BURMA: MONITORING THE 3D FUND

C O N F I D E N T I A L SECTION 01 OF 04 RANGOON 000309

SIPDIS

STATE FOR EAP/MLS
DEPT PLEASE PASS TO USAID:CJENNINGS
PACOM FOR FPA
BANGKOK FOR USAID HEALTH OFFICE

E.O. 12958: DECL: 05/02/2018
TAGS: SOCI EAID PHUM KHIV PGOV SENV BM
SUBJECT: BURMA: MONITORING THE 3D FUND

REF: RANGOON 308 AND PREVIOUS

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Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4
(b and d)


1. (C) Summary. The 3 Diseases Fund (3DF),the largest and
newest donor in Burma's health sector, has taken steps during
the past year to improve the administration of its programs.
Aware that monitoring and evaluation (M/E) of its programs
are key to securing future funding from donors, the 3DF has
improved M/E capabilities, encouraging implementing partners
to focus first on ensuring the success of existing programs
before expanding to new areas. The World Health
Organization, a technical agency that does not typically
manage funds, has stepped in to manage the 3DF's fund flow
mechanism, which includes carefully scrutinizing how
implementing partners and GOB national programs spend their
money. The 3DF, which faced initial problems procuring vital
drugs, has improved its procurement mechanism, carefully
reviewing which agencies receive the drugs and how they
administer them. 3DF officials recognize that the system is
not perfect, but note with pride the success that their
program has had during the first year. End Summary.

Ensuring Funds Go to the Right People
--------------


2. (C) The 3DF, a consortium of six donors (Australia, the
European Commission, the Netherlands, Norway, Sweden, and the
United Kingdom) who have pledged $104 million over five years
to reduce the burden of communicable disease mortality and
morbidity for HIV/AIDS, malaria, and TB, recently completed
its first year of work in Burma (Reftel). Getting the 3DF
off the ground took a lot of time and coordination, 3DF
Manager Mikko Lainejoki admitted to us. The 3DF, a new
organization created to fill the gap after the pull out of
the Global Fund in 2005, needed to establish mechanisms for
obligating and providing funds to implementing partners,
creating mechanisms for proper monitoring and evaluation of
grants, and enhancing coordination between the implementing
partners and the national health programs (the National
HIV/AIDS Program, the National TB Program, and the National
Malaria Program). After much coordination between the 3DF
donors and various UN agencies, UNOPS became the overseer of
the 3DF, relying heavily on assistance from the WHO and
UNAIDS, Lainejoki explained.


3. (C) UNOPS could not directly manage the flow of the 3DF's
money due to potential conflicts of interest, so the WHO took
over as fund flow manager in 2006, managing the bridge funds
to cover the Global Fund gap, Lainejoki acknowledged. Many
people questioned whether the WHO, a technical agency that
provides assistance and training to the national programs,
could manage the funds properly. There were problems
initially, WHO TB Officer Hans Kluge told participants during
the 3DF Annual Review Meeting. The WHO, which had little
experience doling out funds but had to act quickly to
obligate the bridge fund money in 2006, ran into problems
with Burmese banks and faced challenges getting money to all
324 townships and hard-to-reach areas. Learning from the
2006 experience, the WHO in 2007 established a Fund Flow
Office, working with implementing partners and the GOB to
improve the disbursement of funds.


4. (C) The 3DF does not provide money directly to the GOB,
even though it funds national programs at the township level,
Lainejoki emphasized. UN agencies, such as WHO, UNAIDS,

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UNFPA, and UNODC, work with specific national programs to
provide funding for specific trainings, outreach activities,
and other programs. 3DF provides money on both a direct
disbursement and reimbursement basis. Direct Disbursements
cover trainings, meetings, workshops, mobile team activities,
and public-private coordination, while the WHO provides
reimbursements for M/E programs, initial home visits, sputum
collection, and transport of drugs to patients and medical
centers. Any program involving a direct disbursement must be
pre-approved, with clear documentation depicting how the
funds will be spent. Kluge emphasized that the WHO is not a
bank, and when it administers funds, it also assumes
liability for those technical programs and trainings. WHO
officials conduct spot checks on the documentation, verifying
the information before the funds are administered to ensure
that the amounts are accurate.


5. (C) Dr. Kluge explained that the WHO carefully
scrutinized all reimbursement requests, ensuring that money
was used for legitimate activities rather than lining the
pockets of the government. With eight field offices around
the country, WHO officials can accurately monitor how GOB
implementing partners use the money. Because the 3DF works
with township level health officials, who best understand the
health needs of the people, there is little risk of the
central government trying to take the funds, Kluge noted.
Fund flow operational guidelines are clearly stated in the
3DF MOU with the Ministry of Health, and the MOH has been
supportive of the 3DF and WHO's decisions to reject
reimbursement requests, Lainejoki told us.

