (EIRR) of 31% (compared to an estimated net present value [ENPV] of $111.7 million and an EIRR of 37% at design). In the case of the West Sumatra subproject, a larger project impact equal to 2% of the disability-adjusted life year gap was assumed, based on the idea that project investments were used to restore the operation of

33

Ministerial decree KMK35/2003 stipulates that onlending is allowed only for regional projects that generate revenue.

34 The preliminary assessment of the project’s sustainability involved, as in the assessment at design, a review of

recent trends in public health expenditure at all levels, and an assessment of the fiscal impact of project investments at the district level, where most investments were targeted.

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an existing public health system. Under these assumptions, the West Sumatra subproject has an ENPV of $16.9 million and an EIRR of 71.0%. The combined project has an ENPV of $88.3 million and an EIRR of 33.0%.The reevaluation of the economic and financial analysis is in Appendix 10. E. Impact 38. Community empowerment for improved maternal and child health, extensive human resource development for health staff (particularly at the district and health center level), and substantial health infrastructure development, including in West Sumatra, are the most tangible project contributions. Based on the Indonesia Demographic and Health Survey (IDHS) data (footnote 25), infant mortality decreased in the project areas between 2003 and 2012 from 50.3 per 1,000 live births to 39.7 per 1,000 live births (i.e., by an estimated 10.6 deaths per 1,000 live births). However, it decreased during the same period by an estimated 11.2 deaths per 1,000 live births in the nonproject provinces (excluding the Decentralized Health Services Project provinces, where it decreased by only 7.7 deaths per 1,000 live births). The estimated decrease in the under-5 mortality rate during this period was larger in the project provinces (i.e., 18.1 deaths per 1,000 live births versus 13.5 deaths per 1,000 live births in the nonproject provinces, and 14.6 deaths per 1,000 live births in the Decentralized Health Services Project provinces). However, this difference was not statistically significant in multivariate analysis. Although the absence of any project impact on infant mortality may be due to data limitations (i.e., the provincial mortality estimates are based on births during the preceding 10 years), it is consistent with the small increase observed in the measles vaccination rate in both the project provinces (2.4%) and Decentralized Health Services Project provinces (3.2%) compared with 11.7% in the nonproject provinces, and the insignificant differences between the project provinces and the nonproject provinces in the percentage of births attended by a skilled health provider or occurring in a health facility. There are no province-level estimates of the maternal mortality ratio.35 The project’s focus on the MODS subcomponent during its second phase may also be partly responsible for the absence of project impact. Analysis reported in Appendix 9 indicates that the desa siaga program component benefited those with higher incomes, whereas the training of midwives in the project’s first phase benefited poor people.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 39. On the basis of the preceding assessment, the project is assessed relevant, less effective, less efficient, and likely sustainable. The project overall is rated partly successful. The design was fully aligned with Indonesia’s development priorities. While the project was flexible and responsive to government requirements, both in terms of addressing a changing health policy environment and disaster response, it did not fully achieve key outcome indicators. Given the changes made in the midterm review, the project missed the opportunity to more comprehensively support government decentralization efforts, largely because the MOH remained cautious in decentralizing responsibilities, which was reflected in concerns about the capacity of districts to take over new responsibilities. The project contributed to raising awareness about child and maternal health, helped to improve access to maternal and child

35

The 2012 Indonesia Demographic and Health Survey (IDHS) estimates indicate that the national maternal mortality rate increased to 359 maternal deaths per 100,000 live births from 228 in the 2007 IDHS. However, even the 2012 national estimate has a very wide confidence interval (i.e., a 95% confidence interval of 239–478).

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health services in remote areas, and overall helped to increase obstetric deliveries attended by skilled providers, though significant regional disparities continue to exist. Evidence suggests that the project had a significant positive effect on the modern-contraceptive prevalence rate. Additional project benefits include reconstruction and equipping of health facilities in West Sumatra in the aftermath of the 2009 earthquake. B. Lessons 40. Project scope and coverage should be feasible. To increase impact, project resources should not be spread over a large geographic area. A large number of intended outputs most likely will slow down project implementation. Investment priorities based on health needs and poverty incidence may contribute to increased effectiveness. 41. Capacity development requires continuous investment. Human resource development is key to providing improved health services. A large number of health staff, including medical doctors and midwives, received scholarships to build capacity in obstetrics and neonatal care. However, local governments’ fiscal capacity to finance capacity development was limited or nonexistent. Significant investments, both in terms of capacity building and health infrastructure, will be required to meet the maternal mortality MDG target by 2015. C. Recommendations

1. Project Related 42. Reduce project scope to increase efficiencies. The project’s scope should be manageable given the rather limited implementation capacities at district and subdistrict level. 43. Proper evaluation of new approaches would help to justify further investments. The project would have benefited from an independent impact evaluation of the desa siaga program so as to allow for adjustments to interventions during implementation and to help the government assess the feasibility of scaling up the program nationally. 44. Evaluate the benefits of human resource development. While a large number of health professionals and auxiliary staff were trained under the project, the benefits from this investment are less clear given the lack of thorough evaluation. Determining future skills gaps and addressing deployment practices will require frequent skills audits to ensure workforce strategies are effectively implemented. 45. Improve maternal and child health through public–private partnerships. The original project design emphasized the need for more public–private partnerships in health care delivery. Given the major shift to private providers for obstetric deliveries in recent years, it is essential to include the private sector in national target programs addressing maternal and child health.

2. General 46. Create synergies. Greater synergy is required between health projects of this nature and government national poverty reduction and social protection programs. Strengthening inclusion of maternal and child health in the context of poverty reduction could more holistically address child and maternal mortality.

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47. Sound monitoring and evaluation systems can help to improve efficiencies. The project’s routine monitoring and evaluation systems were not adequate to measure incremental project benefits. Baseline surveys rarely include qualitative data and information comparing project and nonproject areas.

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Indicators with Baselines

1

Achievements Data Sources and Reporting Mechanisms

Assumptions and Risks

Impact Improved health status of the population, especially of poor and vulnerable groups

By 2010

Maternal mortality ratio reduced from 262 per 100,000 live births (2005) to 175 (2010)

Maternal mortality ratio reduced from 262 (2005) to 226 (2010)

Indonesia Health Profile (2005), Demographic and Health Survey (SDKI) 2012

Infant mortality rate reduced from 35 per 1,000 live births (2005) to 26 (2010)

Infant mortality rate reduced from 35 (2005) to 32 (2012)

SDKI 2012

Outcome By 2012 Assumptions

Improved health services in nine provinces and 90 districts and cities

Measles immunization coverage increased from 72.8% (2003) to 85%

Measles immunization coverage increased from 72.8% (2003) to 88.0% (2012)

Indonesia Demographic and Health Surveys (IDHS; 2002, 2003, 2012)

Local economic growth and sufficient revenues Health services are essential to improve health status of the population and make people able to participate in the development of the nation

Contraceptive prevalence rate increased by 10% from benchmark (2005)

Contraceptive prevalence rate increased from 55.7% (2005) to 60.8% (2012)

Births attended by skilled personnel increased by 50.0% from 53.4% (2005)

Births attended by skilled personnel increased from 53.4% (2005) to 74.3%% (2012)

Unmet need for contraception decreased from 9.1% (2005) to 8.0% (2010)

Unmet need increased from 9.1% (2005) to 12.5% (2012)

The number of children weighed within the last 3 months at posyandus (community health posts) increased by 30% from 60% (2007)

The number of children weighed at posyandus increased from 60.0% (2007) to 67.5% (2010)

Riskesdas 2010

The number of obstetric complications managed by health facilities increased by 20%

The number of obstetric complications managed by health facilities increased from

1 Revised performance indicators of the midterm review in 2008.

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3.0% (2005) to 57.1% (2011)

Outputs Assumptions

1. Strengthened maternal and child health services

Number of trained district midwives increased to at least 5,000 midwives

6,375 district midwives trained Project benefit monitoring and evaluation (BME) 2013

Local governments take advantage of decentralization to better address local health needs Decentralization remains national policy Fair cost and revenue sharing between government and regions

Provided training for all emergency obstetric care teams on maternal and child health services

Comprehensive emergency obstetric neonatal services (PONEK) teams in nine project provinces were trained on maternal and child health services

Increased the number of health centers with obstetric services to two per district (180 teams)

243 PONEK teams were trained

Provided standard equipment to health facilities

273 health centers PONEK equipped in the project area

At least 2,000 staff including midwives, doctors, and maternal and child health workers received continuous education fellowships

2,147 staff received scholarships

Assumption

2. Enhanced community participation in improving maternal and child health (block grant for desa siaga [alert village] program)

At least 90 community facilitators trained out of which 50% are women by 2010

90 community facilitators, of whom 60% are women, were trained

BME 2013 Low quality and access to health services, especially for the poor, prevent better health status At least 700 village action plans to

be financed through block grants approved by the end of 2010

732 village action plans were approved

At least 80% of midwives reside permanently in poskesdes (village health posts)

732 village health posts were constructed, one in each project village. About 85% of midwives reside in village health posts

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3. Revitalized family planning services

Family planning field workers and 80% of cadre trained (target 39,064)

4,929 field workers and 32,880 cadre were trained

National Family Planning Coordinating Board (BKKBN) final report

Assumptions

BKKBN adopts a leadership role, shifting from deciding and controlling to assisting and guiding

Availability and distribution of information, education and communication (IEC) materials for family planning fieldworkers (target 5,532)

Provided 5,476 IEC materials for family planning fieldworkers

All family planning program executors have been socialized in family planning operational mechanisms

10,348 program executors were trained

All district governments in the project areas established a family planning institution

90 family planning institutions were established

BKKBN final report

At least 75% of information and counseling centers for adolescent reproductive health were installed by the project (target 3,220)

3,022 information and counseling centers were established

80% of the poor served by contraceptive services (target 2,519,974 poor)

2,198,864 poor received contraceptive services

Number of family planning clinics increased year by year

Total number of private clinics in the project area was 3,970

Certification of family planning services of village midwives (target 1,037)

1,123 village midwives certified as family planning service providers

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4. Improved district capacity in managing decentralization

By the end of 2012, district health accounts are available in 20 pilot districts

District health accounts were established in 33 districts by the fourth quarter of 2012

Assumption

Strengthening information system will help districts to have better planning and budgeting as well as monitoring and controlling

By the end of 2012, integrated health planning and budgeting model has been introduced in at least 50% of the project districts

73% of project districts introduced integrated health planning and budgeting model by fourth quarter of 2012

By the end of 2012, at least one staff member of the monitoring and reporting section of the district health offices (DHOs) has been trained in monitoring and evaluation

90 staff, one in each district of DHO, were trained by fourth quarter of 2012

5. Strengthened government capacity to support decentralized health services

By the end of 2012, the evaluation of the impact and sustainability of the desa siaga model is conducted

The project‘s internal evaluation rated the desa siaga model successful and sustainable

Assumption

Ministry of Health and BKKBN adopt a leadership role, shifting from deciding and controlling to assisting and guiding

By the end of 2010, a draft national policy on revitalization of primary health care was developed

The draft policy was developed but not approved as of project closing


Ap

pe

ndix

1 19

20 Appendix 2

PROJECTED AND ACTUAL LOAN DISBURSEMENTS Table A2.1: Cost Estimates and Financing Plan by Item of Expenditure at Appraisal

($ million) Total

ADB

Government

Item Total Forex Local

Total Forex Local

Total Forex Local

A. Investment Cost

1. Civil Works 23.228 11.614 11.614 15.098 11.614 3.484 8.130 0.000 8.130

2. Equipment and Vehicles 30.186 30.165 0.021 30.186 30.165 0.021 0.000 0.000 0.000

3. Consultant Services and Systems Development

12.228 5.336 6.892 8.041 5.336 2.705 4.187 0.000 4.187

4. Training and Seminars 35.049 8.854 26.195 21.027 8.854 12.173 14.022 0.000 14.022

5. Materials and Consumables

2.600 0.780 1.820 0.78 0.78 0 1.820 0.000 1.820

6. Project Management 16.709 2.134 14.575 8.354 2.134 6.22 8.355 0.000 8.355

7. Community Health Program

0.000 0.000 0.000 0.000 0.000 0.000

Total Investment Cost 120.000 58.883 61.117 83.486 58.883 24.603 36.514 0.000 36.514

B. Contingencies

1. Physical contingencies 2.027 1.658 0.369 1.669 1.658 0.011 0.358 0.000 0.358

2. Price contingencies 10.569 2.214 8.355 4.441 2.214 2.227 6.128 0.000 6.128

C. Interest charges 10.404 10.404 0.000 10.404 10.404 0 0.000 0.000 0.000

Total 143.000 73.159 69.841 100.000 73.159 26.841 43.000 0.000 43.000

Table A2.2: Actual Cost and Financing Plan by Item of Expenditure at Completion ($ million)

