U.S. ASSISTANCE GETS MALAWI GLOBAL FUND PROGRAM BACK ON

1. Summary: Malawi is one of the largest recipients of
assistance from the Global Fund, with over $300 million in grants
approved to date. Execution of the grants, however, has been beset
by many problems, and less than a quarter of approved funds have
been disbursed. In order to improve Malawi's Global Fund
performance, the U.S. Mission HIV/AIDS Team, with assistance from
OGAC, organized technical assistance and a visit of high-level
Global Fund Managers to bring together all interested parties and
confront the problems head-on. The recent visit produced a solid
action plan that will help Malawi move decisively forward to improve
its Global Fund grant performance. End summary.

Less Than Stellar Performance


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2. Despite being one of the largest recipients of Global Fund
grants (over $300 million in four separate grants), Malawi has
suffered a number of difficulties in execution, and to date only $70
million has been disbursed. Global Fund grants for HIV, malaria,
orphans and vulnerable children (OVCs) and health systems
strengthening (HSS) have been underperforming for numerous reasons,
including:

- Bottlenecks and obstacles in the disbursement process
- Lack of intensified implementation by the principal recipients,
particularly in prevention of maternal to child transmission (PMTCT)
and OVC
- Misalignment of Global Fund reporting requirements and local
health pool funding mechanisms
- Lack of implementation of the health systems strengthening
activities, which are key to the success of all public health
initiatives in Malawi
- Overall lack of clarification of roles and responsibilities of
partners supporting the implementation of HIV/AIDS interventions in
Malawi



3. In spite of the difficulty with expending funds, Malawi has
enjoyed particular success with its rapid scale-up of antiretroviral
(ARV) treatment, funded principally by the Global Fund. But that
success requires commitments for continued funding, not only for ARV
drugs, but also the infrastructure that supports the effective
delivery of the drugs. Up to now, the future of that funding has
been uncertain.



4. Both PMI and PEPFAR leverage their funding against that of
the Global Fund in Malawi, thus the performance of the grants are
critical to U.S. interests here. The U.S. position is to encourage
Malawi to seek Global Fund Round 7 continued funding for malaria as
well as for HIV/AIDS prevention activities, the latter being a
critical need that is currently poorly funded.

Addressing the Problem


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5. Recognizing these problems, the U.S. Mission Lilongwe
HIV/AIDS team, assisted by OGAC, organized technical assistance in
the fall of 2006 to address bottlenecks in procurement, financial
management and monitoring and evaluation. Following the first round
of assistance, the principal recipients of the grants asked the U.S.
Mission team to help convene a meeting in Malawi between senior
management at the Global Fund and their Malawian counterparts and
all interested parties. The main objective of the visit was to
directly address issues of grant under-performance and the
development of a plan of action to remedy the situation.



6. With the invaluable assistance of OGAC's Ambassador Jimmy
Kolker and Peter Mamacos, we secured a visit from Operations
Director Orobaton, Southern Africa cluster team leader Amal Medani,
and Fund portfolio manager Tatjana Peterson, February 12 - 16, 2007.
Prior to the visit, the Mission team consulted with all local
stakeholders and developed the visit program and meeting agendas,
and invited participants. Four principal meetings took place: a
technical meeting with the principal recipients and the Fund
portfolio manager; a meeting of development partners and the
Operations Director and cluster team leader; a meeting between the
Global Fund delegation and heads of diplomatic missions and donor
agencies in Malawi; and a meeting with the Global Fund Country
Coordinating Mechanism (CCM).

Plan of Action


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7. As a result of these highly productive meetings, Global Fund
prepared an Aide Memoire that outlines the vollowing points, on
which all stakeholders agree:

- Malawi will apply for Global Fund Round 7 funding and
simultaneously pursue the rolling continuation channel to extend the
Round 1 HIV/AIDS grant. This will require achieving an "A" rating in
three consecutive reporting cycles.

- Malawi will intensify implementation of all grants, particularly
over the next six months, aiming with stakeholder support, to
achieve an "A" rating to coincide with receipt of the Round 7
proposal.

- Evidence of HSS, PMTCT, OVC and impact mitigation scale up in
activities must be documented and verified. This will involve the
National Aids Commission (NAC), the Ministry of Health and the
Ministry of Women and Childhood Development.

- Global Fund agrees to process extraordinary disbursements where
performance allows and NAC will adequately complete reporting
requirements for disbursements, to help speed up the disbursement
process.

- Ministry of Health as Principal Recipient will submit all
disbursement requests for malaria, and the submitted malaria
monitoring and evaluation plan will be reviewed by the Global Fund.

- Ministry of Health in consultation with partners will finalize
arrangements for funding the retained technical assistants in the
Ministry and provide Global Fund with an organogram to meet the
conditions precedent for the first disbursement of the HSS Round 5
grant.

- The Local Fund Agent (LFA) will assist the Ministry of Health to
develop a work plan for the HSS grant, and prepare an action plan
for dealing with the requirements of the conditions precedent for
first disbursements from the HSS grant.

- The Global Fund agrees to new terms of reference for the LFA to
act as a resource to the CCM, to work in conjunction with the pool
donors and the principal recipients, and to assist in more effective
communication with partners.

- The Global Fund also agrees to critically examine the conditions
precedent upon receipt of Malawi's workplan.

- The CCM consents to receiving technical assistance from the Global
Fund to help restructure and strengthen the CCM in its role as
overseer of all Global Fund grants in Malawi, including its roles
and responsibilities, equipping it with a secretariat funded by
development partners, establishing technical committees, and
resolving the potential conflict of interest wherein the secretariat
and chcir of the CCM are also the Principal Recipients of the
grants.

Comment


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8. U.S. Mission Lilongwe is very pleased with the results of
this visit, which succeeded in bringing together the government of
Malawi, development partners and the Global Fund to reaffirm a
commitment to making Fund grants work productively in Malawi. In a
message to U.S. Mission Team Coordinator Mamadi Yilla, Operations
Director Orobaton warmly praised the work of the Mission Team in
facilitating the meetings and getting the issues onto the table for
resolution.



9. Post thanks OGAC for all of its assistance in arranging the
visits and providing funding, and we look forward to improved
collaboration that will maximize the Global Fund's contribution to
better health for all Malawians.

EASTHAM