Providing Small Grants to Civil Society
--------------


6. (C) The 3DF plans to expand its small grants program in
2008, providing a total of $1 million to local NGOs for their
health programs. While the 3DF had planned to administer
these funds by March, it ran into problems identifying viable
NGOs, Lainejoki stated. For the 3DF, all NGO partners must
be registered with the government and funds must be
transferred to a bank account in the NGO's name. GOB
regulations prevent non-registered local NGOs to open bank
accounts. 3DF received many excellent proposals from
non-registered NGOs, but could not fund them because the 3DF
could not legally transfer funds to those groups.
Recognizing that many non-registered NGOS successfully worked
in Burma, the 3DF called on its implementing partners to
collaborate with local NGOs so they could conduct their
activities. Lainejoki explained that several larger INGOs
saw this as a capacity building exercise, and were willing to
transfer funds and conduct monitoring and evaluation of local
NGOs' programs. The second round of small grants will close
in June, and the 3DF hopes to administer funds by July. At
that time, the Fund will determine whether to continue its
small grants program or work with the Board to establish new
criteria for fund disbursement.

Improving Monitoring and Evaluation
--------------


7. (C) Monitoring and evaluation of 3DF programs has been a
challenge, 3DF Officer Attila Molnar admitted. Following its
national M/E guidelines, the 3DF holds quarterly meetings
with its implementing partners to coordinate on programs.
Fund officers also meet frequently with individual NGOs to
discuss developments in their specific programs as well as in
the national programs and to evaluate their partnerships with

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the GOB. However, due to the GOB's cumbersome and lengthy
travel request process and subsequent limitations on travel,
many implementing partners are unable to conduct M/E
operations in a timely manner, Molnar continued.


8. (C) 3DF partners raised this issue with the MOH during
the annual review (Reftel),only to be told that the MOH had
approved 303 travel permits through March 2008, compared to
444 trips in 2007. The MOH will only approve travel to
regions covered by each NGO's MOU - if the location is not
listed in the MOU, NGO officials cannot travel there, Dr.
Kyaw Nyunt Sein, Deputy Director of the Ministry of Health,
emphasized repeatedly during the 3DF Annual Review. There is
no reason why only foreigners should conduct monitoring and
evaluation, MOH officials said, encouraging NGOs to utilize
their local staff more for M/E operations. The MOH believes
that NGOs and UN agencies travel too much, and is under
pressure from the senior generals to limit travel, Dr. Kluge
told us.


9. (C) The 3DF Board raised this issue with the Minister of
Health after the annual review, Molnar told us. While the
Minster of Health remained non-committal, he acknowledged
that travel around Burma should be easier after the May 10
referendum.

Procurement Issues
--------------


10. (C) We heard from several NGOs that the 3DF struggled
initially with procurement of drugs. Peter Follen, 3DF
Procurement Officer, explained that the GOB took a long time
to establish and approve standard operating procedures within
the MOU so the Fund could buy drugs. In order to procure
drugs, the 3DF must establish a procurement and distribution
plan, estimating how many drugs would be needed over a long
period of time - this requires intense consultations with the
implementing partners and national programs, Follen stated.
Due to its lack of experience procuring drugs
internationally, the 3DF office faced challenges, including
dealing with discrepancies in the prices of some commodities,
working with companies would not sell drugs to Burma,
difficulties finding affordable drugs that adhered to the
standard National Treatment Protocols, as well as
difficulties securing the necessary import licenses from the
GOB. To resolve the issue, the 3DF in 2007 worked closely
with the WHO to establish procurement protocols. In 2007,
the 3DF procured $4.5 million worth of commodities, of which
$500,000 was purchased locally.


11. (C) Having since resolved many of these issues, the 3DF
is now looking to strengthen its monitoring of procured
drugs, accurately inventorying all drugs received and
ensuring that implementing partners are using them
appropriately. The 3DF continues to work with implementing
partners, encouraging them to order generic drugs that are
part of the National Treatment Protocols rather than more
expensive brand names. Currently, the 3DF has an order for
$500,000 worth of drugs for nine implementing partners, which
should arrive in the next three months.

Comment
--------------


12. (C) During its first year in operation, the 3DF has gone
through many growing pains, identifying the areas for
improvement and acting to rectify any problems. While many

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of the initial problems, such as fund flow and drug
procurement, were internal issues that only the 3DF could
resolve, problems with monitoring and evaluation require more
cooperation from the Burmese regime. Implementing partners
are using 3DF money to provide health services, treatment,
and education to Burma's needy, but the only way to measure
success is through accurate monitoring and evaluation.
Although the MOH understands that additional donor assistance
requires better access for monitors, it remains subject to
the decisions of the military. The international community
in general is waiting to see if access will be improved after
the referendum.

VILLAROSA