Total

ADB

Government

Item Total Forex Local

Total Forex Local

Total Forex Local

A. Investment Cost

1. Civil Works 9.024 6.115 2.908 8.666 6.115 2.550 0.358 0.000 0.358

2. Equipment and Vehicles 13.328 4.211 9.117 12.901 4.211 8.690 0.427 0.000 0.427

3. Consultant Services and Systems Development

4.776 1.319 3.457 4.142 1.319 2.823 0.635 0.000 0.635

4. Training and Seminars 30.009 6.697 23.311 18.339 6.697 11.641 11.670 0.000 11.670

5. Materials and Consumables

0.141 0.141 0.000 0.141 0.141 0.000 0.000 0.000

6. Project Management 11.570 0.484 11.087 6.053 0.484 5.569 5.517 0.000 5.517


29.439 0.121 29.318 29.439 0.121 29.318 0.000 0.000

Total Investment Cost 98.286 19.088 79.198 79.680 19.088 60.592 18.606 0.000 18.606

B. Contingencies

1. Physical contingencies

2. Price contingencies

C. Interest charges 4.643 4.643 4.643 4.643 0.000

Total 102.929 23.731 79.198 84.323 23.731 60.592 18.606 0.000 18.606

Appendix 3 21

ANNUAL DISBURSEMENTS

Annual Disbursements ($ million)

Year Loan 2074 Loan 2075 Total Project

2004 0.000 0.000 0.000 2005 1.893 1.002 2.895 2006 1.195 0.248 1.442 2007 3.120 3.712 6.831 2008 5.582 3.208 8.790 2009 15.821 3.701 19.521 2010 5.400 14.635 20.035 2011 3.440 8.299 11.741 2012 4.136 2.139 6.276 2013 5.117 0.835 5.952 2014 0.669 0.171 0.851 Total 46.373 37.950 84.323

0.000

5.000

10.000

15.000

20.000

25.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total Disbursement

$m

illio

n

Year

22 Appendix 4

PROJECT IMPLEMENTATION SCHEDULE Component 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

A. At the District Level

1. Capacity Building

a. Establishment of the PIU

b. IEC Campaign

c. Training and Workshop

d. Consulting Services

e. Health System Reform

2. Physical Investments

a. Civil Works - Renovation

b. Civil Works - New

c. Office Equipment

d. Medical Equipment

e. IEC Equipment

f. Vehicles

g. New Hospitals

h. Information System

3. Project Management

a. Midterm Review

b. Implementation


a. Preparation

b. Implementation

c. Evaluation

Appendix 4 23

Component 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

B. At the Provincial Level

1. Capacity Building


b. Training and Workshop

c. IEC Campaign


e. Health System Reform

f. Health Sector Reform


a. Civil Works - Renovation

b. Civil Works - New

c. Civil Works

d. Office Equipment

e. Medical Equipment

f. IEC Equipment

g. IEC Material

h. Vehicles


a. Midterm Review

b. Implementation


a. Preparation

b. Implementation

c. Evaluation

24 Appendix 4

Component 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

C. At the National Level 1. Capacity Building


b. Fellowship Program

c. Operational Research


e. Training, Fellowship, Workshop


a. Office Equipment

b. Contraceptives

c. IEC Materials


a. Midterm Review

b. Implementation


a. Preparation

b. Implementation

c. Evaluation

IEC = information, education, and communication; PIU = project implementation unit. Legend:

Plan at Appraisal Plan at Midterm Review Actual

Appendix 5 25

STATUS OF COMPLIANCE WITH LOAN COVENANTS

COVENANTS Status Particular Covenants under Article IV

The Borrower shall cause the Project to be carried out in accordance with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and health services, and management practices.

LA 2074 Article IV, Section 4.01 (a) LA 2075 Article IV, Section 4.01 (a)

Complied with.

The Borrower shall make available, promptly, as needed, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out the Project and for the operation and maintenance of the Project facilities.

LA 2074 Article IV, Section 4.02 LA 2075 Article IV, Section 4.02

Complied with.

In the carrying out of the Project, the Borrower shall cause competent and qualified consultants and contractors, acceptable to ADB, to be employed to an extent and upon terms and conditions satisfactory to the Borrower and ADB.

LA 2074 Article IV, Section 4.03 (a) LA 2075 Article IV, Section 4.03 (a)

Complied with.

The Borrower shall cause the project to be carried out in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. The Borrower shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request.

LA 2074 Article IV, Section 4.03 (b) LA 2075 Article IV, Section 4.03 (b)

Complied with.

The Borrower shall ensure that the activities of its departments and agencies with respect to carrying out the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.


Complied with.

The Borrower shall enable ADB’s representatives to inspect the Project, the goods financed out of the proceeds of the Loan, and any relevant records and documents.


Complied with.

The Borrower shall ensure that the Project facilities are operated, maintained and repaired in accordance with sound administrative, financial, engineering, environmental, and maintenance and operational practices.


Complied with.

26 Appendix 5

COVENANTS Status Environmental

The Borrower shall ensure that an initial environmental evaluation/environmental impact assessment is prepared for each candidate subproject. Subprojects with a value of $300,000 or less shall be submitted to the relevant regional BAPPEDALDA (Badan Pengendalian Dampak Lingkungan Daerah) office for approval prior to subproject approvals; subprojects with a value of more than $300,000 shall be submitted for Bank approval prior to subproject approval.

LA 2075, Sch. 6 para. 20

Complied with.

The Borrower shall ensure that all actions taken as a result of the Project are in accordance with the Bank’s Environmental Assessment Guidelines 2003, and all applicable environmental laws and regulations.

LA 2075, Sch. 6 para. 20

Complied with.

The Borrower shall ensure that MOH and BKKBN strictly apply an environmental review procedure, as agreed upon by the Borrower and ADB, when reviewing subprojects for approval.

LA 2075, Sch. 6 para. 20

Complied with.

The Borrower shall cause MOH and BKKBN to ensure that all works are carried out in accordance with the approved initial environment evaluation and environment management and monitoring plan.

LA 2075, Sch. 6 para. 20

Complied with. The Ministerial Decree on Environment No. KEP-11/MENLH/3/1994 indicates that Hospitals Class A or similar Class A, or hospitals with fully staffed specialists, hospitals with specialists, hospital with >400 beds and pharmaceutical industry need to submit IEE and EM&MP.

Social

The Borrower shall ensure that the Gender Action Plan, as agreed upon by the Borrower and the Bank, is implemented in all Project activities.

LA 2075, Sch. 6, para. 17

Complied with.

The Borrower shall ensure that women constitute at least fifty percent (50%) of all persons trained pursuant to the Project’s activities and that this percentage is applied to each category of training programs.

LA 2075, Sch. 6, para. 16

Complied with.

The Borrower will ensure that, within 1 year of the loan Effective Date, all land acquisition and resettlement activities shall have been completed in accordance with the Resettlement Framework agreed upon by the Borrower and the Bank, the Borrower’s laws, regulations procedures and the Bank’s requirements as defined in the Bank’s Policy on Involuntary Resettlement and the Handbook on Resettlement. In case of discrepancies between the Borrower’s laws, regulations, and procedures and the Bank’s requirements, the Bank’s requirements shall apply. No civil works shall commence in any

Complied with. Any new construction and/or upgrade of poskesdes (village health posts) financed through the block grant complied with ADB’s Resettlement Policy.

Appendix 5 27

COVENANTS Status geographic area prior to completion of resettlement and income restoration activities in that geographic area.

LA 2075, Sch. 6 para. 18

The Borrower shall ensure that measures are undertaken to promote full participation of indigenous peoples in Project activities including, inter alia, developing mechanisms to include indigenous peoples in capacity building and training under the Project. The PPMS developed under the Project shall include performance indicators that facilitate the monitoring and participation of indigenous peoples in Project activities.

LA 2075, Sch. 6 para. 19

Complied with. Desa Siaga in 2010 included in the 2 villages in District Mamuju Utara, West Sulawesi Province that consist of indigenous communities in (i) Bambaira Village, Baruga Baru Village Health Post; and (ii) Tampaure Village, Bambarano Village Health Post.

The Borrower shall ensure that Project activities are carried out in accordance with the Bank’s Policy on Indigenous Peoples and in accordance with the Action Plan for Indigenous Peoples and the Specific Action Plan for Indigenous Peoples, as agreed upon by the Borrower and the Bank.

LA 2075, Sch. 6 para. 19

Complied with.

The Borrower shall ensure that the Project is implemented in accordance with the Bank’s Guidelines for Incorporation of Social Dimensions in Bank Operations, and that: (i) Project data collected by Participating Districts provides qualitative and quantitative data on the poor and vulnerable groups living in the referenced geographic area (including internally displaced persons and indigenous peoples), disaggregated by gender; and (ii) the health information management system and performance monitoring system for the Project shall provide gender disaggregated data and information.

LA 2075, Sch. 6, para 24

Complied with.

Financial

The Borrower shall maintain, or cause to be maintained, records and accounts adequate to identify the goods and services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, the operations and financial condition of the agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof.

LA 2075 Article IV, Section 4.06 (a)

Complied with.

The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and term of reference are acceptable to the Bank; (iii) furnish the Bank, as soon as available but in any event not later than 9 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the

Complied with.

28 Appendix 5

COVENANTS Status report of the auditors relating thereto (including the auditor’s opinion on the use of the Loan proceeds and compliance with the covenants of this Loan Agreement as well as on the use of the procedures for Project account/statement of expenditures), all in the English language; and (iv) furnish to the Bank such other information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request.

LA 2074, Article IV, Section 4.05 (a) LA 2075, Article IV, Section 4.06 (b)

The Borrower shall enable ADB, upon ADB’s request, to discuss the Borrower’s financial affairs related to the Project from time to time with the Borrower’s auditors, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree.

LA 2074 Article IV, Section 4.05 (b) LA 2075 Article IV, Section 4.06 (c)

Complied with.

The Borrower shall ensure that all necessary counterpart funds for Project implementation at the national level are provided in a timely manner and, to such end, the Borrower will make timely submissions of annual budgetary appropriation requests and take all other measures necessary or appropriate for prompt disbursement of appropriate funds to the Project Provinces and Project Districts during each year of Project implementation.

LA 2075, Sch. 6 para. 12

Partly complied with. With the exception of 2012 when the DIPA was released in January, the release of DIPA during 2006 to 2013 was delayed between June to September of each year.

The Borrower shall ensure that Participating Provinces and Participating Districts are aware of the need to provide counterpart funding for Project activities in each Participating Province or Participating District and that each Participating Province or Participating District are informed that a failure to produce the required counterpart funding for a period in excess of one year will result in that Participating Province or Participating District being no longer eligible for participation in the Project, unless otherwise agreed by the Bank.

LA 2075, Sch. 6 para. 13

Complied with. For fiscal year 2007, all participating districts and cities provided counterpart funding through local district government budget (APBD). Since 2008 district activities were covered by provincial budgets.

The Borrower shall ensure that, throughout the review period of Project implementation, the proceeds of the Loan, and the corresponding amount of necessary counterpart funds shall be disbursed to Project Provinces and Project Districts, by budgetary transfers of funds earmarked for such purpose.

LA 2075, Sch. 6 para. 14

Complied With. In 2008 it was agreed that the project will shift from a decentralized to a central funded project. As stipulated in PP Decree No.57/2007, district counterpart funds were no longer applicable.

For purposes of audit of accounts and financial statements in the Project carried out pursuant thereto, the Borrower shall ensure that any independent auditors financed from proceeds of the Loan shall be selected and engaged in accordance with competitive selection procedures acceptable to the Bank.

Complied with.

Appendix 5 29

COVENANTS Status LA 2075, Sch. 6 para. 21

The Borrower shall ensure that all Project Provinces and Project Districts, national level MOH and national level BKKBN maintain a separate accounting system for Project expenditures in accordance with sound accounting principles.

LA, Sch. 6 para. 22

Complied with.

The Borrower shall establish immediately after the Effective Date, an Imprest Account at Bank Indonesia. The Imprest Account shall be established, managed, replenished and liquidated in accordance with the Bank’s “Loan Disbursement Handbook” dated January 2001, as amended from time to time and detailed arrangements agreed upon between the Borrower and the Bank. The initial amount to be deposited into the Imprest Account shall not exceed the equivalent of $2,000,000.

LA 2075, Sch. 3, para. 8 (a)

Complied with. For Loan 2074, $1.5M was deposited on 19 October 2005. For Loan 2075, $1.0M was deposited on 27 September 2005.

Others

Fielding of Consultants The selection, engagement and services of the consultants shall be subject to the provisions of the “Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers” dated April 2002, as amended from time to time, which have been furnished to the Borrower.

LA 2075, Sch. 5 para. 2

Complied with.

