UNCLAS LILONGWE 000497

SIPDIS

SENSITIVE
DEPT FOR S/GAC, AF/S, AF/EPS (SDRIANO), OES/IHA
USAID FOR GH/AA (APETERSON)
HHS/PHS/OFFICE OF GLOBAL HEALTH AFFAIRS (WSTEIGER)
HHS ALSO FOR NIH (MDYBUL AND JLEVIN), HRSA (DPARHAM)
GENEVA FOR DHOHMAN AND MCGREBE

E.O. 12958: N/A
TAGS: KHIV EAID TBIO SOCI MI WHO HIV AIDS
SUBJECT: GLOBAL FUND'S EFFECTIVENESS IN MALAWI STIFLED



1. (SBU) The Global Fund's effectiveness in Malawi, the
largest HIV/AIDS award recipient, has been stifled by
operational and administrative problems. The goal of
"limited oversight" has become unstructured and unwritten
operational guidelines that are often confusing rather than
liberating. The "new way of doing business" has created ever
changing methods of operation that do not always consider
constraints on the ground. The "rapid roll-out" of ARVs has
caused funding announcements to get ahead of administrative
support systems, resulting in the impeded movement of funds.
Clear guidelines and increased communication with the Global
Fund Secretariat would likely give Malawi's principal
recipient, the National AIDS Commission (NAC), the confidence
needed to implement programs quickly and effectively.


2. (SBU) Currently, Malawi has three primary obstacles to
effectively using Global Fund for AIDS, TB, and Malaria
(GFATM) money:

-- Changed guidelines have led to NAC's submission of several
human capacity development and salary supplement components
in its revised work plan This new policy may result in
"top-ups" on some government employees' salaries and a
scramble by health care professionals to NAC-funded
institutions, creating even larger staffing gaps in regular
health care facilities.

-- UNICEF, charged with procurement and distribution of ARV
drugs, has had serious administrative problems with
delivering drugs. From the release of funding for ARVs in
January 2004, it took five months to procure the first
shipment of drugs. Similar delays in the future could
interrupt patients' treatment regimes.

-- The GFATM has recently called into question the
sufficiency of NAC and its sub-grantees' financial management
systems. According to the GFATM's Local Fund Agent (LFA),
all grantees, whether receiving funding directly or
indirectly, must undergo initial and annual audits. This
seemingly new requirement makes problematic NAC's original
plan to funnel funding through community-based and
faith-based organizations. NAC fears many local organizations
will legitimately not be able to fulfill audit requirements.
NAC has thus put all sub-grant funding on hold until the
issue is resolved.

BACKGROUND
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3. (SBU) When Malawi submitted its initial proposal to the
Global Fund in 2002, the GFATM noted that "absorptive
capacity" of funds, human resources constraints, and health
system overload would be serious challenges for Malawi to
overcome. In mid-2002, the GFATM approved a revised version
of Malawi's proposal, which reduced funding for technical
assistance, monitoring, and evaluation, and awarded the
National AIDS Commission (NAC) USD 196 million over the
following five years. A series of miscommunications and
inadequate work plans, owing to changing information from the
GFATM and misunderstandings by NAC, delayed the first tranche
of real money (USD 9.5 million) until early 2004.

COMMENT
--------------

4. (SBU) While many of these problems will have to be
resolved by NAC and its local partners, increased
communication with the Global Fund Secretariat would likely
lead to smoother operations. Specific written guidelines
(yet not concrete policies) and direct communication with
administrative and technical staff (not filtered through
portfolio managers) would help NAC understand more clearly
how it can and cannot implement programs, giving it the
confidence necessary to lead the Global Fund initiative in
Malawi. END COMMENT.
DOUGHERTY