Established, staffed and operating PMU/CPIU. National Level: A CPIU shall coordinate Project implementation at the national level and provide technical support to lower level implementations units. The CPIU shall have two full-time Executive Secretaries, each Executive Secretary being responsible for four Participating Provinces with their associated Participating Districts, and each Executive Secretary shall have a finance officer, procurement officer, monitoring and evaluation officer, planning officer and other support staff as needed. The Executive Secretaries shall be responsible for project implementation. The CPIU shall have regular meetings with the World Bank-supported provincial health projects to ensure coordination and experience sharing. BKKBN shall have a CPIU sub-unit with a full-time Executive Secretary and support staff.

LA 2075, Sch. 6 para. 5

Complied with. At MTR, the project implementation structure was amended. One executive secretary, instead of two, was responsible for the CPIU. Technical coordinator consultants were appointed at central level and in the 8 provinces. Bangka Belitung Island had no technical coordinator because the proposed candidate was not approved by ADB. Instead, the technical coordinators’ consultant of the CPMU assisted Bangka Belitung.

A Technical Advisor shall be appointed pursuant to the provisions of Schedule 5 of the Loan Agreement and shall be responsible for the technical quality of the Project. The Technical Advisor shall ensure that the Project objectives are being met and that MOH and BKKBN national policies are incorporated into Project activities.

LA 2075, Sch.6 para. 6

Complied with.

The Borrower shall ensure that, within 6 months of the Effective Date, contracts for consulting firms for Project activities described in para 1

Partly complied with. Instead of a firm, 4 individual

30 Appendix 5

COVENANTS Status of Sch. 5 have been awarded.

LA 2075, Sch. 6 para. 7

consultants were recruited in 2010 to support primary health care revitalization.

Provincial Level: The head of the Provincial Health Services shall be the Provincial Project Manager (PPM). The PPM shall be assisted by the PPIU, composed of a full-time Executive Secretary, finance officer, procurement officer, and monitoring and evaluation officer, which shall coordinate Project implementation in the Participating Province and which shall provide technical support to the Participating Districts in the Participating Province and to the Participating Province. The PPM will report to the provincial governor or the head of the provincial BAPPEDA. The PPIU shall be assisted by a Provincial Technical Review Team which shall include representatives from MOH and BKKBN, the private health sector, academics and professional organizations, and technical experts on an individual basis and as needed. The PPIU shall assist the district DIUs to prepare the required procurement documents to make consolidation at the provincial level possible. A sub-PPIU for BKKBN activities may be established at the provincial level as needed to implement Project activities.

LA 2075, Sch. 6 para. 8

Complied with.

District Level: A full-time District Executive Secretary shall be responsible for Project implementation under the guidance of the head of the District Health Services who shall be the District Project Manager (DPM). The DPM shall be responsible for preparing annual district action plans, and shall supervise local Project implementation, assisted by the DIU, composed of an Executive Secretary and other staff as needed. The DPM shall report to the district or city regent (Bupati).

LA 2075, Sch. 6 para. 9

Complied with.

By June 1 of each year, beginning June 2004, the DHC, District Project Manager and District Implementation Unit shall review and update, as needed, the district proposal for assistance under the Project and shall transmit the plan to the Provincial Project Manager, with the Minutes of the DHC and the response of the DPM explaining the DPM’s response to the DHC’s recommendations. At the provincial level, the district proposals shall be reviewed by the Provincial Technical Review Team and consolidated on a province-wide basis. By July 1 of each year, the Provincial Technical Review Team shall transmit the consolidated provincial proposal to the national Project Manager, including a summary of the issues discussed by the Provincial Technical Review Team and the solutions proposed. After review of the consolidated provincial proposals by the national Technical Team, the national Project Manager shall endorse the provincial proposals (as they may be amended) and submit them to the Bank by August 1 of each year of approval.

LA 2075, Sch. 6 para. 11

Complied with.

The Borrower shall ensure that the CPIU submits to ADB, within 60 days of the end of each calendar quarter period, consolidated

Complied with

Appendix 5 31

COVENANTS Status progress report in a form agreed upon by the Borrower and ADB.

LA 2075, Sch. 6 para. 23

The Borrower shall ensure that the PPMS attached to the approved annual plan is implemented at the local level.

LA 2075, Sch. 6 para. 25

Complied with.

The Borrower shall make arrangements satisfactory to the Bank for insurance of Project facilities and equipment financed from the proceeds of the Loan to such extent and against such risks and in such amounts as shall be consistent with sound practice.

LA 2075, Article IV, Section 4.05 (a)

Complied with.

The Borrower undertakes to insure, or cause to be insured, the goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods.

LA 2075, Article IV, Section 4.05 (b)

Complied with.

The Borrower shall furnish, or cause to be furnished, to the Bank all such reports and information as the Bank shall reasonably request concerning (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the administration, operations and financial condition of the agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof; (v) financial and economic conditions in the territory of the Borrower and the international balance-of-payments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan.

LA 2075, Article IV, Section 4.07 (a)

Complied with.

The Borrower shall furnish, or cause to be furnished, to the Bank quarterly reports on the carrying out of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as the Bank shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter.

LA 2075, Article IV, Section 4.07 (b)

Complied with.

Promptly after physical completion of the Project, but in any event not later than six (6) months thereafter or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, in such form and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the Borrower of its obligations under the Loan Agreement and the accomplishment of the purposes of the Loan.

Complied with.

32 Appendix 5

COVENANTS Status LA 2075, Article IV, Section 4.07 (c)

ADB = Asian Development Bank, BAPPEDA = Badan Perencana Pembangunan Daerah (Provincial/District-level Development Planning Agency), BKKBN = National Family Planning Coordination Board, CPIU = central project implementation unit, DHS2 = Second Decentralized Health Services Project, DIPA = Daftar Isian Pelaksanaan Anggaran (annual operational budget), DPM = district project manager, EM&MP = environment management and monitoring plan, IEE = initial environmental evaluation, MOH = Ministry of Health, MTR = mid-term review, PMU = project management unit, PPM = provincial project manager, PPMS = project performance management system. Source: Asian Development Bank.

Appendix 6 33

SUMMARY OF GENDER EQUALITY RESULTS AND ACHIEVEMENTS A. Project Description 1. The Second Decentralized Health Services Project1 for $100 million (Loan 2074, $64.8 million from Asian Development Bank [ADB] ordinary capital resources, and Loan 2075, $35.2 million from ADB Special Funds resources) was approved by ADB on 19 December 2003 and became effective on 29 March 2005. The original project closing date was 31 December 2010. The project was extended twice, and had an actual closing date of 31 December 2013. The project goal was improved health of the population by focusing on the health-related Millennium Development Goals (MDGs) and provision of better primary health care services for women, infants, and children in nine provinces and 90 districts. The executing agency was the Directorate General of Community Health,2 Ministry of Health (MOH), and the implementing agencies were the MOH and the National Family Planning Coordinating Board (BKKBN). As a result of the midterm review in November 2007, the Government of Indonesia refocused the project to strengthen maternal neonatal child health and support the implementation of the desa siaga (alert villages) program to help meet MDGs 4 and 5 (on maternal and child health). Loan proceeds of $29.5 million (Loan 2074) were reallocated, largely to develop a network of poskesdes (village health posts) and strengthen referral through the training of midwives. In the aftermath of the 2009 earthquake in West Sumatra, the government requested that ADB utilize savings of loan proceeds, and $12.6 million (Loan 2074) was reallocated to the reconstruction and rehabilitation of health facilities. B. Gender Analysis and Project Design Features

1. Gender Issues and Gender Action Plan Features 2. The maternal mortality ratio in Indonesia was estimated at 262 per 100,000 live births in 2005. According to the Indonesian Demographic Health Survey 2003, the modern contraceptive prevalence rate was unchanged at 54.2% between 1994 and 2002, while the total fertility rate decreased moderately. The percentage of births attended by skilled health personnel had increased from 47% in 1994 to 68.4% in 2002. In rural and remote areas, emergency obstetrics care was available in few district hospitals because of a shortage of staff or existing staff were not sufficiently trained or health facilities lacked necessary equipment. Even when such care is available, high opportunity costs including transport limit access. Low access to health services for populations living in rural and remote areas, particularly women, is exacerbated by poverty and taboos related to traditional health practices. 3. The project paid special attention to the improvement of health services for women and children by supporting gender-sensitive planning, budgeting, and reporting at all levels, while giving particular focus to addressing maternal and neonatal care through (i) construction and renovation of health facilities and provision of medical equipment and ambulances at provincial and district levels; (ii) support for pre-service and in-services in obstetric care and skilled birth attendance; (iii) training and supporting of village health volunteers to provide health education, nutrition, postpartum and newborn care, family planning, and assistance in emergency referrals; and (iv) establishment of health equity funds for the poor, especially women, to access

1 Asian Development Bank (ADB). 2003. Report and Recommendation of the President to the Board of Directors:

Proposed Loans to the Government of Indonesia for the Second Decentralized Health Services Project. Manila. 2 Changed in 2010 to the Directorate General of Nutrition and Maternal Child Health.

34 Appendix 6

emergency obstetric services. During the midterm review in 2007, the project was substantially restructured to support the government’s community health program (desa siaga) to help achieve the MDGs related to maternal and child health through the training of 5,000 midwives, and the provision of scholarships for health staff. 4. The gender strategy highlighted the need for (i) mechanisms to ensure that women are involved and benefit equally from the project; (ii) gender training for health professionals, district and provincial planners, and service providers to help them understand gender issues in health planning and service provision; (iii) other capacity building activities for health planners and service providers, ensuring women’s participation in all these trainings and project activities; and (iv) collection of sex-disaggregated data for monitoring and evaluation of project activities and beneficiaries.

2. Overall Assessment of Gender-Related Results and Achievements 5. While the gender strategy did not provide clear targets for female beneficiaries or their participation in project activities, the project’s focus on maternal and child health care ensured that an estimated 186,000 infant girls and 1.51 million girls under 5 years of age benefited from the project. About 4 million poor people were expected to benefit from the project. At least 50% of participants in the managerial and clinical training activities were expected to be female health staff. In the project areas, women benefited through improved obstetric services, delivery rooms and facilities, medical equipment, skilled health care providers and medical staff, and health packages. In addition, women were given equal opportunities to participate in trainings and capacity building activities. Overall, the project had a positive effect on improving physical access to and the utilization of maternal child health care and reducing the number of home deliveries. 6. The Decentralized Health Services Project3 financed the construction and renovation of eight health centers and nine subhealth centers, eight midwife stations, and 13 village health posts. The Second Decentralized Health Services Project has had a positive effect on the percentage of births occurring in any type of health facility, particularly hospitals. In fact, obstetric deliveries attended by skilled medical staff increased from 56.5% to 74.9% between 2003 and 2012. 7. About 5,100 midwives were trained at the health center level in basic emergency obstetric and newborn care, neonatal asphyxia management, lactation management, breastfeeding counseling, and nutrition management. These resulted in an increased proportion of health centers with female staff, from 25% in 2006 to 63% in 2011, which contributed to an increase in births attended by skilled medical staff from 53.4% in 2005 to 80.0% in 2012. 8. The desa siaga approach focused on the establishment of village health posts, including the placement of midwives and cadres to empower communities. As part of the community empowerment intervention, village forums, which comprised 68% women, were established to create awareness about maternal and child health including the provision of health services in their areas. C. Gender Equality Results

3 ADB. 2000. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical

Assistance Grant to the Government of Indonesia for the Decentralized Health Services Project. Manila.

Appendix 6 35

1. Participation, Access to Project Resources, and Practical Benefits 9. The project interventions benefited women through increased access to (i) improved health services and facilities, especially for maternal, reproductive, and other health needs; and (ii) training opportunities for female medical staff and involved women in the delivery of health promotion activities including vaccinations and family planning through the posyandu (integrated health service post) at the community level. The project supported fellowships for midwives and doctors. A total of 526 female health center staff received a range of in-service trainings, 888 out of 3,316 village health volunteers trained on health education were women, and 140 out of 300 (47%) scholarships for training in regional health colleges were awarded to female district health officers. 10. The project supported construction of poskesdes (village health posts). The project financed construction and renovation of 21 new health centers, 40 existing health centers, two new district hospitals, one district hospital, and one provincial hospital. These facilities have delivery rooms, which provide separate bathroom facilities for men and women, however, in some cases toilets and bathrooms are not always maintained adequately. Most poskesdes ensure women’s privacy. Twenty two ambulances and medical equipment were provided to district hospitals. The expansion of poskesdes and improved referral helped women’s access to health care services, especially in remote areas. Availability of delivery and post-delivery rooms and provision of ambulances and medical equipment all contribute to addressing the urgent needs of women. Based on project data, about 80% of the staff in the poskesdes were female and 65% in the puskesmas (community health centers). At community level the expansion of poskesdes and posyandu play and important role to delivery primary health care for mother and child.

2. Strategic Changes in Gender Relations 11. The increased proportion of deliveries attended by skilled health care providers and the increased preference of women to deliver in health facilities suggest that women have more choice in making decisions about their maternal and reproductive health, and that families are giving more importance to the health of the mother and her unborn child. In addition, women’s participation in capacity building trainings improves their capacity to provide better services and is likely to improve their opportunities to be promoted or appointed to more management or technical positions.

3. Contribution of Gender Equality Results to Overall Loan Outcomes and Effectiveness

12. The project contributed to improving the health status, including the MDGs related to maternal and child health, especially of the poor and vulnerable groups in the project areas. The project’s gender equality results were are a result of the self-targeted nature of the project and of ensuring that women have access to higher-level training and fellowships. Activities which addressed barriers to access to health services for women and ethnic groups as well as other key issues identified during the project appraisal ensured that the project’s goal of improving the health of women, children, and other vulnerable groups in the project areas was achieved. As a result of an expanded health service network, there was an increase in the number of skilled female medical staff, culturally appropriate health promotion activities were delivered to community members, there was an increase in health service utilization, and there were changes in behavior in service utilization among women.

36 Appendix 6

D. Lessons and Recommendations 13. Overall, the implementation of the gender strategy was successful, the number of district midwives trained was succeeded and 60% of female community facilitators trained. However, challenges such as placing midwives and female doctors in remote areas remains a challenge. Several factors such as women’s lower educational attainment and cultural barriers hinder professional development and thereby placement in remote rural areas T. These factors pose significant challenges that should be taken into consideration, and strategies need to be developed to address these in future projects to ensure that gender targets on women’s participation and employment are met. 14. It is envisaged that the integration of gender into planning and budgeting at provincial and district levels, such as the 5-year plans and expenditure frameworks and 5-year health sector development plan, will contribute to the sustainability of gender-responsive primary health care delivery in the project areas and improved access of women and ethnic groups to primary health care.

Appendix 6 37

Gender Action Plan Monitoring Table Loan 2074 - Second Decentralized Health Services Project

Gender Action Plan (Activities, Indicators and Targets, Time

Frame, and Responsibility) Progress (as of 31 December 2013) Issues and Challenges

Clinical/managerial skills training (district level)

1. Review and revision of data collection and monitoring to ensure data is sex disaggregated and monitoring indicators are gender responsive

Achieved. Overall, quarterly project monitoring reports and end line survey include sex-disaggregated data.

2. Gender training conducted (district level) Achieved. The project focused on strengthening the capacity largely of female health staff and empowering communities for improved maternal and child health. Training on detecting at-risk pregnancies and other health risks pertaining to women were conducted.

3. Ensure that women participate in clinical and managerial skills training

Achieved. - 6,375 midwives were trained on low birth weight management,

neonatal asphyxia management, basic emergency and obstructed labour and new born care (exceeding the target of 5,000). No sex-disaggregated data is available, but overall, majority of the midwives are women.

- 2,147 medical staff received fellowships, out of which 935 were for midwives

- 90 community facilitators were trained, out of which 60% were women

It is recommended that future similar projects ensure the collection of sex-disaggregated data for all activities and indicators

4. Local government identify women for managerial or administrative positions

Capacity building focused mainly on improving technical rather than administrative skills of nurses, midwives, and medical practitioners. About 600 district and provincial staff were trained on integrated health planning and budgeting. However, no sex-disaggregated data is available.

5. Focus on women becoming trainers and facilitators

Achieved. The project trained 90 community facilitators, out of which 60% were women.

6. Training of female cadres to undertake family planning promotion and methods in targeting poor households

Achieved. 42,921 family planning field officers were trained out of which more than 50% were female. Family planning cadres are mostly led by women.

7. Training of traditional birth attendants n identifying high-risk cases, nutrition promotion in pregnancy, and breastfeeding

Achieved. Traditional birth attendants were trained to identify high-risk pregnancies and ensure referral to skilled health professionals, which proved to be key since midwives are not permanently available around the clock in all villages or health facilities.

Ap

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38 Appendix 6



Involving stakeholders

8. Ensure that women’s groups are involved in the identification of health needs.

Achieved. The essence of the desa siaga (alert village) program is that communities are enabled to identify their health needs and priorities. Village health forums are community-based institutions which comprise mainly women. Also, family planning cadres are mainly led by female staff.

9. Involve women’s groups and networks to assist women in learning about health issues and supporting one another

Achieved. The purpose of the desa siaga approach is to empower communities to improve maternal and child health status through existing networks such as the women’s welfare movement and village forums.

Organizing pro-poor health services

10. Assess gender inequality in access to health care and responses of the health system

Achieved. Overall, the demand for maternal health services increased through the desa siaga program, which focused on community empowerment for improved maternal and child health. The establishment of poskesdes (village health posts) aimed to reduce gender gaps in access to health services. While no assessment was conducted under the project to determine gender inequality in access to health care and responses of the health system, difficulties faced by women, especially poor women in rural areas, in accessing health services and facilities were highlighted in the project’s social and poverty analysis. The project focused on increasing women’s access to health care services, especially women in remote areas. Project interventions contributed to increasing the percentage of deliveries attended by skilled health professionals from 53.4% to 80.0% between 2003 and 2012.

11. Recruitment of women’s groups to help in health promotion activities

Achieved. The desa siaga approach focused on involving village based women’s groups as described in para. 9 of the main text.

Planning and budgeting

12. Promote gender-sensitive planning and budgeting at district level

The inclusion of gender in planning and budgeting was not ensured, hence the modules on integrated health planning and budgeting did not include gender-sensitive aspects.

No gender specialist or staff member qualified to ensure that gender is included in planning and budgeting was appointed. Future similar projects should ensure that a gender specialist or gender focal point is assigned to support the executing agency in undertaking similar activities.

38 A

pp

end

ix 6

Appendix 6 39



Monitoring and evaluation

13. Collect sex-disaggregated data on health status of men and women, the numbers and training levels of male and female workers, and on decision making patterns for family health needs, particularly for reproductive health

Achieved. Health centers disaggregate data by sex and age. Data on training of health staff are mostly disaggregated. Cadres of the national family planning committee use sex-disaggregated data providing family planning information and distribution of contraceptives.

14. Involve local communities including women’s groups in monitoring and implementation of the project at district level

Achieved. The desa siaga approach utilizes local women groups to engage in planning and monitoring of activities in cooperation with the health staff and midwives of the village health posts

Specialist training (provincial level)

15. Training of relevant health professionals about why sex-disaggregated data and gender-responsive indicators are necessary and in the use of new formats

Nurses and medical doctors were trained in provincial hospitals; however, sex-disaggregated data on participants was not collected.

16. Gender training (provincial level) Was not included in the project design

17. Ensure that women candidates are included in the specialist training

Achieved. The project trained nurses and medical doctors but gender-disaggregated data for participants in these training packages was not recorded

Managerial skills

18. Ensure that women participate in training

Achieved. The training focused mainly on technical and less on administrative skills (see no. 3)

19. Managerial training includes training on gender-sensitive planning

Was not included in the project’s training scope

Monitoring and evaluation

20. Collect sex-disaggregated data Achieved. See no. 1

Clinical/management skills training (central level)

21. Ensure that women participate in clinical and managerial skills training

The training focused largely on districts. The project aimed to support decentralization of health services at the local level.

22. Government identifies women for managerial and administrative positions

The project focused on upgrading technical skills on maternal and child health at the peripheral level.

The project aimed to support technical rather than managerial training for women.

Ap

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40 Appendix 7

USE OF NATIONAL CONSULTANTS FOR PROJECT MANAGEMENT

Position Number of

consultants Person months

Person-months per consultant

% of consultants

% of person-months

Central

Project Coordinator 2 72 36.0 0.6 0.6

Executive Secretary 2 72 36.0 0.6 0.6

Technical Coordinators 1 37 37.0 0.3 0.3

Planning Officer 1 69 69.0 0.3 0.6

Finance Officer 1 36 36.0 0.3 0.3

Procurement Officer 2 69 34.5 0.6 0.6

M&E Officer 1 48 48.0 0.3 0.4

Support Staff 14 690 49.3 3.9 5.5

Subtotal 24 1,093 45.5 6.7 8.7

Province

Executive Secretary 11 550 50.0 3.1 4.4

Procurement Officer 11 324 29.5 3.1 2.6

M&E Officer 11 540 49.1 3.1 4.3

Support Staff 20 576 28.8 5.6 4.6

Technical Coordinators 10 159 15.9 2.8 1.3

Subtotal 63 2,149 34.1 17.5 17.1

District

DIU 90 3,048 33.9 25.1 24.3

DIU Staff 90 3,012 33.5 25.1 24.0

MODS Advisors 2 10 5.0 0.6 0.1

MODS Facilitators 90 3,228 35.9 25.1 25.7

Subtotal 272 9,298 34.2 75.8 74.1

Total 359 12,540 34.9 100.0 100.0

DIU = district implementation unit, M&E = monitoring and evaluation, MODS = desa siaga operational models. Note: Table does not include three national consultants used for system development and financing (7 person-months), community empowerment (7 person-months), and monitoring and evaluation (2 person-months). Source: Asian Development Bank.

Appendix 8 41

PROCUREMENT OF CIVIL WORKS AND GOODS

Activities

At Appraisal Actual

Number of Contracts

Mode of Procurement

Number of Contracts

Mode of Procurement

A. Civil Works 1. Hospitals - New Construction 6 ICB/LCB 2. Hospitals - Renovation 24 LCB 3. Health Centers - New Construction 24 LCB 4 NCB 4. Health Centers - Renovation 24 LCB 4 NCB 5. Subhealth Centers - New Construction 24 LCB 5 NCB 6. Subhealth Centers - Renovation 24 LCB 4 NCB 7. Health Agency Office/Training Center -

New Construction 2 LCB

8. Health Agency Office/Training Center -Renovation

8 LCB 1 NCB

9. BKKBN Warehouses - Renovation 26 LCB 6 NCB 10. Rehabilitation of Midwifery Services

(Polindes) 6 NCB

11. New Construction of Polindes 3 NCB 12. Construction of Hospital Waste

Management Installation 1 NCB

13. Renovation of Laboratory 1 NCB 14. Constructions of Poskesdes Desa Siaga 13 NCB 15. Furniture 38 NCB 16. Floors, Painting, and Renovation of

Project Office 3 NCB

B. Equipment

1. Health and family planning equipment 25 ICB/IS 154 NCB/Shopping 2. Office/training/IEC Equipment

a. MIS Equipment 9 IS/DP 69 NCB/Shopping b. Training Aids 50 IS/LCB/DP 5 NCB/Shopping c. Office Equipment 50 IS/LCB/DP 62 NCB/Shopping d. IEC Equipment (audiovisual, others) 24 IS/LCB/DP 75 NCB/Shopping e. IEC Instruction Materials LIB 2 NCB/Shopping

3. Environment Equipment 1 IS 4. Small-Scale Equipment and Essential

Drugs for Poskedes LIB/Shopping 11 NCB/Shopping C. Materials and Consumables

1. Drugs and Contraceptives 1 ICB NCB/Shopping 2. IEC Materials (print, audio, and others) 24 LCB 4 NCB/Shopping 3. Materials and Consumables Shopping

D. Vehicles

1. Four-Wheel-Drive Vehicles 18 LCB 32 units NCB 2. Ambulances Car 16 ICB/LCB 25 units NCB 3. Ambulance Speed Boat 32 units NCB 4. Motorcycles 24 ICB/LCB 585 units NCB

BKKBN = National Family Planning Coordinating Board, DP = direct payment, ICB = international competitive bidding, IEC = information, education, and communication, IS = international shopping, LCB = local competitive bidding, LIB = limited international bidding, MIS = management information system, NCB = national competitive bidding. Source: Executing agency, project completion report.

42 Appendix 9

PROJECT OUTCOME INDICATORS Table A9.1: Education and Health Outcomes of Married Women Aged 15–49 in Project Provinces

versus Nonproject Provinces, 2003 and 2012 (sample means)

Province Group

Median Number of Years of Schooling

Literacy

(%)

Total Fertility Rate

Contraceptive Prevalence, Modern

Methods (%)

Unmet Need for Contraception

(%)

2003

DHS1 project provinces 6.2 88.8 2.9 55.9 8.9


Nonproject provinces 6.0 86.5 2.5 58.0 8.2

Subtotal, 2003 6.0 86.4 2.6 56.7 8.7

2012



Nonproject provinces 8.7 93.5 2.5 59.4 10.8

Subtotal, 2012 8.6 93.0 2.6 58.5 11.2

Change, 2003–2012

DHS1 project provinces 2.65 3.30 (0.24) 0.44 3.20


Nonproject provinces* 2.61 6.99 0.02 1.38 2.58

Subtotal, 2003–2012 2.62 6.60 0.01 1.80 2.50

( ) = negative, DHS1 = Decentralized Health Services Project, DHS2 = Second Decentralized Health Services Project. Note: Sample means are weighted by the number of married women aged 15–49. * includes West Sumatra. Source: Statistics Indonesia et. al. 2003. Indonesia Demographic and Health Survey 2002–2003. Maryland; Statistics Indonesia et. al. 2012. Indonesia Demographic and Health Survey 2012. Maryland.

Table A9.2: Health Outcomes of Children Under 5 in Project Provinces versus Nonproject

Provinces, 2003 and 2012 (sample means)

Province Group

Infant Mortality

Rate

(1)

Under-5 Mortality

Rate

(2)

Measles Vaccination Rate (% of

children aged 12–23 months)

(3)

Birth Attended by Skilled Provider

(%) (4)

Place of Delivery

(%)

Public Health Facility

(5)

Private Health Facility

(6)

Any Health Facility

(7= 5+6)

2003

DHS1 project provinces 42.10 57.54 77.54 69.09 11.45 24.78 36.23


Non-project provinces 41.90 51.28 70.35 67.90 8.25 34.92 43.17

Subtotal, 2003 43.21 54.61 71.75 66.24 9.24 30.52 39.76

2012



Non-project provinces 30.66 37.76 82.00 86.54 14.57 55.11 69.68

Subtotal, 2012 32.54 40.54 81.20 84.16 17.18 47.39 64.57

Change, 2003–2012

DHS1 project provinces (7.72) (14.57) 3.16 13.01 7.71 8.22 15.93

DHS2 project provinces (10.53) (18.12) 2.40 18.39 14.56 9.32 23.87

Non-project provinces* (11.24) (13.52) 11.65 18.64 6.33 20.19 26.51

Subtotal, 2003–2012 (10.67) (14.07) 9.44 17.92 7.94 16.87 24.81

( ) = negative, DHS1 = Decentralized Health Services Project, DHS2 = Second Decentralized Health Services Project. Note: Sample means are weighted by the number of births during the past 5 years. *includes West Sumatra

Appendix 9 43

Source: Statistics Indonesia et. al. 2003. Indonesia Demographic and Health Survey 2002–2003. Maryland; Statistics Indonesia et. al. 2012. Indonesia Demographic and Health Survey 2012. Maryland.

1. The data in Table A9.1 (columns 1 and 2) indicate that education among married women aged 15–49 (a key determinant of maternal and child health outcomes in most developing countries) improved in the project provinces at about the same rate as in the nonproject provinces between 2003 and 2012. However, the literacy rate increased more slowly in the original project provinces. The data in Table A9.1 indicate that there was very little change in the total fertility rate between 2003 and 2012 in the second project and nonproject provinces, whereas some decrease was observed in the original project provinces. However, the modern-contraceptive prevalence rate increased by almost 6.0 percentage points in the second project provinces, compared to an increase of only 0.4 percentage points in the original project provinces and 1.4 percentage points in the nonproject provinces.1 Unmet need increased by 2.5 percentage points overall, with a somewhat smaller increase in the second project provinces (increase of 1.4 percentage points) than in either the original project provinces (increase of 3.2 percentage points) or in the nonproject provinces (increase of 2.6 percentage points).

2. The estimates in Table A9.2 (column 1) do not suggest that the original or second project had any impact on infant mortality. However, they do suggest that the second project may have had a negative impact on the mortality of children under 5 (column 2). The data in Table A9.2 (column 3) suggest that both the original and second projects may have had a negative effect on measles immunization rates, which increased by only 2–3 percentage points in the project provinces between 2003 and 2012, compared to an increase of 12 percentage points in the nonproject provinces. The data in Table A9.2 (column 4) do not support the idea that either the original or second project had a positive effect on the percentage of obstetric deliveries attended by skilled providers. The data in the last three columns of Table A9.2 suggest that neither the original project nor second project increased the percentage of deliveries in any type of health facility (column 7). However, they do suggest that both projects may have encouraged the use of public health facilities instead of private health facilities (columns 5 and 6). The use of private health facilities for obstetric deliveries increased by 20.2 percentage points between 2003 and 2012 in the nonproject provinces, compared to only 8.2 percentage points in the original project provinces and 9.3 percentage points in the second project provinces.2 3. One of the reasons for the limited project impact may have been that the project directed much of its resources to the desa siaga operational models (MODS) component that was added to the project at the midterm review. The available evidence indicates that the MODS component was not well targeted compared to other project investments. Figure A9.1 shows the number of project-supported MODS villages per poor person by province compared to the percentage of the province population that was poor at design. These data show that the project’s MOD component was pro-rich.3 In contrast, Figure A9.2 shows that the project’s investment in the training of midwives (including both project-supported fellowships and project-provided training) was pro-poor.

1 The estimated positive effect of the project on the contraceptive prevalence rate was statistically significant in

multivariate analysis (not reported, but available on request). 2 Both differences were statistically significant in multivariate analysis (not reported, but available on request).

3 The relationship is similar if the dependent variable is the value of the desa siaga operational models (MODS)

grants per poor person instead of the number of MODS villages per poor person, implying that neither the number nor the average size of MODS grants was increased in poorer provinces.

44 Appendix 9

Figure A9.1: Number of Project-Supported Desa Siaga Operational Models (MODS) villages per Poor Person by Province Compared to the Percentage of the Population that

was Poor in 2003

Source: Data presented in Executing Agency project completion report.

Figure A9.2: Percentage of Midwives by Province Receiving Project-Provided Fellowships or Training Compared to the Percentage of the Population that was

Poor in 2003

Source: Data presented in Executing Agency project completion report.

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0% 5% 10% 15% 20% 25% 30% 35%Pro

jec

t s

up

po

rte

d M

OD

S v

illa

ge

s

% of population poor

MODS per poor person Linear (MODS per poor person)

0%

10%

20%

30%

40%

50%

60%

70%

0% 5% 10% 15% 20% 25% 30% 35%

% of population poor

% of Midwives with fellowships or training

Linear (% of Midwives with fellowships or training)

Appendix 10 45

RECALCULATION OF ECONOMIC AND FINANCIAL VIABILITY 1. The economic analysis done at appraisal1 identified the project’s main benefit as improved health status of the population in the project provinces. Improved health status was measured as the reduction in the number of disability-adjusted life years (DALYs) lost. The potential improvement was estimated as the difference between the DALYs lost by established market economies (i.e., Organization for Economic Development countries) and those lost by Asian countries (other than India and the People’s Republic of China). This gap was estimated to be 143 DALYs per 1,000 population in the 1993 World Development Report.2 It was assumed that the Second Decentralized Health Services Project would reduce this gap by 5.2% (i.e., by 7.4 per 1,000 head of population) because of improved clinical quality (1.9%), increased efficiency (1.6%), and the provision of better targeted and more appropriate health services (1.7%). During project implementation, both project participation and health benefits were assumed to occur as follows: year 1 25%, year 2 50%, year 3 75%, and subsequent years 100%. It was assumed that each DALY gained had an economic value equal to the 2002 regional minimum wage (Rp320,000–Rp362,000 per month). Project costs were estimated by adjusting the value of tradable goods (which were assumed to account for 40% of total cost) using a shadow exchange rate factor of 1.20. Project funds were assumed to be spent according to the projected annual project disbursements over a 6-year period. The project’s recurrent cost burden (i.e., the cost of operating and maintaining project investments) were assumed to equal 5% of capital costs (i.e., project expenditure on civil works and equipment and vehicles). The analysis covered a 20-year period (2004–2023) and was done in constant 2002 prices using domestic prices as the numeraire. 2. The economic analysis at design needs to be revised to reflect the actual implementation of the second project, which differed importantly from the project design, and to incorporate revised assumptions in a few cases. The following are the areas where revisions are needed: 3. Definition of the project. The second project became two geographically distinct subprojects: (i) a substantially redesigned and scaled-back version of the original project in eight (but later nine) provinces, reflecting substantial changes made at the time of the midterm review; and (ii) a second, smaller subproject supporting the rebuilding of health infrastructure in West Sumatra province following the 2009 earthquake. The economic and financial analysis should be done separately for the two subprojects. 4. Project impact. According to the recent project evaluation report of the Decentralized Health Services Project, the size of the potential DALY gap was reestimated in 2010 to be only 77.2 DALYs per 1,000 head of population in 2005.3 Use of the revised estimate of the gap alone would reduce the project’s assumed impact of a 5.2% reduction of the DALY gap from 7.4 DALYs gained to 3.1 DALYs gained per 1,000 head of population. However, the project evaluation report for the original project questioned the reasonableness of a lower assumed project impact of 4% for the original project for two reasons: (i) it focused on maternal and child health and “maternal-related illness amounted to around 2% of the total burden of disease in Indonesia,” and (ii) there was only “limited difference between project and nonproject health indicators.” Instead, the project evaluation report assumed only a 2% impact (instead of the 4%

1 Asian Development Bank (ADB). 2003. Report and Recommendation of the President to the Board of Directors:

Proposed Second Decentralized Health Services Project. Supplementary Appendix: Economic and Financial Analysis. Manila.

2 World Bank. 1993. World Development Report. Investing in Health. Washington, D.C.

3 ADB. 2013. Performance Evaluation Report: Decentralized Health Services Project in Indonesia. Manila.

46 Appendix 10

impact assumed at appraisal) in its reestimation of the benefits and costs of the original project. This project completion report, using both the same data set and methodology as used to measure the project impact in the project evaluation report for the original project (Appendix 9), has also failed to find any evidence of project impact on maternal and child health outcomes, apart from contraceptive prevalence. 4 Under these circumstances, assuming even a 2.0% project impact on the DALY gap in the original eight (and later nine) province subproject (instead of the 5.4% impact assumed at project design) seems excessive, particularly since actual project expenditure in the original eight (and later nine) province subproject was 40% lower than at design. At the same time, assuming no health impact seems equally implausible, given the substantial project investments in equipment and training and village health services. Accordingly, an assumed project impact equal to 1% of the estimated 2005 DALY gap (77.2) seems appropriate for the original eight (and later nine) province subproject. However, a higher project impact equal to 2% of the 2005 DALY gap seems appropriate for the smaller subproject supporting the rebuilding of the health infrastructure in West Sumatra because it supported the restoration of services in a previously functioning public health system. 5. Timing of benefits and participation. The economic analysis at design assumed that benefits and project participation would increase linearly during the first 4 years of project implementation, after which it would remain at 100%. However, there were substantial delays in implementation of the second project. It would seem more reasonable to assume that project benefits and participation followed actual project disbursement rates in the original eight (and later nine) province subproject. It is assumed that project benefits in the West Sumatra subproject followed assumed cumulative disbursement rates of 25% in 2010, 50% in 2011, 75% in 2012, and 100% in 2013. 6. Valuation of project benefits. The economic analysis at design assumed that one DALY had an economic value equal to the 2002 regional minimum wage. DALYs are usually valued currently not on the basis of forgone earnings but rather on the basis of willingness to pay estimates of the economic value of an additional healthy year of life.5 In this case, one DALY is typically valued at 2–3 times the level of per capita income, with the value adjusted over time to reflect the expected growth rate in real per capita income. In this case, it is assumed that the economic value of one DALY is equal to the regional level of per capita consumption in 2005 (at 2003 prices) and that it increases at the observed regional average annual growth rate in real per capita consumption during 2003–2007 (6.34% in the provinces of the original subproject and 0.62% in the West Sumatra subproject). The number of project beneficiaries (i.e., the total population) is assumed to grow at the same regional rates observed during 2000–2010 (1.69% in the original subproject area and 1.34% in West Sumatra). 7. Period of the analysis. A 20-year period for the analysis seems appropriate, particularly for a project with such a lengthy implementation period (2005–2013). The project

4 This finding was also supported by more refined multivariate analysis (not reported, but available on request).

However, the absence of any significant project impact on infant and under-5 mortality may be due to data limitations (i.e., the fact that the province infant and under-5 mortality estimates are based on deaths during the preceding 10 years).

5 See, for example, Dean T. Jamison and Lawrence F. Summers. 2013. Global health 2035: a world converging

within a generation. The Lancet (December 3). The recent project evaluation report for the original project used the labor productivity approach in reestimating the benefits and costs of the project, i.e., the estimated benefits were reduced by half to reflect labor force participation.

Appendix 10 47

implementation period is assumed to be part of the 20-year period, with project benefits assumed to follow the cumulative disbursement rates.6 8. Recurrent cost burden. The analysis at appraisal used a single annual recurrent cost rate of 5% for all capital investments (i.e., expenditure on civil works and equipment and vehicles). Five percent is reasonable for civil works but it is too low for equipment and vehicles, which require higher levels of expenditure for maintenance and operation and will need to be replaced after 7–10 years. An annual recurrent cost rate of 15% seems more reasonable for equipment and vehicles. In addition, the second project invested heavily in training and project management. It seems reasonable to assume that retraining will be required and that some expenditure on the services provided by project managers will be required after project termination. Accordingly, an annual recurrent cost rate equal to 5% of the project expenditure on training and project management is assumed. The assumed recurrent cost rates and estimates of the annual recurrent cost burden for the various project components are presented in Table A10.13. 9. Distortionary costs. Because the project is a loan and has little or no revenue-earning potential, the government will have to finance, with funds raised through taxation, (i) its own contribution to the project during implementation, (ii) annual recurrent costs after the project terminates, and (iii) annual interest payments and repayment of the loan principal.7 All taxes (with the exception of lump sum taxes) impose deadweight losses on the economy, and these are part of the project’s costs to society.8 No allowance for deadweight losses was included in the economic analysis at design. It is assumed in the reestimation of project benefits and costs that all government expenditure financed through taxation involves a deadweight loss of 20%.9 A. Reestimated Costs and Benefits of Original (Redesigned) Subproject 10. Table A10.1 compares the assumptions at design (to the extent that they are known)10 to the assumptions (and data sources) used in reestimating the project benefits and costs of the original (redesigned) subproject.

6 The project evaluation report used a 28-year period, including 8 years of project implementation and 20 years of

project benefits (i.e., no project benefits were assumed to occur during the 8-year period of project implementation).

7 It is assumed that the annual payments of the government’s contribution to the project are distributed at the same

rate as project disbursements. In the case of ADB Loan 2074, it is assumed that the principal is repaid proportionately by year (i.e., 5% of the principal in each year) after the end of the 5-year grace period and that interest payments are made annually at the rate of 2% of the unpaid balance. In the case of ADB Loan 2074, it is assumed that the annual interest rate (which is based on the LIBOR) is 2% and that the principal is repaid proportionately by year (i.e., 4.17% of the principal in each year) after the end of the 8-year grace period and that interest payments are made annually at the rate of 2% of the unpaid balance.

8 P. Belli et al. 1998. Handbook on Economic Analysis of Investment Operations. Washington, DC: World Bank, p.

46. 9 Empirical estimates range from 17% to 129%, but most estimates used in practice range from 20% to 40%

(footnote 7). 10

In some cases, the assumptions of the economic and financial analysis at design are not known because of the unavailability of the appendixes cited in its main text.

48 Appendix 10

Table A10.1: Assumptions Used in the Reestimation of Project Benefits and Costs for the Original (Redesigned) Subproject

Item Assumption at Design Revised Assumption

Total cost of original subproject (including pro-rated government contribution and the adjusted cost of tradable goods)

$148,654,000 $88,785,451 Actual loan disbursements for the original subproject with the government contribution distributed proportionately (PCR draft, May 2014, Basic Data, sections 1.9b and 2)

Distribution of total cost of original subproject over time

Based on the projected annual disbursements over a 6-year period

Based on actual project loan disbursement schedule (Appendix 3). The total cost of the original subproject was adjusted in 2010–2013 to reflect the annual cost of the West Sumatra subproject (Table A10.5).

Annual recurrent cost burden

All capital goods (5%) $5,234,276 (Table A10.13)

Share of tradable goods in total project investment cost

40% of the total project investment cost is tradable goods

Unchanged

Shadow exchange rate factor

1.20 Used to convert expenditure on tradable goods to domestic prices

Unchanged

Distortionary costs Not mentioned in the main text 20% of government expenditure financed by taxes, including interest payments, repayment of principal, and the government’s contribution to the project

Potential DALY gap between Indonesia and OECD countries

143 (based on 1993 World Bank study)

77.2 (2005) Based on 2010 study cited in project PER

Annual project impact (maximum value)

5.2% of potential DALY gap 1.0% of potential DALY gap (i.e., 0.772 DALYs gained)

Timing of project impact Not mentioned in main text Phased in on the basis of the distribution of cumulative disbursement in the original subproject

Economic value of one DALY

2002 regional minimum wage (i.e., Rp320,000–Rp362,000 per month, equivalent to about $449–$507 annually)

$599 in the base year (2005). Equal to twice the population-weighted average annual level of per capita consumption in 2005 (in 2003 prices) in the project provinces and an exchange rate of $1 = Rp8,560

Annual rate of growth in the real value of one DALY

Not mentioned in the main text 6.34%. Population-weighted average annual growth rate in real per capita consumption in the project provinces during 2003–2007, based on Susenas data deflated by the CPIU.

Base year population Not mentioned in the main text, but probably 30,235,580 (cited in the RRP).

30,150,900 in base year (2005). Based on more reliable estimate of the population in the project provinces in 2010, projected backwards in time to 2005 using the population-weighted average growth rate

during 2000–2010a

Appendix 10 49

Item Assumption at Design Revised Assumption

Annual population growth rate

Not mentioned in the main text 1.69%. Population-weighted average growth rate in project provinces during 2000–2010

Annual discount rate 12% 12%

Analysis period 2004–2023 2005–2024 (20 years) CPIU = urban consumer price index, DALY = disability-adjusted life year, OECD = Organization for Economic Co-operation and Development, PCR = project completion report, PER = project evaluation report, RRP = report and recommendation of the President. a

Ministry of Health. 2011. Indonesia Health Profile 2010. Jakarta. Source: Asian Development Bank and Ministry of Health, Indonesia.

11. The project’s reestimated benefits and costs for the original subproject are presented in Table A10.2, based on the assumptions in Table A10.1. Net present value is estimated to be $71.4 million (second-last row in column 7), and the economic internal rate of return (EIRR) is estimated to be 31%. Investment cost accounts for 72.8% of total discounted project costs, while recurrent cost account for 16.6% of the total and distortionary costs 10.6%. The sharp increase in project benefits over time (8.14% annually following project termination) reflects the assumption that the project benefits should be proportional to the total population (assumed to continue growing at the annual rate of 1.69% estimated to have occurred in the project provinces during 2000–2010) and that the value of each DALY gained should increase proportionately with the rate of growth in real per capita consumption (assumed to continue growing at the annual rate of 6.34% estimated on the basis of Susenas data during 2003–2007).

Table A10.2: Reestimated Benefits and Costs for the Original Subproject ($)

Project Year Investment

Cost Recurrent

Cost Distortionary

Cost Total Project

Cost Project

Benefits Net Benefits

1 515,639 0 219,653 735,292 80,915 (654,377)

2 1,884,012 0 260,735 2,144,746 407,194 (1,737,552)

3 8,919,881 0 471,967 9,391,848 2,077,081 (7,314,767)

4 11,476,503 0 548,723 12,025,226 4,523,308 (7,501,917)

5 25,489,694 0 969,430 26,459,125 10,360,664 (16,098,461)

6 21,962,802 0 1,195,596 23,158,397 16,299,638 (6,858,759)

7 11,132,238 0 863,797 11,996,034 20,418,998 8,422,964

8 6,309,818 0 712,376 7,022,194 23,792,361 16,770,167

9 1,094,863 0 846,470 1,941,333 26,049,434 24,108,101

10 0 5,234,276 1,885,030 7,119,306 28,168,922 21,049,615

11 0 5,234,276 1,873,930 7,108,206 30,460,859 23,352,653

12 0 5,234,276 1,862,829 7,097,105 32,939,278 25,842,172

13 0 5,234,276 1,851,729 7,086,005 35,619,351 28,533,346

14 0 5,234,276 1,840,628 7,074,904 38,517,485 31,442,581

15 0 5,234,276 1,829,528 7,063,804 41,651,423 34,587,620

16 0 5,234,276 1,818,427 7,052,703 45,040,352 37,987,648

17 0 5,234,276 1,807,327 7,041,603 48,705,017 41,663,414

18 0 5,234,276 1,796,226 7,030,502 52,667,854 45,637,352

19 0 5,234,276 1,785,126 7,019,402 56,953,124 49,933,722

20 0 5,234,276 1,774,025 7,008,301 61,587,060 54,578,759

Total 88,785,451 57,577,034 26,213,552 172,576,037 576,320,317 403,744,280 Discounted values 55,075,237 12,552,511 8,032,386 75,660,133 147,109,955 71,449,822 EIRR 31%

( ) = negative, EIRR = economic internal rate of return.

50 Appendix 10


12. Table A10.3 presents the estimated EIRRs for some plausible alternative assumptions about the project impact (i.e., percentage of the preproject DALY gap gained as the result of the project) and the economic value of one DALY (i.e., different multiples of average per capita consumption), while Table A10.4 presents estimates of the net present value under the same alternative assumptions. The results indicate that the EIRR exceeds the discount rate of 12% (implying a positive net present value) except where (i) the assumed project impact is 1.0% or less and a DALY is valued at only one times the level of per capita consumption, or (ii) the assumed project impact is only 0.5% and a DALY is valued at two times per capita consumption or less.

Table A10.3: Sensitivity Analysis for Original Subproject

(Economic Internal Rate of Return under Alternative Assumptions) (%)

Project impact: Percentage of the estimated preproject DALY gap (77.2)

Value of one DALY: multiple of per capita consumption

1 (Base scenario)

2 3

0.5%

11 22

1.0% (Base scenario) 11 31 50 2.0% 31 72 127 DALY = disability-adjusted life year. Source: Asian Development Bank.

Table A10.4: Sensitivity Analysis for Original Subproject (Net Present Value under Alternative Assumptions)

($)



1 (Base scenario)

2 3

0.5% (38,882,645) (2,105,156) 34,672,333 1.0% (Base scenario) (2,105,156) 71,449,822 145,004,799 2.0% 71,449,822 218,559,777 365,669,732 ( ) = negative, DALY = disability-adjusted life year. Source: Asian Development Bank.

B. Reestimated Costs and Benefits of the West Sumatra Subproject 13. Table A10.5 lists the assumptions (and data sources) used in estimating the project benefits and costs of the West Sumatra subproject. The main differences from Table A10.1 are that the maximum project impact is assumed to be 2.0% of the DALY gap (instead of 1.0% in the original subproject), reflecting the presumed larger impact of restoring the functioning of an existing public health system.

Table A10.5: Assumptions Used in Estimating Project Benefits and Costs for the West Sumatra Subproject

Item Assumption

Total cost of West Sumatra subproject (including pro-rated government contribution and the adjusted cost of tradable goods)

$12,852,520 Actual loan disbursements for the West Sumatra subproject with the government contribution distributed proportionately

a

Appendix 10 51

Item Assumption

Distribution of total cost of West Sumatra subproject over time

Assumed to be divided equally between 4 years (2010–2013). The distribution of the total cost in the original subproject is adjusted accordingly (Table A10.1)

Annual recurrent cost burden $763,703 (Details in Table A10.13)

Share of tradable goods in total project investment cost

Unchanged

Shadow exchange rate factor Unchanged

Distortionary costs 20% of government expenditure financed by taxes, including interest payments, repayment of principal, and the government’s contribution to the project

Potential DALY gap between Indonesia and OECD countries

77.2 (2005) Based on 2010 study cited in original project PER

Annual project impact (maximum value)

2.0% of potential DALY gap

Timing of project impact Phased in on the basis of the assumed timing of the distribution of cumulative disbursement in the West Sumatra subproject

Economic value of one DALY $599 in base year (2005). Equal to twice the population-weighted average annual level of per capita consumption in 2005 (in 2003 prices) in the project provinces and an exchange rate of $1 = Rp8,560.

Annual rate of growth in the real value of one DALY

0.62%. Population-weighted average annual growth rate in real per capita consumption in West Sumatra during the pre-earthquake period of 2003–2007 based on Susenas data, deflated by the CPIU

Base year population 4,534,820 in base year (2005). Based on more reliable estimate of the population in West Sumatra in 2010, projected backwards 2005 using the average growth rate during 2000–2010

b

Annual population growth rate 1.34%. Average annual population growth rate in West Sumatra during 2000–2010

Annual discount rate 12%

Analysis period 2005–2024 (20 years) CPIU = urban consumer price index, DALY = disability-adjusted life year, OECD = Organization for Economic Co-operation and Development, PER = project evaluation report. a

Project completion report draft, May 2014, Basic Data, sections 1.9b and 2. b

Ministry of Health. 2011. Indonesia Health Profile 2010. Jakarta: Government of Indonesia. Source: Asian Development Bank.

14. The estimated benefits and costs of the West Sumatra subproject are presented in Table A10.6, based on the assumptions in Table A10.5. Net present value is estimated to be $16.9 million (second-last row in column 7), and the EIRR is estimated to be 71%. Investment cost accounts for 67.0% of total discounted project costs in the West Sumatra subproject, while recurrent cost accounts for 19.8% of the total and distortionary costs are 13.2%. The higher percentage accounted for by recurrent costs is due to the fact that 90% of project expenditure in the West Sumatra component was on civil works and equipment and vehicles. The slower rate of increase in project benefits in the West Sumatra component (i.e., 1.97% annually, following project termination, compared to 8.14% annually in the original subproject) is due to the lower assumed rates of population growth (1.34% in West Sumatra compared to 6.34% in the original project) and real per capita consumption growth (0.62% in West Sumatra compared to 1.69% in the original subproject).

52 Appendix 10

Table A10.6: Reestimated Benefits and Costs for the West Sumatra Subproject ($)

Project year Investment

Cost Recurrent

Cost Distortionary

Cost Total Project

Cost Project


1 0 0 36,725 36,725 0 (36,725)

2 0 0 36,725 36,725 0 (36,725)

3 0 0 36,725 36,725 0 (36,725)

4 0 0 36,725 36,725 0 (36,725)

5 0 0 36,725 36,725 0 (36,725)

6 3,213,130 0 217,102 3,430,232 1,640,682 (1,789,551)

7 3,213,130 0 215,424 3,428,554 3,346,008 (82,546)

8 3,213,130 0 213,746 3,426,876 5,117,889 1,691,013

9 3,213,130 0 225,234 3,438,364 6,958,286 3,519,922

10 0 763,703 281,213 1,044,916 7,095,368 6,050,451

11 0 763,703 279,338 1,043,040 7,235,150 6,192,109

12 0 763,703 277,462 1,041,165 7,377,686 6,336,521

13 0 763,703 275,586 1,039,289 7,523,030 6,483,741

14 0 763,703 273,710 1,037,413 7,671,238 6,633,824

15 0 763,703 271,835 1,035,537 7,822,365 6,786,827

16 0 763,703 269,959 1,033,662 7,976,469 6,942,808

17 0 763,703 268,083 1,031,786 8,133,610 7,101,824

18 0 763,703 266,207 1,029,910 8,293,846 7,263,936

19 0 763,703 264,332 1,028,035 8,457,239 7,429,205

20 0 763,703 262,456 1,026,159 8,623,851 7,597,692

Total 12,852,520 8,400,731 4,045,311 25,298,563 103,272,717 77,974,154 Discounted values 6,202,274 1,831,464 1,225,123 9,258,862 26,143,350 16,884,488 EIRR 71%

( ) = negative, EIRR = economic internal rate of return. Source: Asian Development Bank.

15. Table A10.7 presents the estimated EIRRs for some plausible alternative assumptions about project impact (i.e., percentage of the preproject DALY gap gained as the result of the project) and the economic value of one DALY (i.e., multiples of average per capita consumption), while Table A10.8 presents estimates of the net present value for the West Sumatra component for the same alternative assumptions. The results indicate that the EIRR exceeds 12% for all alternatives except the combination of an assumed project impact of only 1.0% of the estimated preproject DALY gap (77.2) and a DALY valued at only one times the level of per capita consumption. However, one DALY is usually valued at 2–3 times the level of per capita consumption.

Table A10.7: Sensitivity Analysis for West Sumatra Subproject (Economic Internal Rate of Return Under Alternative Assumptions)

(%)



1 (Base scenario)

2 3

1.0%

26 49

2.0% (Base scenario) 26 71 107 3.0% 49 107 141 DALY = disability-adjusted life year. Source: Asian Development Bank.

Appendix 10 53

Table A10.8: Sensitivity Analysis for West Sumatra Subproject (Net Present Value Under Alternative Assumptions)

($)

Project impact: Percentage of the estimated pre-project DALY gap (77.2)


1 (Base scenario)

2 3

1.0% (2,723,024) 3,812,813 10,348,651 2.0% (Base scenario) 3,812,813 16,884,488 29,956,163 3.0% 10,348,651 29,956,163 49,563,676 ( ) = negative, DALY = disability-adjusted life year. Source: Asian Development Bank.

C. Reestimation of Costs and Benefits of the Total Project (Both Components Combined) 16. Table A10.9 shows the reestimated costs and benefits of the combined project (both subprojects combined) under the base scenario assumptions in Tables A10.1 and A10.5. The estimates indicate that the estimated net present value of the combined project is $88.3 million (second-last row of column 7) and an EIRR of 33%. Even if one DALY is valued at only one times the level of per capita consumption (instead of two times as in the base scenario), the net present value of the total project is positive ($1.7 million) and the EIRR is 12%.

Table A10.9: Reestimated Benefits and Costs of the Entire Project

(Both Components Combined) ($)

Project year Investment

Cost Recurrent

Cost Distortionary

Cost Total

Project Cost Project


1 515,639 0 256,378 772,017 80,915 (691,102)

2 1,884,012 0 297,459 2,181,471 407,194 (1,774,277)

3 8,919,881 0 508,692 9,428,573 2,077,081 (7,351,492)

4 11,476,503 0 585,447 12,061,950 4,523,308 (7,538,642)

5 25,489,694 0 1,006,155 26,495,849 10,360,664 (16,135,185)

6 25,175,932 0 1,412,698 26,588,630 17,940,320 (8,648,310)

7 14,345,368 0 1,079,221 15,424,588 23,765,006 8,340,418

8 9,522,948 0 926,122 10,449,070 28,910,251 18,461,180

9 4,307,993 0 1,071,704 5,379,697 33,007,720 27,628,023

10 0 5,997,979 2,166,244 8,164,222 35,264,289 27,100,067

11 0 5,997,979 2,153,268 8,151,246 37,696,009 29,544,763

12 0 5,997,979 2,140,291 8,138,270 40,316,964 32,178,694

13 0 5,997,979 2,127,315 8,125,294 43,142,381 35,017,087

14 0 5,997,979 2,114,339 8,112,317 46,188,723 38,076,405

15 0 5,997,979 2,101,363 8,099,341 49,473,788 41,374,447

16 0 5,997,979 2,088,386 8,086,365 53,016,821 44,930,456

17 0 5,997,979 2,075,410 8,073,389 56,838,627 48,765,238

18 0 5,997,979 2,062,434 8,060,412 60,961,700 52,901,288

19 0 5,997,979 2,049,458 8,047,436 65,410,363 57,362,927

20 0 5,997,979 2,036,481 8,034,460 70,210,911 62,176,451

Total 101,637,971 65,977,765 30,258,863 197,874,599 679,593,034 481,718,435

Discounted values 61,277,511 14,383,975 9,257,509 84,918,995 173,253,305 88,334,310 EIRR 33%

( ) = negative, EIRR = economic internal rate of return. Source: Asian Development Bank.

54 Appendix 10

D. Financial Analysis 17. The financial analysis at design noted the fact that government health expenditure in Indonesia is low by international standards and that chronically low funding has adversely affected service quality and effectiveness, leading to low utilization and relatively poor health outcomes. It also noted that district health expenditure was only about 1%–2% of total district expenditure in most of the project provinces (based on 2003 data) but that it was projected to increase to 5% by 2009. The financial analysis at design estimated that the government’s share of the project’s annual recurrent costs was about $1.6 million and concluded that the budgetary impact of the estimated annual recurrent costs during and after the project implementation is considered minimal. The financial analysis at design also evaluated the likely impact of the project on local government budgets by comparing the projected average annual project grant ($200,000) during the period of project implementation (2004–2009) in a single district “with low fiscal capacity” (Kabupaten Hulu Sungai Utara, South Kalimantan) to its projected average level of total health expenditure during the same period ($11.7 million), and concluded that the project would “have minimal impact on local budgetary resources.” 18. More recent data and analysis have suggested that

(i) the main problem with health sector funding in Indonesia is not its low level but its inequity and inefficient utilization,11

(ii) both overall and district health budgets have been increasing rapidly in real terms since 2003,12

(iii) there is still wide variation between districts in the level of public health expenditure,13

(iv) most districts have very little control over the allocation of their health budgets (footnote 10),

(v) many district governments have difficulty spending their annual budgets (footnote 9), and

(vi) district allocations for operations and maintenance tend to be very low (footnote 9).

19. These findings suggest that it is desirable to reestimate the likely fiscal impact of the project and its prospects for sustainability. 20. Before proceeding to the assessment of the fiscal impact of the individual project components, it is useful to provide an overview of the level and composition of public health expenditure. Unfortunately, reliable data on public health expenditure (as distinct from revenue) are limited in post-decentralization Indonesia. The most recent set of consistent estimates of public health expenditure, made by World Bank staff using Ministry of Finance data, is provided in the 2008 public expenditure review for the health sector for 2001–2005 (Table A10.10).14 These data indicate that (i) the level of public health expenditure in relation both to total public

11

World Bank. 2007. Spending for Development: Making the Most of Indonesia’s New Opportunities. Indonesia. Public Expenditure Review. Jakarta.

12 P. Heywood and N. Harahap. 2009. Public Funding of Health at the District Level in Indonesia After

Decentralization—Sources, Flows and Contradictions.” Health Research Policy and Systems.7 (5). pp. 1–14. 13

For example, one study of district government expenditure in 39 districts during 2007–2009 found that total expenditure on health in 17.9% of the districts was less than 6.0%, in 53.8% of districts it was 6%.0–10.0%, and in 28.2% of districts it was 10.0%–16.0%; United Nations International Children’s Emergency Fund (UNICEF) et al. 2012. Child Poverty and Disparities in Indonesia: Challenges for Inclusive Growth. Jakarta.

14 World Bank. 2008. Public Expenditure Review Health. Washington, DC.

Appendix 10 55

expenditure and to gross domestic product is relatively low, but was rising during this period; and (ii) district public health expenditure accounts for about half of the total public health expenditure and that its share was roughly constant during this period. Table A10.10: Public Health Expenditure in Indonesia by Level of Government, 2001–2005

Item 2001 2002 2003 2004 2005

GDP (Rp trillion) 1,646.0 1,822.0 2,014.0 2,296.0 2,774.0

Total national public expenditure (Rp trillion)*

355.2 339.6 411.2 459.8 547.2

As % of GDP 21.6 18.6 20.4 20.0 19.7

Total public health expenditure (Rp billion)

9,250.0 11,004.0 16,045.0 16,703.0 19,101.0

As % of total national public expenditure

2.6 3.2 3.9 3.6 3.5

As % of GDP 0.6 0.6 0.8 0.7 0.7

At central level (Rp billion) 3,119.0 2,907.0 5,752.0 5,595.0 5,837.0

As % of total 33.7 26.4 35.8 33.5 30.6

At province level (Rp billion) 1,745.0 2,372.0 2,821.0 3,000.0 3,316.0

As % of total 18.9 21.6 17.6 18.0 17.4

At district level (Rp billion) 4,387.0 5,725.0 7,473.0 8,108.0 9,948.0

As % of total 47.4 52.0 46.6 48.5 52.1

GDP = gross domestic product, Rp = rupiah. * includes locally financed local government expenditure. Source: GDP at current prices (Asian Development Bank) .

21. Table A10.11 presents data on the composition of recurrent health expenditure at the district level during 2002–2005 (the most recent available estimates). These data indicate that expenditure on personnel accounted for 70% of total recurrent health expenditure at the district level in 2002, rising to 81% in 2005. Because health personnel are assigned to districts by the central Ministry of Health, local governments do not have any control over this line item, which is mainly financed by transfers from the central government. Nonpersonnel recurrent health expenditure accounted for a small and shrinking share of recurrent district public health expenditure during this period, an increasing percentage of which was absorbed by expenditure on goods. Expenditure on operation and maintenance accounted for only about 2.5% of total recurrent district public health expenditure during this period.

Table A10.11: Composition of Recurrent District Health Expenditure, 2002–2005

Item 2002 2003 2004 2005 Average

2002–2005

District recurrent public health expenditure (as % of total district public health expenditure)

79.1 65.1 61.5 60.0 66.4

Personnel (Rp billion) 3,182.0 3,850.0 4,081.0 4,852.0 3,991.0

Goods (Rp billion) 779.0 640.0 683.0 882.0 746.0

Operation and maintenance (Rp billion)

119.0 116.0 115.0 152.0 126.0

Travel (Rp billion) 28.0 47.0 49.0 70.0 49.0

Miscellaneous (Rp billion) 421.0 215.0 56.0 14.0 177.0

Total recurrent expenditure (Rp billion) 4,529.0 4,868.0 4,984.0 5,970.0 5,088.0

Personnel (%) 70.3 79.1 81.9 81.3 78.4

Goods (%) 17.2 13.1 13.7 14.8 14.7

Operation and maintenance (%) 2.6 2.4 2.3 2.5 2.5

56 Appendix 10

Item 2002 2003 2004 2005 Average

2002–2005

Travel (%) 0.6 1.0 1.0 1.2 1.0

Miscellaneous (%) 9.3 4.4 1.1 0.2 3.5

Total (%) 100.0 100.0 100.0 100.0 100.0


22. Table A10.12 lists the project investment costs by subproject. The main problem in constructing this table is the limited information available on the composition of actual investment costs in the desa siaga operational models (MODS) subcomponent.15 Unlike the other project components (including the West Sumatra subproject), expenditure within the MODS component is not reported by expenditure category. This is probably because of the expectation when the original project was redesigned that the funds allocated to the component would be used only for block grants of Rp275 million to villages, including Rp225 million in the first year to cover the cost of civil works and 1 year of operating costs and Rp50 million in the second year to cover a second year of operating costs. Since the project provided block grants to 732 MODS villages, this would amount to a total investment cost of Rp201.3 billion ($18.4 million at an exchange rate of $1 = Rp10,950). The actual project expenditure on the community health subcomponent was 59.7% higher ($29.4 million). The composition of the additional expenditure of $11.0 million is not reported, although it is reported to have included the cost of equipment for poskesdes (village health posts), training for village midwives and cadres and/or management, honoraria and/or salaries of MODS facilitators, motorcycles for village midwives, and other costs associated with “the development of MODS.”16 Rather than attempt to allocate the additional expenditure among the project expenditure categories, it is reported separately in Table A10.12 as a single item—expenditure on the MODS component.

Table A10.12: Project Investment Cost by Subproject and Expenditure Category ($)

Category Original (Redesigned)

Subproject West Sumatra

Subproject Total Project

Civil works 704,024 7,961,601 8,665,625

Equipment and vehicles 11,120,572 1,780,468 12,901,040

Consultant services and systems development

3,401,540 739,975 4,141,515

Training and seminars 18,173,235 165,273 18,338,508

Materials and consumables 140,623 0 140,623

Project management 5,784,873 268,479 6,053,352

Community health (MODS) 29,439,361 0 29,439,361

Interest charges 4,643,196

Total investment cost 68,764,228 10,915,796 84,323,220


23. Table A10.13 presents estimates of the project’s annual recurrent cost burden by subproject and expenditure category, based on the assumed annual recurrent cost rates for each category (column 1). Most of the expenditure categories are assumed to impose an annual

15

Desa siaga operational models (MODS) expenditure was financed through block grants to village forums.

Although the village forums reportedly recorded their actual expenditure out of the block grants, this information was not reported.

16 Bahana Mitra Buana. 2012. The (Improved) Final Report of the BME Study for DHS2. Jakarta.

Appendix 10 57

recurrent cost burden equal to 5% of the total project investment. The exceptions are equipment and vehicles (15%) and consultant services and systems (0%).

Table A10.13: Annual Recurrent Cost Burden by Subproject and Expenditure Category

Category

Assumed Annual

Recurrent Cost Rate

(%)

Original (Redesigned) Subproject

($)

West Sumatra Subproject

($)

Total Project Expenditure

($)

Civil works 5 35,201 398,080 433,281

Equipment and vehicles 15 1,668,086 267,070 1,935,156

Consultant services and systems development

0 0 0 0

Training and seminars 5 908,662 8,264 916,925

Materials and consumables 5 7,031 0 7,031

Project management 5 289,244 13,424 302,668

Community health (MODS) 5 1,471,968 0 1,471,968

Total 4,380,192 686,838 5,067,029


24. To assess the fiscal impact of the project, it is necessary to project the level of district health expenditure from 2005 (Table A10.10) to 2014. Fortunately, there is a district-level database for Indonesia developed and maintained by the World Bank that includes both total district government expenditure and district government health expenditure for 397 districts (i.e., regencies, cities excluded) during 2001–2011.17 These data were converted from current rupiah to constant 2000 prices using the urban consumer price index. 18 Table A10.14 presents estimates of regression models explaining total district government expenditure per capita (columns 1–2) and the share of total district government expenditure allocated to health (columns 3–4).19 The dependent variable in regressions reported in columns 1–2 is the natural logarithm of total district government expenditure per capita, whereas the dependent variable in the regressions reported in columns 3–4 is the natural logarithm of the share of district government health expenditure in total district government expenditure. Statistically insignificant explanatory variables were omitted from the estimated models reported in Table A10.14.

17

Indonesia Data Base for Policy and Research (http://data.worldbank.org/data-catalog/indonesia-database-for- policy-and-economic-research)

18 There is no regional price deflator in Indonesia.

19 The estimates in Table A10.14 (columns 1–3) were obtained using fixed-effects estimators because a test for the

absence of overidentifying restrictions was rejected at the 1% level in the models in columns 1 and 3 and at the 10% level in the model in column 2. The test used is a test for overidentifying restrictions in panel data estimation that is more suitable for panel data estimation than the more commonly used Hausman-Taylor test. See M.E. Schaffer and S. Stillman. “Stata module to calculate tests of over-identifying restrictions after xtreg, xtivreg, xtivreg2 and xthtaylor.” (http://ideas.repec.org/c/boc/bocode/s456779.html). The estimates in column 4 were obtained using random-effects estimators because there was no theoretical or empirical evidence of fixed effects, and the Breusch-Pagan lagrange multiplier test for the absence of random effects was rejected at the 1% level.

http://data.worldbank.org/data-catalog/indonesia-database-for-

58 Appendix 10

Table A10.14: Regression Analysis of District Government Expenditure in Constant 2000 Prices, 2001–2012

Item

Total District Government Expenditure

(per capita, constant 2000 prices) Share of Total District Government

Expenditure Allocated to Health

Original Project Provinces West Sumatra

Original Project Provinces West Sumatra

Population (million) –1.214 –1.807 0.187 (6.22)** (8.87)** (1.61) Year (2001=1) 0.131 0.079 0.055 0.065 (9.22)** (12.92)** (15.94)** (4.96)** Year squared –0.003 (3.37)** Constant 6.333 6.550 –2.919 –2.995 (79.48)** (75.82)** (64.77)** (32.52)** Observations 860.0 105.0 808.0a 101.0a

Number of districts 98.0 12.0 98.0 12.0 R-squared 0.61 0.71 0.35 0.48 Robust z statistics in parentheses (adjusted for clustering by district) * significant at 5%; ** significant at 1%. a Data on district health expenditure are available only for 2001–2011.

Source: Indonesia Data Base for Policy and Research (http://data.worldbank.org/data-catalog/indonesia-database-for-policy-and-economic-research).

25. Table A10.15 presents estimates of the level of district government health expenditure in current dollars during 2005–2014 (only the estimates for the first 2 years and final 2 years are reported in the table). The population estimates in each subproject area (rows 1–2) are obtained by applying the estimated rates of population growth in each area to the estimated 2005 base year populations reported in Tables A10.1 and A10.5. The levels of per capita district government expenditure in each subproject area (rows 3–4) are estimated by applying predicted annual growth rates in total district government expenditure obtained from the estimated regressions in Table A10.14 (columns 1–2) to the 2005 base year levels of total district government expenditure per capita (in 2000 prices) from the World Bank district-level database. The shares of health expenditure in total district government expenditure in each subproject area (rows 5–6) are estimated by applying predicted annual growth rates in the share of total district government expenditure allocated to health obtained from the estimated regressions in Table A10.14 (columns 3–4) to the 2005 base year levels from the World Bank district-level database. District government health expenditure per capita (in 2000 prices) is estimated by multiplying the estimates of total district government expenditure per capita (rows 3–4) by the estimated shares allocated to health (rows 5–6). These per capita estimates in 2000 prices are converted to estimates of total district government health expenditure in current prices using the urban consumer price index and estimates of the total populations in each subproject area obtained from Tables A10.1 and A10.5. The resulting estimates are converted to dollars using the average annual exchange rates in each year. 26. The estimates in Table A10.15 indicate that annual district government expenditure per capita in constant prices increased during 2005–2014 at an average annual rate of 5.8% in the original subproject area and at an average annual rate of 7.3% in West Sumatra, while district government health expenditure per capita in constant prices increased at an average annual rate of 11.9% in the original subproject area and 14.5% in West Sumatra. The reason for the difference is that the share of district government expenditure allocated to health increased during this period from 7.9% to 13.1% in the original subproject area and from 7.4% to 13.2% in West Sumatra (i.e., surpassing considerably the targeted share of 10.0%).

Appendix 10 59

Table A10.15: Estimates of Total District Government Health Expenditure in Current

Dollars, 2005–2014

Indicator 2005 2006 2013 2014

Average population per district (million), original subproject area

0.40 0.41 0.46 0.46

Average population per district (million), West Sumatra

0.32 0.33 0.36 0.37

Annual district government expenditure per capita (Rp), original subproject area (in 2000 prices)

483,506.00 526,225.00 780,599.00 802,743.00

Annual district government expenditure per capita (Rp), West Sumatra (in 2000 prices)

442,832.00 475,351.00 778,080.00 834,424.00

Estimated share of total district government expenditure allocated to health, original subproject area (%)

7.91 8.37 12.41 13.13

Estimated share of total district government expenditure allocated to health, West Sumatra (%)

7.35 7.84 12.36 13.19

District government health expenditure per capita (Rp), original subproject area (2000 prices)

38,245.00 44,033.00 96,902.00 105,436.00

District government health expenditure per capita (Rp), West Sumatra (2000 prices)

32,548.00 37,285.00 96,193.00 110,087.00

Total population (million), original subproject area

27.69 28.16 31.71 32.24

Total population (million), West Sumatra 4.24 4.30 4.72 4.78

Projected total district health expenditure, original project area (Rp million, current prices)

1,918,509.00 1,986,531.00 3,264,808.00 3,399,414.00

Projected total district health expenditure, West Sumatra (Rp million, current prices)

249,971.00 256,613.00 482,435.00 526,526.00

Projected total district health expenditure, original project area ($ million)

197.62 216.75 312.78 289.31

Projected total district health expenditure, West Sumatra ($ million)

25.75 28.00 46.22 44.81

Note: Table shows first 2 years and last 2 years only. Source: Asian Development Bank.

27. Table A10.16 presents projections of the project’s fiscal impact during the post-project period 2014–2024. The projections assume that district government health expenditure will grow at an annual rate of 6% in both subproject areas, which is about the same rate as the estimated growth rate in total district government expenditure in constant prices during 2005–2014. However, it is assumed that the share of district government expenditure allocated to health will remain constant during this period at its 2014 level of about 13%. The projected composition of district government health expenditure is assumed to follow the average shares during 2002–2005 in Table A10.11. The results indicate that the project’s fiscal impact looks quite manageable if the focus is on the project’s estimated recurrent costs (Table A10.13) in relation to total district health expenditure (as in the financial analysis at design), i.e., 1.7% (West Sumatra) and 1.8% in the original subproject area in 2014, decreasing to 1.0% in both areas in 2024. However, if only the fiscal impact is assessed with respect to recurrent health expenditure, the projected fiscal impact is significantly higher, i.e., 2.6%–2.7% in 2014, decreasing to 1.4%–

60 Appendix 10

1.5% in 2024. If the fiscal impact is assessed more reasonably in relation to the projected levels of nonpersonnel recurrent health expenditure (the only component over which district governments exercise some control), the projected fiscal impact is considerably higher, i.e., 11.9%–12.6% in 2014, decreasing to 6.6%–7.1% in 2024.

Table A10.16: Estimated Fiscal Burden During 2014–2024 (selected years only) Item 2014 2019 2024

Original Subproject

Projected district government health expenditure

Total ($ million) 289.312 387.164 518.113

Recurrent ($ million) 192.199 257.206 344.199

Nonpersonnel recurrent ($ million) 41.422 55.432 74.181

Operation and maintenance ($ million) 4.741 6.345 8.490

Project recurrent cost as % of

Total district health expenditure (%) 1.800 1.400 1.000

District recurrent health expenditure (%) 2.700 2.000 1.500

District non-personnel recurrent health expenditure (%) 12.600 9.400 7.100

District expenditure on operation and maintenance (%) 110.400 82.500 61.600

West Sumatra Subproject

Projected district government health expenditure

Total ($ million) 44.811 59.967 80.249

Recurrent ($ million) 29.769 39.838 53.312

Nonpersonnel recurrent ($ million) 6.416 8.586 11.490

Recurrent expenditure on operation and maintenance ($ million)

0.734 0.983 1.315

Project recurrent cost as % of

Total district health expenditure (%) 1.700 1.300 1.000

District recurrent health expenditure (%) 2.600 1.900 1.400

District nonpersonnel recurrent health expenditure (%) 11.900 8.900 6.600

District expenditure on operation and maintenance (%) 104.000 77.700 58.100


28. The projections of fiscal impact in Table A10.16 are done at an aggregate level, not for individual districts. However, according to the World Bank district-level database, variation in both (i) the share of total district government expenditure allocated to health, and (ii) the level of district health expenditure per capita have increased over time, suggesting that project investments are more likely to be sustainable in some districts than in others.

Appendix 11 61

PROJECT ORGANIZATIONAL STRUCTURE

At Design

BAPPEDA = Regional Development Planning Agency, BKKBN = National Family Planning Coordinating Board, MOH = Ministry of Health.

62 Appendix 11

As Revised During Implementation

BAPPEDA = Regional Development Planning Agency, BKKBN = National Family Planning Coordinating Board, MOH = Ministry of Health.

Central Steering Committee Central Project

Director (MOH)

Central Technical

Committee

Deputy Project Director/

Manager (MOH)

Deputy Project Director (BKKBN)

Provincial Project Director

(Gov/BAPPEDA I)

Provincial Project Manager (BKKBN)

Provincial Implementation Unit (MOH)

Executive Secretariat

District Project Manager

District Project Implementation Unit Coordinator

District Health Committee

District Project Director

(BAPPEDA II)

Technical Advisor

Central Project Implementation Unit

(BKKBN) Executive Secretariat

Central Project Implementation Unit (MOH)

Executive Secretariat

Provincial Project Manager (MOH)

Provincial Health Council

Technical

Review Team

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